Should I accept endowment payout but add a caveat?

Frances63

Yes word for word. I'm going to try to upload a photo of that part of the leaflet. It might help other people too.

I only said 'inferred' that it was guaranteed because I can't see the actual word guarantee, which is what I was told, but those words above ("Interest is paid to the Society and an endowment policy is taken out which repays the amount borrowed at the end of the loan"), as you say, amount to a guarantee I believe.

The interest only mortgage was with another lender, (it is a base rate tracker) they took the fact that I would later be having a maturing endowment into account when offering me the loan. I also had a large deposit to put down (about 35%), so that & the endowment + salary secured me the interest only mortgage. I now only work part-time so would not be able to achieve that mortgage again these days.

Will see if I can manage the upload...

Frances63

The leaflet is dated April 87

Frances63

Here is the cover of the 1987 leaflet that the above is an extract from:-

opinions4u

Did you get you shares in Friends Provident when they demutualised?

http://www.friendslife.co.uk/common/layouts/subSectionLayout.jhtml?pageId=fpcouk/SitePageSimple%3Aunclaimed_demutualisation_benefits

holly_hobby

You will note the leaflet refers to an Endowment, and does not differentiate between full with profits (or unit linked endowment) and low cost endowments.

A full endowment, WILL meet the target sum - but it is an expensive mge repayment method, which is why, given the relatively high sums assured reqd, low cost endowments from the late 80s became a popular mortgage repayment vehicle.

A low cost endowment, is cheaper than a full endowment as it holds no guarantees on maturity (notwithstanding its basic sum assured on maturity , and life cover within the policy term).

If appears that you had a low cost endowment - what does YOUR policy document (which you will still have if you haven't recd payment yet) and point of sale illustrations state ? (which I assume you have retained, if you have kept hold of a branch issue general basic mge info leaflet).

If you have a low cost endowment and you were given a recommendaton at the point of sale (as oppossed to just facts & costing figs for you to make a decision), or the policy documentation itself for the policy provided a clear gte, then you may have a case.

The general mge info leaflet you have provided (IMHO) I believe will be argued to be inadequate to support your complaint, as it makes no reference to a low cost endowment coming with a gte to repay the loan, just refers to an Endowment - but I believe it could be deemed ambiguous enough to be worth a punt on a complaint (given that it was published for the layman consumer).

But as this is a general info leaflet, which could have pre-dated your mge application ... what did YOUR own point of sale, illlustrations and policy literature state re any gte repayment of loan ?

Hope this helps

Holly

Frances63

My understanding is that it was 'low cost' because the payments started low and increased each year over the first few years. So I wound up paying a higher amount for longer. It actually didn't work out as a lower cost in the long term, but helped in the early years when money was very tight.

This is how it was explained to me. Certainly not that it was an inferior endowment policy.

My policy was both "with profits" and "low cost".

Frances63

opinions4u wrote: »

Did you get you shares in Friends Provident when they demutualised?

Hi Opinions4u, yes I did get shares and sold them.

holly_hobby

Frances63 wrote: »

My understanding is that it was 'low cost' because the payments started low and increased each year over the first few years. So I wound up paying a higher amount for longer. It actually didn't work out as a lower cost in the long term, but helped in the early years when money was very tight.

This is how it was explained to me. Certainly not that it was an inferior endowment policy.

Thats a low start endowment, low cost endowment - which will be with profit. The basis of such a policy is that premiums start lower than under na standard level premium low cost endowment, but rise by (typically 20%) each policy anniversary over the 1st 5 yrs of the policy term and thereafter remain level.

You say that this helped as costs were tight in early yrs, and given that SVR at the time fluctuated between 9% and 10% - a repayment mge from you comments, would have been out of your grasp I fear - hence I now understand why you effected an IO mge - a repayment mge being unaffordable at that time, and given the option one it appears you wouldn't have taken in any event, due to budgetary constraints.

Hope this helps

Holly

Frances63

Here's what they say about Low cost mortgages.

According to the comparison on the leaflet there was very little difference in payments between repayment and endowment mortgages. What swings it is the promise of the cash surplus. It was a no brainer.

I'm not sure if the comparison in the example can be seen clearly:-

magpiecottage

I will add a few comments.

Abbey National was not tied to Friends Provident until 29 April 1988 - the day the old Financial Services Act went into force.

However, I think a complaint against Abbey National IS under FOS jurisdiction because I think Abbey National was, at the time, a member of the old Building Societies Ombudsman scheme.

Whilst we cannot see the entire document the OP has posted, what we have seen looks like a guarantee to me.

Anyway - back to the original question.

You accept the money from Friends Provident and complain to Santander.