Endowment Policy For Savings

kt

10 years ago I advised my son that he should start saving some money. We at the time were in contact with a FSA over transferring our mortgage and we asked him to discuss options with our son. It was suggested that he took out an endowment policy over 10 years at £40 per month. Sum Assured was arount £3900.
This policy is now about to mature and he has had his final maturity figure which he was horrified to find is less than the amount that he has paid in. Does he have any comeback on this? - it was suggested that he could make up to £10k. I feel awful as I suggested that he started to save and he has come away with a really bad experience.
Would appreciate any comments - is it worth pursuing it with the Insurance Company or FSO, or do we put it behind us as a really bad experience.

lisyloo

You cannot make a complaint on the grounds of performance.
You knew (or at least you should have known) that the money was being invested and that this was something on a gamble.
You can't now complain that your gamble didn't pay off.

However you can complain if you think you son was mis-sold.
i.e. the product was totally unsuitable for his needs or the risks weren't properly explained.

It's possible that the company didn't keep proper records (not uncommon 10 years ago) and in that case they might find it hard to defend themselves.

So you could try a mis-selling complaint on the basis that you think you were mis-sold.
I recommend further research on the mortgages board and other websites, so that you can put together a decent complaint.

It doesn't cost you anything to complain but the better researched your letter the more likely you are to succeed.

It could take many months and the advisors will try to fob you off and play on your guilt at every stage, so don't be put off by what they throw at you.

Most endowments contain an element of life assurance and I'm not sure that a product with life assurance was suitable for your son.
If that's the case then taht's another point that you can make in your argument.

dunstonh

These types of plans were the main long term "savings" vehicle for decades. Typically sold by the insurance agents of the home service insurance companies. Most of the time they paid out large surpluses. However, due to a number of events, they became obsolete from around 1999 when ISAs were introduced. Some firms had already ceased them earlier than that and offered regular contribution PEPs.

At the point of starting this one (1997) ISAs did not exist and one assumes you saw a tied agent. Chances are this was the only "savings" plan they offered and their authorisation is to offer the best product from their product range. Not the best product on the market. So, in that case, there is no grounds for complaint. Just as there isnt because it didnt make as much as you thought it would.

For reference, your initials are all mixed up.
FSA = Financial Services Authority. Thats the regulator. They do not sell any products.
FSO is a motor company. FOS is the Financial ombudsman service. You cannot complain direct to them. You have to excercise the complaints proceedure of the advising firm first.

A 1997 plan is likely to have better documentation than say a 1990 case and its certainly less likely to be mislaid. The tied agents are pretty good at defending these. Mainly as they were generally the only long terms savings product at that time. The life assurance content is not really important as it really exists as part of the conventional with profits structure and not for life assurance needs.

If you felt you were mis-sold, you can of course complain. If it was sold by an IFA then you would stand a good chance of winning as an IFA would have done a regular contribution PEP as best advice. If it was sold by a tied agent, then they probably didnt have that available so they didnt really sell the wrong product. They sold the best that they could offer which is all they are required to do. So its unlikely to be upheld.

Risk could be one approach. However, with profits was considered cautious in the 90s (medium risk now) and the FOS will treat the complaint using 97 rules and not 2007 rules. You would have to say you were zero risk and not many people are zero risk. Most would fall under cautious.