Friends Provident Mis-selling Endowment (Advice Please)

muckell

Hi,

I'm after a little bit of advice, its not actually for myself, but rather my dad. He took out an endowment with Friends Prov 13 years ago, and it is going to under-perform by about 8k, and thats even if it picks up in the coming years.

Well, my dad has put in a compliant that he was mis-sold this endownment, on the grounds it was supposed to cover his mortgage and leave a small excuss once all paid off.

Well he received a letter back from Friends Prov the other day saying that they did make him aware of its underperformance in 2000 and again in 2003. They went on to say that the only accept complaints within three years of them making him aware of the under-performance. Therefore he only had until the end of 2003 to make a complaint. Is this fair, surely a complaint/compensation claim can be made in any time of the policy.

The letter went on, actually getting quite negatively and quite rude in my opinion, and ended in bold letters that this would be the end of any investigation into the mis-selling.

Any advice would be greatly welcomed, as my dad is not sure what to do, and after showing me the letter i can't beleive they could get away with this kind of treatment.

Thanks for listening and also for any time you take to reply

all the best

Chris

EdInvestor

Hi muckell

It sounds like they have rejected his complaint.

Thus he should take it to the Ombudsman.

https://www.financial-ombudsman.org.uk

He can call them for advice on how to proceed. The Which site is also helpful: https://www.endowmentaction.co.uk

Note that even if he succeeds with the Ombo, it's very unlikely the compensation will make up the shortfall.

He will thus need to think about how to fix that problem, and remortgaging to a repayment mortgage at the lowest interest rate he can find would be one spot to start.

Surrendering the endowment might also be a good idea, (using the proceeds to reduce the total mortgage) though it might also be better to keep it to maturity,each endowment is different, you need to see the figures to decide.

dunstonh

Although the insurance companies have messed up a bit in dealing with endowments, there does have to be some ownership of the problems and changes that have occured.

Endowments suited the boom/bust economy and had that continued and Gordon Brown not taxed various stockmarket investments which helped create an underperforming stockmarket, then endowments would still be paying out big surpluses.

With the lowering of interest rates and stability that has happened, the insurance companies should have written to people and told them that their premiums needed to go up to compensate for this. Had this happened, then there really wouldnt be the problem with have now.

Your father was first told 5 years ago and did nothing. There does come a time when you cannot blame others for everything. Had he put aside £30pm he would have nearly £2000 now and with the remaining time would possibly covered that shortfall. He would still have been better off in his pocket as well as mortgage payments would have dropped by more than that.

On the positive side, Friends Provident are not one of the weak companies where bonuses are unlikely to ever return and this year has seen bonus rates bottom out and in a few cases increase again. So, there is the chance that the shortfall will not be as high as he thinks or may not even exist. However, the investment risk remains and as such, nothing is guaranteed.

EdInvestor

dunstonh wrote:

With the lowering of interest rates and stability that has happened, the insurance companies should have written to people and told them that their premiums needed to go up to compensate for this.

I agree, this is part of the problem.You can't really blame people for not figuring this out for themselves,can you?

Perhaps more of a factor, the majority of endowments were heavily invested in the stockmarket,which crashed in 2001 and still hasn't recovered.But a lot of policyholders had no idea their policy was invested in equities - indeed these people normally win missselling compensation for that reason - so equally they can't be blamed for that either, it seems to me.

OTOH, virtually anyone who's owned a property over the last 30 years in the UK is sitting on a huge tax free capital gain. Yippee!

But then again they're gonna need it, because look at what's happened to their pension.Gloom.

You just can't win, can you?

gobananas5

To get back to your dads problem their is probably no point in going to the Ombudsman. Friends Provident use this 3 year rule to get rid of as many complaints as they can. The trick is that the rule itself does not apply to the life companies but it does apply to the Ombudsman so if you apply to the Ombudsman they will tell you that they can only look at it outside of the 3 years if FP don't object. They refer back to FP and ask if they don't mind the Ombudsman looking at it and what do you think FP will say? Correct, we object, so many months later nothing has happened. The only exception is if there have been exceptional circumstances that have prevented your dad from complaining in which case it may be reviewed. It don't help much, sorry