Endwoment Policy Charges

Mac001

Hello,

I was sold an endowment policy connected with my mortage back in 1991 for my first house. I took out this product with Nationwide. The House purchase price was $49,000 (pounds), and I think I invested around $4000 to set up the endowment policy.

However when I came to sell the house in 1995, the endowment policy had shrunk to the value of $900, and the explanation I got from Nationwide was "ah well, this is due to the setting up fee".

I remember being under pressure from the sales woman who said that an endowment Policy was the best option for me, but clearly it wasn't as I lost a considerable amount of money and I wasn't given other mortgage options at the time. I later found out that the sales woman got $1000 from the transaction of my mortage and it has bugged me ever since. I also remember her attitude to me as being one of "sign it and get out of the office so I can get another mortgage sold".

Do I have any case for complaint since the product was purchased back in 1991?

Any comments would be appreciated,

Thanks
Mac001

dunstonh

The House purchase price was $49,000 (pounds), and I think I invested around $4000 to set up the endowment policy.

Endowments for mortgages were a monthly premium. You would not have paid £4000 into a monthly premium plan. Is it possible that the £4000 was a MIG due to high loan to valuation?

However when I came to sell the house in 1995, the endowment policy had shrunk to the value of $900, and the explanation I got from Nationwide was "ah well, this is due to the setting up fee".

endowments were front loaded with the charges taken in the early years. Early surrenders frequently paid out less than you paid in premiums. However, there were plenty of risk warnings that it was the case and it was general consumer knowledge at the time as well.

I later found out that the sales woman got $1000 from the transaction of my mortage and it has bugged me ever since.

It is highly unlikely she got £1000 as Nationwide staff didnt keep the commission. They were paid on bonuses. The illustration had to show a comparative cost of advice figure but the commission went to Nationwide.

Do I have any case for complaint since the product was purchased back in 1991?

none whatsoever. You can be timebarred under the FSA 3 year/6 year rule. You have 6 years from the date of the transaction or 3 years from being reasonably aware of an issue to make a complaint. 6 years from 1991 is 1997 and 3 years from surrender is 1998. So, you had to make a complaint by 1998. There is also the issue that data protection requires firms to destroy records they no longer require and the FSA recommend 6 years. So, there is also the probability that little or no records are held on a case that ceased to be required to held in 2001.

in all probability you are no worse off anyway. On a repayment mortgage you would have paid little off in 4 years and endowment mortgages were typically cheaper. On an amount of £49k in the early 90s you would have been around £20pm better off than repayment mortgage. Plus you had MIRAS for a period which always helped endowments until it was abolished in 2000. Ironically, endowments didnt start falling short until around 2000 onwards.

Time to put his to bed and stop worrying about things that occurred over 20 years ago.