Friendly Society mis-selling?

edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
4 replies 1.2K views
StandyStandy Forumite
37 Posts
edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
The UK Civil Service Benefit Society persuaded my wife to enrol in a with-profit tax free endowment assurance product in 2003. She paid £25 a month for 10 years and had life cover of all of £2,445! She was told by the salesman at the time that these policies always did better than a building society savings account.
So, 10 years down the line and after contributing £3,000 she is offered £3,092 including all bonuses :(
If I allowed a generous £1 a month for the paltry life cover and looked at investing £24 pm in a BS savings account, then she would have received over £3,400. Even allowing for tax, she would have been FAR better off in a BS.
Does she have a case for mis-selling? Reading engage mutual's report and accounts (who took over this investment), the Board seem to be doing much better than their products!

Replies

  • innovateinnovate
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    What proof does your wife have that the salesman at the time told here that these policies always did better than a building society savings account?

    As galling as it might be, if she doesn't have such proof, there is nothing she can complain about.
  • dunstonhdunstonh Forumite
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    Does she have a case for mis-selling?

    If she had used an IFA then there is a chance there would be mis-selling. We have been advised that the use of Friendly Society savings plans could be classed as mis-sales given their inflexibility and extremely high charges when compared to other options.

    However, she used a sales rep of the friendly society and if you have followed this forum over the last week you will see the misguided way some people try to sell these.

    In most timescales, it probably would have beaten cash savings. That is something you can say. However, you cannot say always would do better (although until around 2002, they always had). The biggest issue is proving that wrong information was said and it may not have even been an advised sale but an introducer or sales rep.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • StandyStandy Forumite
    37 Posts
    dunstonh wrote: »
    If she had used an IFA then there is a chance there would be mis-selling. We have been advised that the use of Friendly Society savings plans could be classed as mis-sales given their inflexibility and extremely high charges when compared to other options.

    However, she used a sales rep of the friendly society and if you have followed this forum over the last week you will see the misguided way some people try to sell these.

    In most timescales, it probably would have beaten cash savings. That is something you can say. However, you cannot say always would do better (although until around 2002, they always had). The biggest issue is proving that wrong information was said and it may not have even been an advised sale but an introducer or sales rep.
    I thought that would be the point at issue - it was an introducer that sold her the policy and the comments were only verbal - nothing written down other than the laughable (though standard at the time) example rates of return of 5%, 7% and 9% (YES, 9% !!!).
    I shall trawl through the forum posts for solace ...:(
  • ffacoffipawbffacoffipawb Forumite
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    Standy wrote: »
    I thought that would be the point at issue - it was an introducer that sold her the policy and the comments were only verbal - nothing written down other than the laughable (though standard at the time) example rates of return of 5%, 7% and 9% (YES, 9% !!!).
    I shall trawl through the forum posts for solace ...:(

    In the early 90's we were doing projections at 8.5% and 13% rates of return, even more unthinkable now!
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