Mis-sold Care Annuity

Archergirl

Lynwill53. Do you think this will do your own health any good? It seems to me you have been beating yourself up over this and you have spent the last few years wondering if you did the right thing.

You did the best you could do at the time for the right reasons,do you really want to spend the next few years fighting all this and maybe spending money in the process?
It might be better for your health to put it all behind you and have a happy life.

spinneywirral

I took out an immediate needs care plan with NHFA a subsiduary of HSBC on behalf of my mother. I have recently been contacted by HSBC telling me the advice I was offered was unsuitable for her needs and that redress payment would be made(£12K). I have ccepted!!
I did not ask for the policy to be reviewed, apparently the bank is reviewing all policies sold between 01.04.2004 and 20.07.2010.

dunstonh

spinneywirral wrote: »

I took out an immediate needs care plan with NHFA a subsiduary of HSBC on behalf of my mother. I have recently been contacted by HSBC telling me the advice I was offered was unsuitable for her needs and that redress payment would be made(£12K). I have ccepted!!
I did not ask for the policy to be reviewed, apparently the bank is reviewing all policies sold between 01.04.2004 and 20.07.2010.

They got into trouble, not so much on the annuity but the investment products that so many of them sold alongside it. They had to review all cases between a period.

bilbo51

lynwill53 wrote: »

Yes, of course it's also about the money. Since the whole sorry episode in my life I have been unable to work due to agoraphobia, anxiety, panic attacks and depression. Times are tough and I am convinced that putting my Mum's money in a high interest account would have been a much better option.

lynwill53, I pray to God that your circumstances improve and that you can find the strength to overcome your personal stress/depression issues.

For myself, I'm so thankful that you have told your story here. It has given me much to consider - especially concerning my own father's situation aged 87 and indeed (lol) my own aged 61.

[Note to self: must arrange to finance my own circumstances without burdening the kids.]

God bless you.

PasturesNew

For the time covered and the amount paid .... I'd say you got your money's worth, and more, from the annuity.

It is a tough decision to make, we've chosen to pay the fees rather than buy an annuity - almost guaranteed now for my parent to become the oldest living person ever

System

I think the mistake, with hindsight, was only buying the care annuity in 2004 once she was already in need of care. At that point her future was pretty much known, give or take changes, mainly worsening, in her care needs. So there was no element of insurance in the plan, it was virtually an annuity. The whole point about an annuity is that you give up the capital.

My mother purchased a long-term care bond about 10 years before she had any inkling that she might be needing it. The money was invested, but had an insurance element in it, so that if she ever needed care, it would be covered up to £20,000 pa for life. If she never needed care, there would be no payout.

But the bond retained a (diminishing) value, could be cashed in at any time, and on her death there still remained a residual value which was paid out to her estate.

With hindsight it was a waste of money of course, because she lived to 89 and never needed care. But that's the point about insurance - you buy security but hope never to need it. You can't have it both ways.

greenacre

Hi Lynwill53, I know exactly how you feel. I don't have paperwork with me, like you it is in the loft! so figures etc are pretty much guess work.

My mother had dementia, was aged 92 and owned her own home. She went into a care/nursing home in October 2002 and we were faced with costs of £550 per week (rose to £600 in April 2003). The care home manager had a leaflet for a care annuity package and suggested that we got in touch with the IFA named on the leaflet and we decided to go with the annuity. As I understand it an independent health assessment was carried out which determined how much she should pay for the annuity. We put her home up for sale and until it was sold took out a loan on our mortgage for £60,000.00 to pay for it which we claimed back after property was sold.

As you say, with the anxiety and guilt you feel of putting a parent into a home, everything seems rushed, we were pressed for monthly payments etc.

The outcome was after spending £60,000.00 in January 2003 my mother died in April 2003 so £60,000.00 was not a bad three months work!

Yes, this does sound as if it is all about money but like many others my parents worked and saved damned hard to buy their home and to leave something for their children - something that modern parents perhaps don't seem to worry about!

I too, would like to know if there is some way of getting any of this back now, I seem to remember at the time there was not.

dunstonh

I too, would like to know if there is some way of getting any of this back now, I seem to remember at the time there was not.

You havent indicated any wrong doing. So, on that basis alone, no you are not entitled to anything back.

An annuity provides a guaranteed income for life. If a long life happens, the insurer loses out. If a short life, then the insurer gains. However, the gains/losses are reflected in the terms given to all those that purchase. i.e. the gains from those that die early are used to pay for those that live longer.

As date of death is always an unknown, you cannot complain that she died three months later. That is just bad luck. It is also one of the risks of the annuity option. You would have been told about the investment option but the risks with that is that the money could run out if a long life. As no crystal ball exists, you make a choice which to go with knowing full well that you dont know in advance which will end up being best. Only time will tell and you cant complain that you picked the wrong one with the benefit of hindsight.

greenacre

Thanks for your answer, which I appreciate and understand and probably understood at the time! Do you know if it is possible to get hold of a copy of the health assessment that was carried out?

dunstonh

greenacre wrote: »

Thanks for your answer, which I appreciate and understand and probably understood at the time! Do you know if it is possible to get hold of a copy of the health assessment that was carried out?

Possibly but it wouldnt aid you on the advice. The assessment is there to work out the annuity rate payable over the expected life expectancy. It isnt really that applicable to the advice given as the adviser is not a medical practitioner and has to rely on the information supplied.

It is a real pain to give advice in this area. One options suits short life, the other option suits longer life (but is set on the basis of life expectancy knowing medical situation). You really cant say which will be best and the documentation issued should be full of risk warnings saying as much.

you could ask the advising firm for a copy of the suitability report they issued at the time. At least it will recap what you were told and what warnings were given. With any complaint (or potential complaint) that report is the key document used to support the advice.