compensation for under performing endowments

Matrix_2

Along with others our endowment started about 1993 should pay £55,000 but is only projected to pay out £38,000. There is a lot of talk of claiming compensation for bad selling, but won't the company just say it is the market's fault and therefore the figures it originally quoted are a guideline only? Has anyone successfully claimed compensation? How hard a battle was it? Any hints and tips if we are fobbed off originally?

Compensationitis

If you didn't understand what you were buying you should complain.

EdInvestor

But don't expect the compensation money to cover the shortfall, even if you win.Compensation is designed to put you in the position you would be in now if you had been sold a repayment mortgage.That's all.It usually amounts to only a few thousand pounds if that.

You will still need to work out how to solve the shortfall problem. Have you looked at that yet?

Compensationitis

Did you read the press statements about 75% of compensation going towards a new car or a holiday, very few do anything about the supposed shortfall.

It's a wicked system that allows people to obtain money under false pretences with impunity.

AND, the correct word is 'Redress'.

EdInvestor

IMHO there's nothing wrong with people claiming misselling compensation - there's certainly tons of evidence around that many people not only weren't told their endowment might not pay off the mortgage, but were also showered with promises of extra lump sums on maturity for things like the holiday of a lifetime or a new car.

What concerns me is that many people seem to think that if they win their misselling case, then the money will make good the shortfall and the problem will go away.

Usually it comes nowhere near solving the problem.:(

So people spend a lot of time looking at websites, consulting IFAs and complaints handlers, writing letters to the company, the Ombudsman etc, only to discover at the end of all this hassle that even if their complaint succeeds, they still have a shortfall.

It may even have got worse because time has elapsed and nothing has been done.

Compensationitis

Very true, but in the heyday of endowment mortgages the average life expectancy of a mortgage was under 8 years, people move around as often as they change their undies, well not quite but you get my drift.

Central to this issue is the misaprehension that a repayment mortgage is guaranteed to repay the loan, this is not so and the FOS can prove it if you look at their website, despite that fact that umpteen annual statements have alerted borrowers to a shortfall they have ignored it and at redemption they find... yes you've gused it! A shortfall. What to they do? They complain because they have to find a few £thousand extra to pay off the loan at the agreed date.

It's manyana syndrome.

defender_of_the_weak

People are not claiming money under false pretences. Some are, most are'n't. The average life expectancy was as posted was 7-8 years, after that they probably had the policy churned to generate new commisssion for the next adviser. Please don't bother telling me this did not happen

Compensationitis

Of course it went on, humans are greedy and buyers are liars.

How weak are those you defend?

number9

Please do not tar all of the people who have claimed 'redress' with the same brush.

There was (probably still is) a lot of inappropriate, inaccurate, misguided 'advice' given to thousands of house purchasers regarding endowment policies. I use the word 'advice' with tongue in cheek as the main aim of many badly trained advisors was to gain new business and hence commission as quickly as possible.

I purchased my first property in 1990 as a single, 21 yr old and my experiences with the local Northern Rock as both mortgagors and tied agents of Legal & General was shocking.

I received poor advice, mistakes were made and the paperwork was non-existent.

Recently, as a married man with 3 children I found myself with a frightening predicted shortfall and my main fear was the lack of documentation over the 2 policies concerned. I have always had a strong case as far as the misselling/compensation scenario was concerned but I feared that it would turn out to be 'my word against theirs'.

However, having used the 'Which?' template as the basis for my letter together with all the relevant points of evidence/observation I could muster, I have now had my complaint upheld by Legal & General primarily - but correctly - on the grounds of the inappropriate analysis of risk to my circumstances.

Don't anyone say that I have been dishonest or 'greedy' because, as I said, the advice was shocking.

Many people are unconfident about tackling these matters. Hence, the long delay in addressing their shortfall in whatever way, or, the use of so called specialists charging abhorent commissions to undertake their claim.

EdInvestor

Well done to No 9 for not only successfully fighting his misselling claim, but also for going on to fix the whole problem, so there's no shortfall any more.

Here's how he's going about it

Way to go :T

defender_of_the_weak

Very weak. Let me give a few examples.

The lady who was sold a payment protection policy to cover a loan and when she tried to claim because she had cancer she was told the company would not pay out because she knew she had it before she signed. How she was supposed to know this I don't know.

Couple sold a universal policy (whole of life) to cover the mortgage. Did not even realise what it was until I met them. The company continually referred to it as an endowment.

Many individuals told that they received no advice before 1988 so the complaint is rejected (this even includes direct saleforce sales) in the hope that they will give up, as many do.

Complaint rejected because the client could not produce payslips from 1989 to demonstrate affordability for her dead husband who passed away 3 years ago

Most of our clients are not particularly financially aware, probably less than 2% would be in the social category A/B. I could fill an entire thread with disgraceful case studies. Mr and Mrs Average did not understand what they were buying they trusted the advisers in the main (sadly many of the advisers did not know what they were selling either)