Endowment update: payouts still falling

MortgageMamma

Yes, excellent point. Not that I would ever sell and investment product, and I can't bring much to this debate because I'm too young to have sold endowments, but it would be nice to hear from the oh so badly done to what they think SHOULD have happened....

mayb_2

I cannot be bothered to reply to the posts of Mrhelpfull and toonfish as Vino65 covered it very well and so have I in past posts on this site.

originally posted by absolutebounder

"All this happened in the past so we cant do anything about it but Im sure the advisers would welcome sensible comment as to how they can cover their backsides in an ethical and agreeable way for the future."

Did you not read the posts? - what you do is you get a signature - butt nicely covered aparently!

I, like Vinno and many others, paid a heavy price for our ignorance. The product I bought was fraudulently misrepresented. This was probably partly born of ignorance on behalf of the salesperson and if some of the posts here are anything to go by an increase in the qualifications to be a mortgage adviser could be one of the first things on the to do list.

With my With Profits missale I did not see the fact find and certainly didn't sign it and dunstonh has already said this is still not a legal requirement on the salesperson to ensure that both of these things happen. So we could add that to the list of things to do. The company involved failed to produce to either us or the Ombudsman any literature pertaining to the product we had bought or any signed contract between us and the company. In fact they had not one shred of evidence that we had been properly sold this policy. So something to address that would have been good. Copies of the details - copies of a signed contract - pretty basic really.

I think you will find that many of the things mentioned have already been addressed by the FSA. The problem that exists now is that the posters here and currently the Ombudsman refuse to believe that anything like these types of sales techniques ever existed. I absolve dunstonh from this last comment. These sales people did not arrive at our house armed with a lapto, printer and mobile phone - these things did not exist and details were hand written in their own notepads - so no copies passed to you at the time - and you may receive a policy document later typed on a manual typewriter.

I think a system like the Industrial Tribunal where cases can be heard without cost to the claimant could be useful. It would avoid the vagaries and partisan aproach of the Ombudsman who does not have to look at all of the evidence and also does not have to act as a court of law would.

How about some of this - Make sure you have some real and relevant qualifications before claiming to be a Mortgage Adviser. Make sure you understand the products you are selling. Make sure that you sell the best product for the customer not the one giving the most commission/fee or the one your company wants to sell more of. Make sure you fully explain the product and ensure that the customer fully understands all of the implications of the purchase. Make sure that nothing is signed on the first visit and that the customer is given full written details and all available literature explaining the product. Make sure that the customer is given a written explanation of why this particular product is being recommended by you. Make arrangements for the customer to take this away and study it and come back to you for another appointment to discuss it and answer any questions the cusomer might have. Ensure you have fully discussed the customers income and expenditures and the affordability of the product. Ensure that the customer is aware of any clauses pertaining to the product - charges, fees, stamp duty or whatever.

That could do for starters.

As to the other point raised - this thread is discussing something that was initiated in the past and that continues to fail those who have these policies - so continuing to have an effect now and into the future- this leads to discussions of what is being done about it. It is likely that this will continue to be part of the discussion as some of us feel that there should be something done about it. If you cannot understand that then perhaps you should try another thread?

defender_of_the_weak

So lets see, how do we stop this happening again

Know your client

Give best advice

Document all of their circumstances

Provide a report, detailing the reasons for recommendations and those areas of need or risk that have not been covered

Get client to sign the report

Keep records

To put it very simply, meet the requirements of the Financail Services Act introduced 19 years ago

Mr_helpful

defender_of_the_weak wrote: »

So lets see, how do we stop this happening again

Know your client

Give best advice

Document all of their circumstances

Provide a report, detailing the reasons for recommendations and those areas of need or risk that have not been covered

Get client to sign the report

Keep records

To put it very simply, meet the requirements of the Financail Services Act introduced 19 years ago

Strangely enough I agree with this but others in this thread will have issues with the signing bit and it still doesnt cover the argument of I just signed without reading it because i didnt understand what I was signing for.
You may have answered why some of us have no complaints upheld against us but Mayb just says rather pathetically we were just covering our backsides. Its blatantly obvious just from reading these threads that some people never even get past the first page of anything they are given and I dont really know how you deal with this other than to simplify the products and quotes. I did when I was an IFA like the key facts document as it put the salient points on the front page and I kept a copy of all key facts documents issued in the file.
As for record keeping I think the FSA slips up here certainly for mortgages as the time set for keeping records is in my opinion too short for todays compensation culture and this maybe why some firms have no records to defend themselves with.
A tribunal might be nice but its expensive especially for the majority of amounts involved so in my opinion cost should be paid by the loser as this might weed out the not so genuine claims but it may bring in the professional claims chasers.
So far I dont think problem is solved. How do we, as advisers beat the selective memory if we cant use the customers signature as evidence the client understood things and was not miss sold?
Mayb says she paid a high price for ignorance and 100% blames the salesman but surely should take some responsibility herself. I cant remember ever 100% reading one of my mortgage offers which I have signed but I would never complain either as I accept responsibilty for my actions.
The problem of miss sales is very real but both for clients and advisers and rather than slinging mud at each other I think its better to work out how we stop the past repeating itself as it will soon over some other products.

mayb_2

Mayb says she paid a high price for ignorance and 100% blames the salesman but surely should take some responsibility herself. I cant remember ever 100% reading one of my mortgage offers which I have signed but I would never complain either as I accept responsibility for my actions.

You obviously make a habit of not reading 100% of anything Mrhelpful or you would have noticed that I said I did not get anything to read and I didn't sign anything.

Where did my responsibility start and end I wonder. I got advice from a financial adviser who knew my circumstances and I took it. So really the responsible person would never go near one of these is that it? I paid a high price for not being able to work out how the stock market worked and how it related to my purchase - I am to blame for that too? So I am to take some of the blame for a fraudulent presentation of a product to me - Is that it?

I suppose you believe that the victim should take the blame if they have been mugged as well? Because frankly I can't see the difference. There is obviously legal mugging and illegal mugging. I do not believe that I am the only person out here that this has happened to either. It is not possible to get a conviction on a mugger without a witness however. Confidence trixters now there is another area with double standards it would appear. One could receive a prison sentance - the other is ok as long as the signature is there. I will remind you again as I expect you have forgotten - I did not sign anything - but I am aware others have, without knowing what they were signing- which is why I say nobody should sign a document at the first visit - they should be advised to take it away and look at it first. Is that what you do Mrhelpfull - before you ask your clients to sign that bit of paper?

I cant remember ever 100% reading one of my mortgage offers which I have signed but I would never complain either as I accept responsibilty for my actions.

Except when your lack of professionalism could affect someone else it would appear. You buy mortgages without reading the paperwork yourself - how on earth can you be a responsible Mortgage Adviser to anyone else?

Follow defenderoftheweaks advice and you would not go far wrong. The point being made is the signature is not the important thing - the ensuring of the full picture being given to the client and their understanding is before getting the signature is. The next time someone comes in to an adviser and a half hour later they have signed up to a mortgage - then you know for sure they have just missold it.

Mr_helpful

1) its on my head whether I read my own mortgage offers from start to finish but as I see so many that I read or clients I find there arnt too many shocks on my own. If I did miss something I could always blame my solicitor as she goes through the mortgage offer. However it wouldnt happen.

2)"The next time someone comes in to an adviser and a half hour later they have signed up to a mortgage - then you know for sure they have just missold it." Depends on client experience but I would agree as I have often been told off for two hour interviews with clients but you might be surprised to know the FSA recommends two appointment sales of mortgages. However it doesnt mean a client bothers to read anything in between. Some do some dont.
I have been following FSA advice for many years but there is a problem. You cannot talk about everything a client might or might not need to know in a couple of hours because human attention span tends to be around 40 mins max this is why school lessons tend to be about that in length. This could be where selective memory comes in. The people selling endowments would not have known what would happen in the future so I dont see they wilfully mis sold things The problem with endowments is that you have to realy ask what the alternative was which of course was the repayment mortgage. Why was that so unpopular? was it the fact that after one fifth of the term of the mortgage you had only paid one twentieth of the capital off or was it that the monthly payments worked out higher. The majority of mortgages these days are repayment but just as many people are in a mess now so are they the best thing since sliced bread. Over the years things have got better as far as sales process goes but the problem still arises when one human says something didnt happen and another says it did if you are not going to accept that a signature accepts understanding.

dunstonh

We are stuck between a rock and a hard place at the moment.

TCF guidelines say we shouldnt put all the risk warnings on the suitability report if the appear in the illustration and key features documents. Just the most important ones. Yet in the event of a complaint, the FOS disregard the illustration and key features document which contain the warnings.

The FSA want suitability reports to be about the recommendation but the industry has turned them into reason why not reports. The FSA want to push us back to being about the recommendation and remove a lot of the extra information. However, compliance departments know full well that would leave us open to complaints again in the future.

mayb_2

Two hours is not enough - the FSA is right in saying two visits and may be each of those should be two hours if that is what it takes. I am sure many will not bother reading the paperwork but they could not later claim that they had not had the oportunity to do so - it needs to be explained as well. The paperwork also needs to be in clearly understandable language - understandable to someone who has never bought something like this before.

If your first contract you ever get involved in is committing you to 25 years of payments on a loan of £180,000 - you need to be given the opportunity to understand all of the implications of the committment you are undertaking - and this is not taught in school even if 40 minute lesson periods.

A signature does not mean understanding - in the past people who could not read signed with a thumbprint - they hadn't read it but they had signed it!

You do not need any qualifications to get yourself a mortgage or any other financial commitment. The onus is on the person claiming to be an advisor to advise - a professional adviser should be happy to feel that they can be trusted to make an ethical sale. The endowments sold earned lucrative commission for the salesman and so were pushed at the detriment of repayment mortgages - like Vinno 65 said you were told you would be an idiot not to go for it. The FSA will tell you that the sales of these increased after it was realised that many of them did not have a hope of meeting their targets - low cost endowments for instance. These are facts and they can be checked out. Not all endowments were atached to a mortgage either.

What about the sales without documentation or signature - the only thing I signed for my WP policy was the direct debit instruction to my bank- a Fact Find that said no illustrations were given to the client? All perfectly 'legal' according to dunstonh - not a regulatory requirement to give illustrations and yet we were supposed to have known what we had purchased. Is it right that firms should be allowed to get away with this - does this work for any other contract you can think of between salesman and customer?

EdInvestor

As for record keeping I think the FSA slips up here certainly for mortgages as the time set for keeping records is in my opinion too short for todays compensation culture and this maybe why some firms have no records to defend themselves with.

But surely the FSA is only seetting a minimum time?It's not forcing you to destroy records.If you think you should keep them for longer, what's stopping you from doing so?

Mr_helpful

EdInvestor wrote: »

But surely the FSA is only seetting a minimum time?It's not forcing you to destroy records.If you think you should keep them for longer, what's stopping you from doing so?

Not much in our case we are only a small firm but over the years the storage space needs get to be a problem and claims are going back 20 yrs and more in some cases. I believe safe storage problems was the reason Halifax stopped asigning policies. Does one really expect compensation culture to rear its ugly head so long after a sale. I dont think too much of the public will realise advisers like Dunston H are probably going to be paying for PI run off cover for the rest of his life in case of a claim.