Endowment Mis-selling - Don't give up!

ConFused.ME_3

I wonder is anyone could give me advice as whether to try for a complaint against my Endowment mortgage.

In 1998 I took out an endowment mortgage after being sold one by Royal Scottish Assurance. Mortgage was for £53100 and now is warning of a potential shortfall of £14303.
At the time I intended to buy a repayment mortgage but was 'lead' down the path of an endowment as the adviser stressed that although they had a bad name, endowments were now based on such a low interest rate (7.5% in 1998 for Royal Scottish), I would pretty much be guaranteed a lump sum on completion as most endowments were based on 9% according to the adviser. Details of how my money was to be invested were sketchy and I don’t believe my attitude to risk was taken into account at all.
I was young and naive but think I was miss sold this endowment.

Question is, enough grounds for a complaint or should I just adjust my mortgage back to a repayment mortgage that I wanted all along.

dunstonh

7.5% for a 1998 policy is actually quite high. Most were heading for 6% at that point. Although the last one I sold was in 1997, that had 4.4% (thank goodness with hindsight).

Question is, enough grounds for a complaint

Being guided down that route is not grounds for complaint. Failing to make you aware of both options, including pricing of both and presenting the pros and cons of both options could all be considered a mis-sale.

By 1998 most advice providers had massively improved the level of disclosure required and attitude to risk should have been taken and to be honest, probably was.

If you feel you were mis-sold you can complain. However, you will need to be honest as the documentary evidence on record with the advice firm should be pretty good. (should be doesnt always mean will be). Dont make anything up, dont guess just state facts or say you cannot recall. If you are proven to be telling lies in one area (either on purpose or by error) then the view may be taken that you are mistaken in others.

The other thing to consider is that if you have a unit linked endowment or even a unitised with profits fund, then the shortfall is likely to be nothing close to what is being shown on the projections. Plus the timing of the commencement and the stockmarket crash are great news for a long term endowment. Returns on many average balanced managed funds (which is what many are in) has been in excess of 15% a year for the last 3 years. That doesnt really compare well with projections supplied at 3%

Whammer007

I too took out an endowment policy with Royal Scottish which I supplemented with another top-up when I moved house. I started getting the letters that it was underperforming, so I tried to sell them. Nobody would touch them on the open market, the only option being to sell them back to Royal Scottish. Nobody seems to know the reason why no other company will entertain an offer on these policies.
I have complained to Royal Scottish about being mis-sold the products in the first place, but my complaint was rejected on the grounds that buying the second policy showed that I was "comfortable with a higher risk investment" I am persuing my claim through the Ombudsman but I don't hold out much hope.
Meanwhile, I have converted my mortgage to repayment and I am keeping the endowments as savings plans.
Does anyone have any idea why I can't offload these policies?

Regards,

Col

dunstonh

Nobody seems to know the reason why no other company will entertain an offer on these policies.

Easy to answer. No-one will buy them from you because they are rubbish. You are getting rid of them because they are underperforming. Would you buy one from somoene else doing the same?

Generally, only the better endowment policies are bought.

scarey_man

dunstonh wrote:

If the company was not a network member, then go straight to the FSCS. If it was a network member, make the complaint to the network. They will hold all the client files (in theory).

Just received letter from FSCS.
They have told me that the IFA who sold me the policy in May 1996 was not regulated until June 1996 so they say they can't help.
Also, the IFA was selling policies on behalf on AXA Equity and Life, which no longer exist.

Anything else I can do?

I'd be disappointed if I can go no further.

dunstonh

They have told me that the IFA who sold me the policy in May 1996 was not regulated until June 1996 so they say they can't help.

That cannot be done.

Also, the IFA was selling policies on behalf on AXA Equity and Life, which no longer exist.

This means he wasnt an IFA at the time but a tied agent of AXA. AXA do exist and still trade and have tied advisors. They work under AXA. You should contact AXA at:

AXA Sun Life AXA Centre PO Box 1810 Bristol BS99 5SN

scarey_man

Spoke with FSCS who told me that as the IFA and his company were not regulated/authorised in May 1996 then the Company that my policy is with (Std Life, not sure why they even mentioned Axa Equity and Law) then I need to ask them why they were allowing their products to be sold by an unauthorised IFA.

Sound about right?

dunstonh

scarey_man wrote:

Spoke with FSCS who told me that as the IFA and his company were not regulated/authorised in May 1996 then the Company that my policy is with (Std Life, not sure why they even mentioned Axa Equity and Law) then I need to ask them why they were allowing their products to be sold by an unauthorised IFA.

Sound about right?

It does sound right. The company he set it up with would have had to confirm his regulatory status before setting up the agency. You cant just get quotes without being regulated. You cant get an agency without being regulated. If he was trading illegally, then the compensation wont be due from the FSCS. However, the FSA should take an information from you and investigate. Especially if he is still in the industry now. You also have a stronger case for legal action, which may end up being the route needed. Alternatively if he was a network member, then they should have ensured he wasnt trading before start date. They hold some responsibility too.

financeklux

would appreciate the help of the big brain out there.

I bought a Friends Provident with profits policy for 26K in 1986, from an IFA.

Friends Prov.say the IFA is responsible, and say that the IFA is not tied to them.

The IFA is saying its pre 88 so get lost.

Is this the end of the line for my complaint, or are there any other bodies I can complain to ?.

If it is the end of the line could someone please give a view on how conservative (or otherwise) FP are normally in projecting shortfalls. The minimum guaranteed cash sum (inc bonuses) is 15.5K and the declared bonuses are 6.6K, at 4% they are quoting 16.7K and at 8% its 21K.

dunstonh

Is this the end of the line for my complaint, or are there any other bodies I can complain to ?.

Its the end of your complaint. You can take legal action but unlike the complaints proceedure which needs the advisor to prove it wasnt mis-sold, the legal route requires you to prove it was mis-sold. Also, the law would put more weight on the documentation that was issued than the complaints proceedure does.

If it is the end of the line could someone please give a view on how conservative (or otherwise) FP are normally in projecting shortfalls. The minimum guaranteed cash sum (inc bonuses) is 15.5K and the declared bonuses are 6.6K, at 4% they are quoting 16.7K and at 8% its 21K.

Look at the 4% as a realistic figure if with profits. It could be lower if maturity is in next 5-8 years.