Endowment update: payouts still falling

Mr_helpful

EdInvestor wrote: »

You mean the Germans? Call them clued up? :rotfl:

They don't even have a decent property market.

They think a 6% return is whizz hot.

Their property market might well have been better if we had not hit them with reparation taxes and bombed their cities flat.

mayb_2

Thank you for the explanation MrHelpful, I am already aware of the way a mortgage endowment works - now that is - and I bought mine in 1992 as did many others - no key features document I can assure you. In fact the wording on the document we did receive helped us to prove misselling as it promised to at least pay off the mortgage and talked about an unspecified lump sum too.

The endowment policies talked about on this thread mainly refer to With Profits policies and possibly pension endowments rather than specifically mortgage endowments.

The FSA came into being because of the problems with the Finance Industry and the inadequacy of the regulatory system in place at the time. It is naive to believe that a system of regulations and advice for the selling of financial products, and indeed for claiming for misselling of endowments would have been implemented by the FSA and the FOS , if no need was shown to exist. In other words the depth and breadth of the misselling left no option but for the goverment to address the problem with stringent measures. I am sure it would be convenient to believe that this was not the case. I would also state that if you have not been completely coherent in the sale, and made sure to ensure that the customer fully understands and complies with it you are guilty of a missale - whatever the financial product. The customer has come to you for advice on a product they don't normally deal with and do not necessarily understand but do need to acquire - a mortgage, a pension, a savings vehicle of some kind - whatever it is this is your expertise and not theirs.

It is also true that the FSA has spent many years looking into the problems and solutions for the With Profits situation too. There are many examples where the FSA can be quoted as referring to the complexity of this business and it has experienced great difficulties in overseeing a fair system of presenting these in an understandable way. It would appear that they are still working on it, which makes it a shame really that probably no one is selling them anymore anyway and it is too little too late in that respect.

However, you need not panic too much about misselling of With Profits etc - as only the guaranteed amount, if you have one, is guaranteed and neither the FSA nor the Ombudsman have the balls (if you'll forgive the expression) to start the ball rolling on the miss selling of these. Not yet anyway.

toonfish

mayb wrote: »

However, you need not panic too much about misselling of With Profits etc - as only the guaranteed amount, if you have one, is guaranteed and neither the FSA nor the Ombudsman have the balls (if you'll forgive the expression) to start the ball rolling on the miss selling of these. Not yet anyway.

surely the "guaranteed amount" is what you would expect to be guaranteed?

Mr_helpful

Maybe
Can you explain why the number of complaints was so limited before the end of the 90s. Surely the people who bought their policys in the 70's and 80's had just as much chance of being mis sold. In fact it was more likely as training was not as good as it is today.
The FSA and government (both tory and Labour) has passed the buck on these problems. Do you not realise that the FSA knew all about with profits well before they used complexity as an excuse. The fsa or its past equivalents have controlled almost every aspect of sales and training in the industry for years. It may be a coincidence but the only company which didnt want to sign up to FSA rule was the one thats never missed a target ie the Prudential.
Complexity is not a ground for complaint. Do you understand the ins and outs of your car? Most likely not yet you drive it around with little knowledge of how it really works. Even if you did understand an endowment would it make any difference, What would your alternative be? Do you really understand Isas unit trusts oics investment trusts etc.
If you had in writing a brochure promising one thing and it didnt make it yes I agree a mis sale but in reality they are few and far between. If the endowments were not off target how many complaints would there be?
The FSA did not come in to be specifically to deal with problems It came about as a simplification of regulators already in existence and was political.
How on earth cany you complain about the Guaranteed Sum assured as regards mis selling. The government wrote the rulse about that and the insurers had to comply if the policy was to be qualifying.

mayb_2

toonfish - are you being a little disingenuous do you think? - as I am sure you are aware the guaranteed amount was in most people's eyes the amount that would be paid if you died before the end of the term on a with profits policy. It is unlikely that many people - would have bought a policy only expecting the guaranteed amount to be paid on it - as this was less than the premium you would have paid by completion. So you would be paying it in the sure and certain knowledge of making a loss. Slightly different scenario on endowment mortgages but by default the least amount you would have been told you would receive was the amount of your mortgage. Many were promised more. In some people's eyes - because they didn't know any better - the amount 'promised' was the amount they 'knew' they would get. Trust you see - such a shame to see it so abused. There is the term used by the FSA about 'reasonable expectations' which should cover that. It is after all fairly reasonable to most people to expect that which you were promised.

Mr Helpful I think you may be a little guilty also - Endowment Policies sold before 1988 (I believe it was) are not covered by FSA regulations and not sent to the Ombudsman for that reason. The misselling of endowment mortgages reached a peak in the early 90's when it had already become obvious that they would not reach their projected targets and this is also documented by the FSA. I leave you to your own conclusions as to why that happened.
The consumers didn't know they were failing so were not likely to make a complaint before it happened - so yes I can explain why they didn't complain before then. Many others didn't find out until their red letters came through the door. That only happened following the intervention of the FSA.

I hold no candles for any of the governments the FSA or the Ombudsman but surely you are not suggesting they are making up the concept of misselling on this scale. What on earth would be the point of that? One of the first remits of the FSA is to protect the Financial Services Industry from loss of public confidence after all.

'Complexity is not grounds for complaint' - what on earth are you talking about? Complexity only became an issue when these things failed and it was realised that those who had bought them didn't know that could happen. Promises had been made based on the premis that they never failed. They never had. Complexity is grounds for going to an expert to explain it to you perhaps and then trusting their advice. If I bought a new car and it let me down I would take it back and expect something to be done about it - I don't need to understand what is wrong with it. Not an option with my mortgage.

What would an alternative be to an endowment mortgage? A repayment mortgage what else!
I understand savings accounts, cash ISAS and Premium Bonds. I even understand buying and selling property, buy to lets and guaranteed bonds. I now understand the value of putting your money under the matress - so much safer there than in the hands of a dodgy finance company!

pjala

toonfish wrote: »

lure them to sell their "shoddy" policies, then sell them on at a premium to more clued up investors!

I am an "investor" that wants to ensure he gets a good return for an endowment policy, either by cashing it in or keeping it. I aim to keep paying the £60 per month, to get a cash sum at the end, at the moment into a stocks and share ISA fund - but can be convinced otherwise.

You are implying I would be stupid to cash it in, which may be the case, but could you please enlighten me as to what the clued up investors know about endowments that the rest of us simpletons do not.

I am genuinely confused at the moment - are endowments all of a sudden a good investment?
Thanks.

pjala

We were promised that it would at least pay off the mortgage, and the guaranteed amount was purely a starting figure. In fact the broker tried to get me to buy one with a lesser guaranteed amount, to which I said why and he answered that just because it was a larger amount it did not make it a better policy.
I asked for clarification, saying that surely it would be better if the starting amount was higher, to which he just shrugged his shoulders. I got the distinct impression that it really was not worth his while to argue the matter anymore - so much for helpful advice!

defender_of_the_weak

Yes and churning is one of the few genuine miss sells however I didnt and have never had a claim upheld against me plus it doesnt get away from the fact that all your beloved newspapers whose financial columns you believe as if gospel were saying Pearls with profits were the best thing since sliced bread. And that included the authoritive money management as edinvestor calls it. Why are you not going after the Mail, express, telegraph, times, sun etc for bad advice?

I dont think you will find I have ever quoted anything from the papers as gospel. Also your comment 'few genuine mis-sells' sort of sells the Pearl salesforce short. From the period in question over 20% of all supposed new business, thats far from a few.


Did anyone? did anyone know the stockmarket would halve its value? Did the manufacturers of chelsea tractors know Gordon Brown was going to tax them at £400. That is not grounds to say something was miss sold

The advisers never explained exactly how with profits works, and include such things as 'if the management screw something up you pay for it'

True but then a gcse or two will get you started in the majority of jobs.

Unfortunately it is not a question of getting started. FP3 or equivalent is considered competent and an adviser need do no more than attend a few seminars to maintain this status

worse that that, there are companies making a "living" out of these frivolous, unsubstantiated claims. They are the real parasites.

So why are so many cases upheld? I win 94% of cases across the board covering all forms of financial advice and distribution channels. The original advice was in many cases inappropriate or incorect and without good foundation, not frivoluos and unsubstantiated

Mr_helpful

The advisers never explained exactly how with profits works, and include such things as 'if the management screw something up you pay for it'
Did the government explain the ERM and that you would pay for it if they screwed up? because we did pay for it.
Does the average person understand the complexities of their bank?
Do you explain what happens if you screw up and how to get compensation from yourself?

So why are so many cases upheld? I win 94% of cases across the board covering all forms of financial advice and distribution channels. The original advice was in many cases inappropriate or incorect and without good foundation, not frivoluos and unsubstantiated

You could ask your self how michael Jackson got off. Whether you are successful is largely down to lack of evidence. Yes I have had claims against me but all have failed due to the selective memory of clients basically fogetting I got them to sign that they were happy things had been discussed properly and also signing to say that they had received brochures Key features etc. Mine even signed to say they had opted for the endowment because it was cheaper on the monthly premium which in my experience was the main reason for people choosing it. How many times did people say something to the effect of never mind about how it alll works which is cheapest. Lots of advisers trusted clients and didnt do this so Compensation culture exploits this with selective memory. On one thread on this forum is a person who cant even remember if they met the adviser yet knows they were mis sold.
Your 6% failure rate might just be my customers.
As for qualifications in the industry who is to blame for that? Who sets the standards?

vinno65

dunstonh wrote: »

Harold shipman killed his patients. You better not get ill as you obviously wont trust doctors either.

one doctor out of thousands, misselling illegal charges in the financial services industry, rife!

Have you seen the film "thank you for not smoking" Dunston, you could have been its star!

Regards Vinno