Should I accept endowment payout but add a caveat?

Frances63

Thanks Dunstonh and Hollyhobby.

In a legal case would the onus be on me to prove that there were no warnings or on A.N. to prove that there were? Is this what it turns on?

Also what are 'POS docs' demonstrating risk? Should I be searching the attic for more documents? I was given nothing that demonstrated any risk.

I wouldn't have signed up at all if I thought for a second that there was any risk involved in paying off my mortgage. Who would? It wouldn't make sense for anyone to risk their home when a repayment mortgage would have cost virtually the same amount albeit presumably without the life insurance which was not something that concerned me.

holly_hobby

Legal case should you proceed to court with this - is "he who asserts must prove" .

POS = point of sale documentation i.e what was provided to you inthe sale, that enabled you to make a decision. Which would have been a key features document/policy discription, and illustration - showing details such as your age, the term, the guaranteed death benefit of policy, premium payable, both initially, its increase and what it would be for the remainder of the policy following its low start (ie reduced premium) term, matuirty values.

Following submission, you would have recd a policy document from the provider, which showed term, death benefit, basic sum assured, permiums, etc .... and also a cancellation notice (giving you the chance to cancel before prems commenced, should you have decided you no longer wished to proceed with the policy).

Frances63 wrote: »

I wouldn't have signed up at all if I thought for a second that there was any risk involved in paying off my mortgage. Who would? It wouldn't make sense for anyone to risk their home when a repayment mortgage would have cost virtually the same amount albeit presumably without the life insurance which was not something that concerned me.

But if you selected a low start plan, a repayment mge would not have cost virtually the same, it would have been more expensive - and given you admit you had budget issues - this isn't what I would base my complaint on. As there are grounds IMHO for a defence on this (and, setting the gte aspect to one side), the tack I certainly would take if investigating. I also wouldn't consider it reasonable to accept in argument, that if you had been aware of the risks, and together with the costing issue preventing a C&I mge, that you would not have purchased at all as you now suggest. It appears that you chose the cheapest route to faciliate your purchase (ie low start, and also qualifying full MIRAS relief), the ATR could be argued as a FTB, but given that you couldn't have afforded a C&I in any event, this isn't a strong suitability argument.

The strongest element is the perceived gte of target at maturity - this is mis-representation of the policy, and has nothing to do with suitability.

Can I ask again, what did your illustration and policy literature say with regards to any gte of the target amount at maturity ?

Or is the issue that they don't indicate or infer a gte at all, and its only the genefic leaflet you've scanned up, which appears to indicate this in support of the claim ?

Hope this helps

Holly

IainHL

Frances63 wrote: »

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Even my application form says the sum assured is £50,000. That was initialled as 'ok' and dated by the rep. Now they are saying it is £17,200.
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The question here is whether that is the guaranteed sum assured on maturity, or the level of life cover (death benefit) offered while the policy is in force.

holly_hobby wrote: »

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Following submission, you would have recd a policy document from the provider, which showed term, death benefit, basic sum assured, permiums, etc .... and also a cancellation notice (giving you the chance to cancel before prems commenced, should you have decided you no longer wished to proceed with the policy).
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The policy document should then confirm the guaranteed minimum sum assured.

Frances63

Thanks HollyHobby. It's not the case that I couldn't afford the repayment mortgage. The two mortgages offered endowment/repayment were virtually the same, I could have paid either. The low start was offered as an afterthought and as it started off lower I thought it would be a good idea to have that one, but initially I was shown two that were a very similar monthly payment.

It made no difference, other than the promise of a big extra tax-free cash lump sum at the end of the endowment policy. As I said earlier it was a no-brainer. That was the way it was sold, i.e. to say you would be mad to pay the same for a repayment but not have the lump sum bonus.

The illustration doesn't have any warnings on it that I can see. Just lists of comparison figure which I can't quite make out. The only phrases (as opposed to just figures) say
"Friends Provident
FRENTEL (prentel?) ILLUSTRATION NON-SMOKER
for MISS * ******* <female> aged 25 next"

then what looks like

"assuming the plan starts from **/**/87
MORTGAGE FOR £50,000 OVER 25 YEARS
MONTHLY REPAYMENT COST COMPARISON"

The rest is lists of figures with headings such as (the bits I can make out)

INTEREST RATE ........ **%.............. **%
?????? PAYMENT ...... ***.**......... ***.**
TAX RELIEF ............... **.**........... **.**
NET ???? (cost?) ......
etc.

It's barely legible but you can see the rest is laid out as above, with no prose as such, just lists of figures. So I'm absolutely sure there were no warnings in there.

If the A.N. and FOS have dealt with lots of these cases they will already know what information was in these printouts wouldn't they? Surely it will have already been established.

Frances63

IainHL wrote: »

The question here is whether that is the guaranteed sum assured on maturity, or the level of life cover (death benefit) offered while the policy is in force.


The policy document should then confirm the guaranteed minimum sum assured.

I haven't yet found this policy document. I will phone Friends Life and see if they have a copy they can send me.

Friends Life have sent me a copy of the Application Form (which I also didn't have - I'd asked them for anything they have on file, they sent just this).

It doesn't say whether the sum assured is for on maturity or on death, it doesn't make a distinction. I'd been told it was the same for both so didn't have cause to question which. Surely a distinction should have been made if there was one to be made?

I have read every word on the application form too and there is no warning or mention of any risk whatsoever on there either.

holly_hobby

IainHL wrote: »

The question here is whether that is the guaranteed sum assured on maturity, or the level of life cover (death benefit) offered while the policy is in force.


The policy document should then confirm the guaranteed minimum sum assured.

Yes, thats actually referred to as the basic sum assured (BSA).

Death benefit - is minimum death benefit on death during policy term (which is actually proportionatly made up of BSA, attaching reversionary bonuses and a reducing term assurance).

BSA and Death Benefit are 2 different things under the policy.

Hope this helps

Holly

holly_hobby

Frances63 wrote: »

Thanks HollyHobby. It's not the case that I couldn't afford the repayment mortgage. The two mortgages offered endowment/repayment were virtually the same, I could have paid either. The low start was offered as an afterthought and as it started off lower I thought it would be a good idea to have that one, but initially I was shown two that were a very similar monthly payment.

Contradicted by ....

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.

then ...

Frances63 wrote: »

It made no difference, other than the promise of a big extra tax-free cash lump sum at the end of the endowment policy. As I said earlier it was a no-brainer. That was the way it was sold, i.e. to say you would be mad to pay the same for a repayment but not have the lump sum bonus.

But you have already admitted that you at inception in 1987, that any extra cash was not gted.

Frances63 wrote: »

The illustration doesn't have any warnings on it that I can see. Just lists of comparison figure which I can't quite make out. The only phrases (as opposed to just figures) say
"Friends Provident
FRENTEL (prentel?) ILLUSTRATION NON-SMOKER
for MISS * ******* <female> aged 25 next"

then what looks like

"assuming the plan starts from **/**/87
MORTGAGE FOR £50,000 OVER 25 YEARS
MONTHLY REPAYMENT COST COMPARISON"

The rest is lists of figures with headings such as (the bits I can make out)

INTEREST RATE ........ **%.............. **%
?????? PAYMENT ...... ***.**......... ***.**
TAX RELIEF ............... **.**........... **.**
NET ???? (cost?) ......
etc.

It's barely legible but you can see the rest is laid out as above, with no prose as such, just lists of figures. So I'm absolutely sure there were no warnings in there.

If there is absolutely no health warning re the target amount (50k) not being gtd at a maturity in either this or the accompanying policy literature (and the Firm will review their own files to review and verify this), then you have what I believe to be a succesful complaint re mis-representation.

Frances63 wrote: »

If the A.N. and FOS have dealt with lots of these cases they will already know what information was in these printouts wouldn't they? Surely it will have already been established.

Each complaint and review is specific to the individual and what is available for examination as part of the investigation into the sale. Although the firm may review library material from the time. FOS review the complaint file, which they request and is provided to them by the firm in connection with their review.

Hope this helps

Holly

Frances63

Thank you.

I could have afforded any of the premiums. The low start was £25 or so cheaper a month for the first year but more expensive later on. I thought that would be helpful but it was not a deal breaker, just more of an afterthought as it would help me to buy things for my first house. This does not mean the difference between being able to take out a mortgage or not. It was handy, as I said, when finances were tight, as they are when you want to furnish your first home. I still would have taken a mortgage had low start not been available; it just would have meant second-hand curtains instead of new, that's all.

The cash bonus amount was a projection, it was not guaranteed to be the amount of the projection, it could have been less or more. The caveat I showed in the photo says what it is based on. The chance of a decent payout was indeed better than absolutely no surplus which was the alternative given with a repayment. I'm not making it up, this is how it was sold. Not just to me but it seems to thousands of people.

A.N. and Friends must know this.

Frances63

Just a quick update for you ..... and it's good news!

Santander have upheld my complaint and agree the policy was mis-sold.

They have offered compensation by comparing to the position I would have been in had I been sold a repayment mortgage. They have offered around £13,000 (including interest).

I have yet to go through the 4 pages of workings out, which they ask you to check and get back to them if there is anything they have missed, in which case they will recalculate.

I won't pretend it wasn't hard work, but it was worthwhile.

I spent weeks gathering the evidence and communicating with various people and then one afternoon got my act together to return the forms, evidence and statement I'd made of my case. I wasn't going to bed until I'd finished, and by the time I was done and made photocopies of everything it was 7am! (and with the alarm set for 08:30 to be at the P.O. first thing to send it all off recorded!). Phew, that was a long night.

Imagine though if I hadn't done it. No-one will chase you to give you the money you deserve.

If there is anyone out there who thinks it's too late, or that you can't/won't get anything back, it IS worth a try. If you were indeed mis-sold, then your money is there for you, but you do just have to claim it.

Thanks to everyone here for all the good advice. :T

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holly_hobby

Frances63 wrote: »

Santander have upheld my complaint and agree the policy was mis-sold.

They have offered compensation by comparing to the position I would have been in had I been sold a repayment mortgage. They have offered around £13,000 (including interest).

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So they wavied the timebar and agreed to review (even though pre A day) and finally upheld on the policy being unsuitable - as oppossed to the documentation (you scanned here) clearly failing to distinguish this was a low cost (non gted) endowment, and inferring the policy would meet the target sum (which was your original complaint here).

What was their response to your complaint that the policy documentation (from what you told us and docs also scanned up) clearly inferred the target sum was guaranteed (as prev discussed) ?

Did you raise this as part of your complaint, or just that you were unhappy with the performance and were unaware of risks ?

If you did raise the guarantee aspect as the basis of your complaint, what was their response to this ?

On what basis and evidence did they reject the alleged gte aspect of your complaint ?

I ask this, because IF the docs inspected as part of the complaint process mirrored what you scanned here, they do indeed infer the policy would meet the target sum, which is a whole different calculation process.

This is due to the fact that if they only upheld on the policy being unsuitable (even though it was a pre A day sale), the 13k offered has been calculated using the standard mortgage endowment unsuitability calc - which is to put you back in the financial position you would have been, had you taken a repayment mge at outset.

Whereby if there is a proven guarantee issue, the Firm MUST meet the target sum - which I am guessing (without knowing what your maturity value actually was) would be a whole lot more than the 13k on the table ?

This is because the compensation in respect of a upheld gte complaint, would actually be the difference between the policy's actual maturity value and the target sum ( plus interest in your case given it matured 12 mths ago). And this may be why they have chosen not to claim pre A day, or timebar the case, whilst avoid you referring the matter to FOS and they having a look at the docs, and may explain why they have instead gone straight down the unsuitability route (and possibly a lesser recompense and review).

However, you're obviously happy with the 13k offered, which is great ! I don't mean to be a party popper, but I am curious as to how they played their hand with regard the gte issue (which was your original complaint) and what the difference would amount to if they had upheld on the gted target sum aspect of the complaint ?

Well done for your success though !

Holly x