Help! - Policy valuation disappears in puff of smoke as a backdated lapsed policy

RoughRook

I am attempting to sort out an issue that my father has with The Royal London Mutual Insurance Society Limited. A long winded story; please bear with me:

In 1987 he made the mistake of letting salesmen through his door, who persuaded him to invest for his future. At the same time he asked them if they were able to provide a future mortgage for him, as he was considering purchasing his council owned home. They led him to believe there would be no problem in providing such. He then signed up on that day for what he believes was an endowment policy, based on their advice, although he thinks it could possibly have been a personal pension plan (I know, very naive!).

A few months (about 7 months) later in 1987, he visited their office and asked them to arrange the mortgage they promised; but they said it would take 6 weeks to arrange. Very disappointed with their service and needing the mortgage much quicker, he went to his bank, who were able to provide the funds in a matter of days.

Very disappointed and disillusioned with the service that Royal London had provided, he discontinued payments into the policy that he held with them.

In 2001 (14 years later) he contacted Royal London,requesting a valuation on the ‘frozen’ policy. They replied with the following:

“we can assure you that your details are correct on our system and bonus certificates will be issued to you each year. The bonus statements detailing the bonuses awarded for the year 2000 will be issued inthe near future. However, I can confirm the current status of the plan. The current value is £464.68. Please note that this value is not guaranteed and subject to fluctuations”.

My father never received further documents from Royal London.

Now in 2012, and reaching his retirement age of 65, he ha stried sorting out his financial affairs. Included was contacting Royal London by phone, who told him that his policy was now worth a big fat ZERO. A recordof the letter sent in 2001 was said to not exist on their system. He complained, asking for an explanation.

Included in their written response to the complaint:

“our records show that that your policy lapsed in 1987 with last premium being paid in December 1987. Our records show that you made payments from June 1987. No further premiums were paid, and our records therefore show that the policy was lapsed with no further value in accordance with the policy terms and conditions”.

So, Royal London did not contact my father between December1987 and November 2001 telling him that his policy had lapsed. In November 2001they wrote in reply to his enquiry, informing him that his policy is worth £464.68.Now they tell him that the policy actually lapsed in 1987, according to their records. So what records were they using in 2001 to come up with a figure of £464.68?

I would be very grateful for any feedback on where my father stands in this dispute with Royal London after their reply to his complaint.

Thanks for reading.

Thrugelmir

What do the terms of the policy say with regards to discontinuation of payment of the premiums?

RoughRook

Thrugelmir wrote: »

What do the terms of the policy say with regards to discontinuation of payment of the premiums?

Thanks for the reply.

The original policy terms document has been lost. Royal London did not provide the terms with their response to the complaint. They just said that they did what they did according to their terms. But in 2001 they made no reference to such terms; they said then that a value existed against the policy.

Thrugelmir

Suggest you obtain a copy first, in order to see if you have grounds for a complaint.

holly_hobby

Firstly the policy was sold before regulation of the Financial Svc industry, which came into place on 29 April 1988 - so there are no grounds for compliant re the suitability.

Secondly, your father only paid 5 or 6 mths premiums maximum (June to Dec 1987) - therefore the policy would have lapsed without value (with generally no surrender value for those investment plans that were serviced for less than 36 mths). Your Dads policy terms will give you a definite period re the Firms min period, before it considers the plan to be lapsed without value.

Accordingly, I would suggest that their communication of 2001 was in error, did your father retain the letter citing a policy/surrender value ?

If so, it may be interesting to provide the Firm with a copy, and see what their response is.

H

RoughRook

holly_hobby wrote: »

Accordingly, I would suggest that their communication of 2001 was in error, did your father retain the letter citing a policy/surrender value ?

If so, it may be interesting to provide the Firm with a copy, and see what their response is.
H

Thanks for the reply.

Yes, he has the original letter recieved in 2001 with the valuation. Royal London said that their reply was final on the matter, but provided leaflet on taking the complaint to the Ombudsman.

holly_hobby

Ok ... did you actually provide them with a copy of it, and ask for their comments ?

The crux will be what the policy docs stated - did they send you a copy of the T&Cs as part of the defence ?

Has your father a copy of the original policy terms ?

Apart from general annoyance, has the "inaccurate" info re the policy affected your Father in any other way ?

H

RoughRook

holly_hobby wrote: »

Ok ... did you actually provide them with a copy of it, and ask for their comments ?

The crux will be what the policy docs stated - did they send you a copy of the T&Cs as part of the defence ?

Has your father a copy of the original policy terms ?

Apart from general annoyance, has the "inaccurate" info re the policy affected your Father in any other way ?

H

They said that they might ask for a copy of the 'valuation' letter from 2001 when the complaint was submitted via the phone; but they never did ask. They sent no copy of the T&C, just stated that they existed to do what they wanted to do i.e. lapse the policy.

Although only £464.68, he was misled by Royal London (via valuation letter in 2001) that he had that money available once he would require it i.e. upon retirement.

The 2001 letter has a reference similar to: abc/def/hi/STATEMENT
which led him to believe that was indeed a statement of his monies held with them.

holly_hobby

Ok, so you didnt' sent them a copy of the letter.

You need to provide a copy of the letter, which should make them re-visit their decision, as the correspondence was not considered as part of their original investigation (indedd they admit themselves they have no record of it), and is obviously evidence that could have a direct affect on their original decision - so they must review it.

So despite their "this is our final response", send them a letter (recorded delivery), enclosing a COPY of the 2001 valuation letter, asking them to review it.

Also detail how this inaccurate data, has financially affected your Father. concentrating on the fact that as a layman, it was completely reasonable for him to have accepted and relied upon the info provided by the Firm in the 2001 corres, as an accurate representation of the policy. Request their review of the original decison, based on the new and additonal evidence provided - and see where that takes you.

BUT, you should note that this does not take anything away from the fact that the policy t&cs, would(should) have discussed the process underpinning lapsed polices i.e if not serviced for x period, the policy would lapse WITHOUT value, as that could be a valid defence to the copy 2001 communication provided.

If I were reviewing this, and faced with the letter, I may elect to make a D&I payment, without admiting liability, and as a gesture of goodwill. As a case referall to FOS will cost the Firm a fee (depending if they have exceeded the free FOS watershed).

They Firm may however choose to maintain their defence. If thats the case (which may be their decison), come back with details of their defence and we'll take it from there ....

NB - I doubt FOS would overturn any rejection issued by the Firm, so IMHO any D&I offered in light of the hard evidence provided of their foul up, should on balance be accepted, however I'll comment more when there's a bit more meat on the bones.

Hope this helps

Holly

RoughRook

Thanks very much for your help and comments Holly.
Will certainly send them a copy of the letter they were made aware of but conveniently did not request. Will post again when there is a response from them on content of their 2001 statement letter.

Could you possibly elaborate a little on 'free FOS watershed'? Thanks.

holly_hobby

D&I = distress and inconvience, and is simply where the Firm will as a gesture of good (i.e without admission of liability), make a discrectionary payment to the complainant .... OR an additional payment to awarded compensation, where the manner in which the complaint has been dealt with, has caused distressed anguish to the individual (which is rarely proven !). It isn't huge, and varies between firms between say £50 - £150 (although in some rare instances it can exceed the higher sum).

The free watershed is in relation to how many cases may be referred to FOS without the Firm incurring a review fee, and nothing for you to worry about.

Holly