Aviva Endowment Compensation Refused!

sobie

Hi All

Endowment: £47,000.00 taken 1998
orginally Commerical Union - then Commerical General Union, Now Aviva.
we Pay in £75 per month.

Where we are at:
Endowment now will pay out: £17,000.00 (ie £5,500.00 less than we will have paid in!)
Bonuses (what a joke!) £3000.00
"Promised" ammount from Aviva £8,000.00
Will pay: £28,000.00 leaving us with a shortfall of £19,000.00

Basis of our complaint:
1) in our orginal offer from Norwich & Peterbrough our needs where highlighted as "Repay & Protect Our Mortgage"
2) we were also placed at level 1 for risk taking - ie not willing to take risks.

So WHY on this earth was an Endowment policy recommended? we already had a repayment mortgage for our previous property.

Our orginal offer was based on
5% £33,000.00
7.5% £48,000.00
10% £59,000.00

Our Claim:
Aviva have rejected our claim stating "We were aware of repayment mortgages (already having one previously) and that we were provided with figures that ilustrate our endowment might not reach its target, therefore we we're not missold the endowment"

So what can I do now? Do we stand any chance of getting anything from F.O. ? Awaiting paperwork from F.O.
Really do not know what to do. Can't afford to totally change to a repayment mortgage as the redemption will only be £10,000.00 leaving me to remortgage at £37,000 - what a waste of 14 years! There is no way I will have saved £19,000 when this mortgage has to be paid.....

dunstonh

1) in our orginal offer from Norwich & Peterbrough our needs where highlighted as "Repay & Protect Our Mortgage"

That was your objective and that works with endowment or repayment basis. So, not grounds for complaint.

2) we were also placed at level 1 for risk taking - ie not willing to take risks.

That is a very strong reason for complaint.

That said, by 1997, the compliance warnings and disclosures were very strong. But that risk 1 should be the killer blow in a complaint even so.

So what can I do now? Do we stand any chance of getting anything from F.O. ? Awaiting paperwork from F.O.

I would refer it to the FOS as the point about risk 1 does not appear to be have been addressed.

sobie

dunstonh wrote: »

That was your objective and that works with endowment or repayment basis. So, not grounds for complaint.

That is a very strong reason for complaint.

That said, by 1997, the compliance warnings and disclosures were very strong. But that risk 1 should be the killer blow in a complaint even so.

I would refer it to the FOS as the point about risk 1 does not appear to be have been addressed.

Thanks for your answer. Just re-reading the letter from Aviva again (with a clearer head) and it states "It is also important that the advisor assesses what is known as the clients attitude to risk to make sure they are happy to accept the risk. If a client is not happy to take any risk a repayment mortgage would be a more suitable recommendation"
then it goes on to say "the fact finder records your attitude to risk as 2, this is risk is conistant with an endowment policy invested in the with profits fund"

They have included the fact finder report but it is totally unreadable. there is a line of 1's followed by some 2's in the second line. but I cannot read what these numbers equate to. the 1's looks like "repay your mortgage". Funnily enough the investigator couldn't read it either! I have asked for a readable copy but the complaints investigator seems to think it unlikely that the original exsists. (just a poorly scaned totally unreadable copy)

Im not a risk taker, we've been on fixed rate (every 5 years) for 14 years because we like to know what we are paying. even though we have been paying significantly more interest I would rather know what I am paying.

Also the "Fact Finder" sheet has been ticked as Client does not want a copy. Which is ludicrus because we've got every last piece of paper even from our first repayment mortgage in 1995! and every other one is ticked as "copy wanted". The investigator also thought that was inconsistant.

What should I do to make up the £19,000.00 shortfall? I feel like sticking money under my matress would have been better! at least I would know what I have...

I just really feel like they've said "oh look it says 5% £33,000.00 so we are covered" surely that isn't right - I mean they could have used the figure of 0.5% and that would have been more realistic now, but stupid at the time!

davenport151

Hi Sobie

When does your endowment finish? Whats the balance on your mortgage at the mo. If you have been paying more interest perhaps the gap is not as bad as you first thought. Can you afford to over pay on this?

sobie

davenport151 wrote: »

Hi Sobie

When does your endowment finish? Whats the balance on your mortgage at the mo. If you have been paying more interest perhaps the gap is not as bad as you first thought. Can you afford to over pay on this?

Thanks for your advice. We've been on a fixed rate for the 14 years we've been paying. Im a cautious person and like to know my outgoings are.
We've been overpaying for 2 years, but to reach £19,000 (almost 1/2) of our mortgage is going to be difficult as it will mean doubling our payments.
And I'm concerned that we are still losing money year on year, when last year was supposed to be better for investments. surely we should at least get the £22,500 back that we are paying in! (without the Joke Bonuses & Promises!)
Its the fact that we lost money in this last financial year that caused me to look to complain in the first place.

sobie

davenport151 wrote: »

Hi Sobie

When does your endowment finish? Whats the balance on your mortgage at the mo. If you have been paying more interest perhaps the gap is not as bad as you first thought. Can you afford to over pay on this?

Sorry to answer your questions: it finishes April 2023. we owe more than the endowment is taken out for £46,000.00 because N&P added fees at the start that they are now charging us interest on :mad:

dunstonh

we owe more than the endowment is taken out for £46,000.00 because N&P added fees at the start that they are now charging us interest on

If you borrow money to pay the fees then you will pay interest. The simple option is to pay the fees off and then you wont pay the interest.

Risk 2 on a 1-5 scale would typically be consistent with "with profits" for that era. Risk 1 would certainly not. Most risk profiles are documented on the suitability report. So, if the factfind copy is poor but the suitability report says risk 2 then its a difficult one for you. The SR is the key document. The factind actually doesnt carry that much weight nowadays.

sobie

dunstonh wrote: »

If you borrow money to pay the fees then you will pay interest. The simple option is to pay the fees off and then you wont pay the interest.

Risk 2 on a 1-5 scale would typically be consistent with "with profits" for that era. Risk 1 would certainly not. Most risk profiles are documented on the suitability report. So, if the factfind copy is poor but the suitability report says risk 2 then its a difficult one for you. The SR is the key document. The factind actually doesnt carry that much weight nowadays.

I can't read the boxes at all on the Fact finder sheet (neither could the investigator) but the first line are all 1's the second lines are 2's. I have no idea what the 6 numbers means as all of the columns are illegable.
What is the Suitability report? does it form part of the fact finder? is that the bit where the numbers are. I honestly have no recollection whatsoever of these numbers or what they mean.
N&P will not let us pay of the fees seperatly they will always be part of the mortgage, which is annoying but fine. Honestly If I could wind the clock back to 1998. (oh to be 21 and fresh out of uni again)....

dunstonh

What is the Suitability report?

The suitability report (or reasons why report as it may have still been called then) would have been a requirement on an advised case. It gives a summary of the recommendation and reasons why (as well as reasons why not other things). It is not part of the factfind.

N&P will not let us pay of the fees seperatly they will always be part of the mortgage, which is annoying but fine. Honestly If I could wind the clock back to 1998. (oh to be 21 and fresh out of uni again)....

Are you sure? Unless you have bought new deals since then and part the whole of the mortgage into the new deal then you should be able to clear then anytime you like.

sobie

dunstonh wrote: »

The suitability report (or reasons why report as it may have still been called then) would have been a requirement on an advised case. It gives a summary of the recommendation and reasons why (as well as reasons why not other things). It is not part of the factfind.



Are you sure? Unless you have bought new deals since then and part the whole of the mortgage into the new deal then you should be able to clear then anytime you like.

Just checked with Hubby and he said we have paid the fees .

Ah yes got the summary:

"after considoring the different methods of repaying the loan, they have decided this on an interest only basis. In addition it should be noted that Mr does have a mortgage currently which is set up on a repayment basis and this is protected by a CU mortgage protection plan. However it is accepted that this product will not be suitable for the new arrangement and it is therefore Mr intention to lapse the plan. He realises he will no longer be covered by the policy but also understands that he is not disadvantaged because it has no cash value."


"after considoring the different methods of repaying a mortgage, you have decided on an interest only loan of £44,650 over 25 years, and would like to be able to protect and repay this at the end of the term, or earlier on death. I am recommending the Homemaker because it is designed to build up a cash sum to enable you to pay off the mortgage at the end of its term or it will repay the loan should you die prematurely.


"whilst making this recommendation the alternative products available were considored, such as dual plan option, PEP mortgage, Full Endowments, Pension mortgages & Term Assurances, but these were not seen as being suitable. This was because of their higher risks or costs, and in the case of term assurances these do not have a facility to repay captial debt."


Important points to considor:
you should be aware that the returns from this plan will depend on investment performance and the amount you get back is not therefore guaranteed to repay your mortgage in full.

I agree that they have told us that the loan wasn't guarenteed to repay the mortgage, but I really do not see how this product was considored suitable for our needs, over the repayment mortgage we already had. There is no mention of repayment mortgages being discussed, other than the one we already had.
Cost of repayment v's endowment is not discussed nor was it an issue for us. I can't see anywhere mentioned that a repayment mortgage was even discussed. but Aviva said "you were already aware of Repayment Mortgages as Mr already had a repayment policy"

davenport151

Interestingly Sobie you are in a similar situation to us.
Endowment took out in 1995 - due to mature in 2020. Our payments are fixed yearly as we also like to know where we are.

Currently difference in mortgage/endowment is £19,000. Is the figure quoted (the £28,000) the current value? Ours is currently worth £19,000 so this still has room to grow (I hope). Projection value at present £34,600 (at 4%).. Unfortunately ours is unit linked so no bonus or promise.