Endowment Complaint Form

FredTheFifth

Hi All,

I am dutifully completing the forms that my two endowment providers have sent and they are asking questions about my other endowment polices and the current value of the mortgage etc. 100% of my mortgage is linked to endowment policies but because we moved into a cheaper house a while ago the total of all my polices is greater than my current mortgage. Thus I have some built in contingency.

My question is whether the endowment company is allowed to take this contingency into account when compensating me for the miss sold endowment policy?

Regards.
FTF.

turbobob

Yes they are.

dunstonh

the reason is that had you been on repayment mortgage, the changes would have occured to that as well. So, they have to calculate and compare like for like.

FredTheFifth

Ok, I do accept what you guys are saying but, it is implicit that I was advised that the return would reach a certain value, and it has not.

Surely that has to be the main point regardless of whether I have reduced the impact? What’s their argument?

Regards.
FTF

dunstonh

Ok, I do accept what you guys are saying but, it is implicit that I was advised that the return would reach a certain value, and it has not.

Nowhere in the documentation does it say that.

Surely that has to be the main point regardless of whether I have reduced the impact? What’s their argument?

Was your complaint saying that you had a guaranteed minimum maturity or that you should have been on a repayment mortgage?

If you complained that you were told that there should have been a guaranteed minimum maturity value (which is what your posts suggest) then its probable that your complaint will be rejected as it wont say that anywhere on the files or literature.

If you complained that you should have had a repayment mortgage and the complaint is upheld then they will base the redress on you having a repayment mortgage.

FredTheFifth

My complaint is that between 15 and 23 years ago, when I took out my endowment polices I was not advised that there was a risk that they would not reach the sum required to pay off the mortgage that they had been taken out to cover. All the growth predictions showed the sum being achieved.

Regards.
FTF.

dunstonh

Projection rates were set by the regulator. The advising company has no control over those. However, there have been warnings on those projections for around 20 years now that say that you could get back less.

At the end of the day, you are basically saying that you wouldnt have proceeded with the endowment had you known the risk. Therefore you would have gone with a repayment mortgage. So, that is what they are comparing it against.

FredTheFifth

I see what you mean - I hadn’t quite understood the comparison with a standard mortgage till you put it like that. I'm still hopeful because a repayment mortgage would have been cheaper. As I recall I paid a slightly higher interest rate on the mortgage and the premium on the endowment made the endowment option a fair bit more expensive. But it was the nest egg at the end that made it attractive.
Thanks for the advice.
FTF.

dunstonh

I'm still hopeful because a repayment mortgage would have been cheaper

That would be unusual. Most endowments were cheaper than repayment mortgages and was actually one of the most common reasons for people doing them. Particulary in the days of MIRAS. The interest rate shouldnt have been affected by the repayment method. However, back in those days there were specific deals in place for certain repayment methods.

Another positive point is possibly that the questions about the repayments into the mortgage would only be required if the complaint is going to be upheld (or unproven with redress payable). Keep us informed.

FredTheFifth

Dunstonh, yunno I start to doubt myself sometimes and this was a long time ago, but what makes me sure that the endowment mortgage was more expensive is that to me it seemed logical that the slight increase resulted in a return at the end. By the way when I say more expensive I mean that the endowment payment plus the interest payment was greater than the equivalent repayment mortgage. I have to admit that the recollection that the mortgage interest was slightly more is a very faint recollection!!
Thanks again for the response.
FTF.