Standard Life Endowment - policy Sold Direct - miss sold?

mintyone

Hi,
I have two Standard Life policies that are due to mature in May 2013. They were sold directly to me by a former acquaintance, who worked for Standard Life, with no advice. He has now left the company.
With the Mortgage Promise in mind, what do you think my chances are of claiming that these policies were miss sold? And how best to approach it?

vectistim

Do you mean what you've written - they were sold direct with no advice?

opinions4u

If you chose not to take advice they cannot be mis-sold.

Only mis-bought.

holly_hobby

An acquitance "sold" the policy to you - or did he just pass you the forms, and you submitted the app under your own steam ?

OR did he submit the app as a employee under introducer status (which means no advice provided), received commission for it/gave you a kick back of the commission for it ?

Setting that aside for a moment, if the indvidual was not employed as a CR of the company, and just apparently a "friend" who was an employee, and their role in your arrangement was to merely facilitate the provision/submission of the application for UW/processing, either just in effect delivering by hand, or as an introducer - this in essence is an "execution only" sale (which basically means that no advice was sought or provided as part of purchase), with accordingly the Firm having no responsibility re the suitability of the product to your circs or requirements (as that was your role to ensure it was wholly appropriate).

Putting all that to one side - what makes you now think the policy was "mis-sold" ?

(NB - loss of expectation (ie poor performance) is not a justified reason of complaint for an investment product, which I suspect is the case. It so even if this were an advised sale, it would by probably now be timebarred following I am guessing prev red letter EMVs you have already recd over the last 10+ yrs).

Hope this helps

Holly

mintyone

Thanks for the replies, especially yours holly. Things are becoming clearer for me. To reply to opinions4u, I would think that a product being mis-sold and taking advice are two separate things. The product was advertised as a super performing (my words) endowment (I still have the advertising literature) and it was on that basis I took it out. The fact that my acquaintance worked for the company merely eased the process. He did not work in sales and referred me to another employee to complete the sale.
The fact remains that the product was designed to pay off my mortgage and will not do so. I believed it would and was not aware nor was it brought to my attention that there was an element of risk. Surely the Company has a duty of care to alert me to this and that is what the mis-selling is all about?
M

dunstonh

I would think that a product being mis-sold and taking advice are two separate things.

They are not. The whole endowment issue was not about the product. It was about the advice given. Providers didnt pay out compensation. Advisers and advising firms did.

The product was advertised as a super performing (my words) endowment (I still have the advertising literature) and it was on that basis I took it out.

Figure would have been based on past performance. It did used to perform very well. Which? (consumers association) used to recommend Std Life and anyone that followed their recommendation didnt get any consumer protection either as they bypassed the advice channel.

The fact remains that the product was designed to pay off my mortgage and will not do so.

It had an objective to pay the mortgage with the potential to exceed target but also fall short. Just as the risk warnings would have said on the documentation.

I believed it would and was not aware nor was it brought to my attention that there was an element of risk.

As you didnt seek advice, you bypassed the channel that would have given those warnings. However, the product literature would have given the warnings too. In particular the illustration of benefits. If you chose not to read the documentation then that is no-one elses fault.

Surely the Company has a duty of care to alert me to this and that is what the mis-selling is all about?

They had a duty of care and they did provide the documentation. However, they have no requirement or liability to check you understand it or that it is suitable for you. That is the job of the adviser or yourself.

When you buy financial products you either do it under advice or DIY (such as direct offer mailshot or direct to provider application). Advice gives you greater consumer protection as you can complain if the advice is wrong. DIY gives you less protection as you have no-one to complain to if you buy the wrong product. That is the point of DIY.

Finally, most endowments are timebarred from complaint anyway. Std Life have been very active in timebarring and most of theirs were timebarred by 2008/9.

holly_hobby

Hi Minty ...

Glad to have of been some help .....

Unfortunately the Firm, as Duns. correctly states, on an execution only sale, have no responsibility to offer further advice on the suitablility or risk profile of the product, as you directly purchased the product.

They would have clearly published the associated risks of the contract, which would have been documented within the product brochure/booklet, marketing literature (and illustrations which I assume you ensured you obtained from your friend as part of your making your decision making process)

You have however nailed it in this statement ....

mintyone wrote: »

The fact remains that the product was designed to pay off my mortgage and will not do so.
M

That means it aims to ... but doesn't guarantee to.... there is a subtle but very important difference ....

Unfortunately, there are several reasons why there is no merit of complaint, or indeed wasting resources in referring it to the Finanial Ombudsman Service (FOS).

1. Execution only sale - which as I say, simply means that the Life assured (you) neither sought, nor recieved advice, as part of the purchase/decision making process.

2. Even so, and if this WERE an advised sale, you can not be compensated for loss of expectation ... i.e the policy hasn't performed as per estimated growth rates (an estimate is of course an approximation and not a gte of sum).

3. And then the time bar aspect would come into play, IF this were an advised sale, and you complained the contract was not suitable to your risk profile (which is a completely different thing to not being happy there will be a shortfall to target) - but this does not appear to be your main issue.

4. It appears that your main issue appears to be the misleading marketing of the poilcy, which influenced you to pch the policy ...

i.e - you say it was advertised as a "super performing" policy, but the reality some yrs down the line (and you must remember a couple of catastrophic fallouts in the market), is somewhat different.

If this the case, then any complaint would be brought under the Mis-representation Act 1967 - and to prove it you would have to demonstrate that NO WHERE in the product literature or illustrations, (if you did obtain such before you passed your completed proposal to the Friend), did it mention that "past performance was not a guide to future returns", that returns were not guaranteed, or any other associated risk warnings .... and this is VERY doubtful.

If you were not aware of the associated risks at Point of Sale/purchase, simply because you didn't seek to obtain a policy booklet/brochure and illustrations pre-purchase, then that would be cited by the Firm as simply poor execution and negligence on your part.

So you can see why there is absolutely no benefit to pursuing this matter, with Std Life - which I know may disappoint, but the facts are the facts I'm afraid.

Much more productive to put your energies into dealing with the estimated shortfall to target.

So, if you still have an interest only mortgage supported by this policy as a repayment vehicle, you need to urgently start making arrangements to deal with any sfall issues that may arise. They best way to deal with it, is to switch to capital and interest, a sum at least equal to the predicted shortfall (more if you can afford it). Of course the shortfall may be greater than that predicted which is why I say switch as much as you can afford, OR it could be less (as its only estimated at the moment, using industry (FSA) prescribed growth rates ) ... in that case you'll have a sum left over from its maturity value - which may go a little way to offset the increased monthly costings that arose from the partial switch to C&I.

You could of course remove the uncertainity completely and switch the whole mge to C&I.

Your lender will of course assist in guidance on this matter - so have a chat with them and explore your options.

Hope this helps (sorry for lengthy post but hope it top and tails everything for you)

Holly x

dunstonh

on the upside, most endowment mortgages were cheaper than repayment morgtages. An average £20pm saving over 25 years equates to £6000. Plus, £20pm was more important 25 years ago than today. So, in the scheme of things, if you dont have a massive shortfall then you well still be better off.

Don't forget the mortgage endowment promise value either. That is added to the endowment on maturity if it falls short and is not included in the projection figures. So, things may not be as bad as you think.

mintyone

Hi all,
Thank you very much for your replies. This is the first time I have used a forum to seek help and I am amazed at the response and helpfullness. I think I have all I need now I won't waste time on a claim. Yes, there will be a shorfall but that maybe not as bad due to the mortgage promise top up and also the fact that I would have shelled out more on C&I over the same period. And also as said the issue might be time barred. I had thought there might have been something in the fact it was sold directly to me but now realise, well, the above!
My intention is to review my finances when the endowments mature next year and one option is to put them into paying off part of the current mortgage and turning the remainder into C&I. There may be enough to buy another flat to do up and rent out but that is another issue....
Many thanks again.
Murray

holly_hobby

mintyone wrote: »

My intention is to review my finances when the endowments mature next year and one option is to put them into paying off part of the current mortgage and turning the remainder into C&I.

Couldn't agree more Minty ....

Wish you well ... with fingers & toes crossed for your policy maturity next yr to be better than expected ....:j

Holly x