Pru admit mis-sell but ....

beefster

After reading advice on MSE and sending just two letters the Pru have admitted mis selling me an endowment product. Thanks to all those members who helped along the way.
The problem I know have is that their offer of £550 compensation does not compare with the £6000 estimated shortfall (at 6%). They say that is the differance between what I would have paid had I been on a repayment mortgage instead of the endowment based product they sold me. I am going to turn down their offer but would like some advice from any of you who have had any similar experiences or can point me to any help / advice.

Thanks

gobananas5

The amount of redress is calculated on a financial position today, not at maturity. Before you turn down their offer and spend a year taking it through the Ombudsman can you tell me the figures involved and I might be able to give you an idea as to whether it is in the right sort of area

EdInvestor

It's a common misunderstanding that compensation for misselling will cover the shortfall.Normally it won't - it's only designed to put you in the same position as if you had taken out a repayment mortgage.

Dealing with the shortfall might involve options such as

#Remortgaging to repayment at lowest interest rate possible
#Repaying chunks of capital on existing I/O mortgage
#Surrendering endowment and using proceeds of it plus monthly premiums to reduce mortgage (but this may not be the best thing to do,some endowments are worth keeping: and don't forget you may need to replace the life assurance)
#Starting a new savings plan in addition to endowment to top it up

dunstonh

The cost of the endowment mortgage would most likely have been cheaper each month than the repayment mortgage (when you include endowment/life policies) for much of the mortgage term. In addition, the repayment mortgage outstanding balance is quite slow reducing in the early years. The surrender value of the endowment can cover much of that and in some cases more than that. In your case, they have found that £550 is the amount needed to put you in the same position.

beefster

gobananas5 wrote:

The amount of redress is calculated on a financial position today, not at maturity. Before you turn down their offer and spend a year taking it through the Ombudsman can you tell me the figures involved and I might be able to give you an idea as to whether it is in the right sort of area

Thanks, what info is relevant / do you require.

beefster

Bumping this back to the top on the hope of a reply ftom gobananas5. any further info from anyone else would also be most welcome..... sorry to be so blatant!

Compensationitis

The Pru are one of the best so take the money and run.

If you wanted £6k compo you should have bought a lousy endowment.

gobananas5

Start date, target amount (mortgage borrowed) is it Pru or Scottish Amicable, finish date, just your life or joint lives, monthly premium, current surrender value. What is the date of the calculation, is it based on todays date or have you switched to a repayment at some date in the past. that should do I think

beefster

Compensationitis wrote:

The Pru are one of the best so take the money and run.

If you wanted £6k compo you should have bought a lousy endowment.

Gee thanks, constructive as ever!

beefster

gobananas5 wrote:

Start date, target amount (mortgage borrowed) is it Pru or Scottish Amicable, finish date, just your life or joint lives, monthly premium, current surrender value. What is the date of the calculation, is it based on todays date or have you switched to a repayment at some date in the past. that should do I think

Thanx GB5, I will PM you the details.