Endowment Mis-selling - Don't give up!

lizzie53_2

We received a just over £3000 for endowments which could be up to £8000 short

dunstonh

lizzie53 wrote:

We received a just over £3000 for endowments which could be up to £8000 short

If a potential shortfall still worries you, then now is the time to switch to repayment mortgage whilst you are not out of pocket.

Marama_2

Evening,

Has anyone got any experience of taking a complaint further after an offer of compensation? I have been offered £1,200 compensation by Phoenix (formerly Royal & Sun Alliance) after following the advice on endowmentaction web site.

Phoenix say that they would carry out a full personalised calculation based on the interest rates applicable to my own mortgage arrangements but that they would withdraw the first offer and offer the amount of compensation calculated using the exact rates provided by me, even if this amount is lower that the original offer.

Where can I get some help with the calculations that won't cost me loads, before I make up my mind what to do?

Also, they will only calculate my loss up to the time when I took some action and changed my mortgage to part endowment and part repayment. Could I still be entitled to something after this time because the action I was able to afford to take would still not have paid off the mortgage within the original time?

dunstonh

Phoenix say that they would carry out a full personalised calculation based on the interest rates applicable to my own mortgage arrangements but that they would withdraw the first offer and offer the amount of compensation calculated using the exact rates provided by me, even if this amount is lower that the original offer.

That is normal and quite correct.

Where can I get some help with the calculations that won't cost me loads, before I make up my mind what to do?

Most providers supply a breakdown of how they get the compensation figure. Read that.

Also, they will only calculate my loss up to the time when I took some action and changed my mortgage to part endowment and part repayment. Could I still be entitled to something after this time because the action I was able to afford to take would still not have paid off the mortgage within the original time?

The choice to change your mortgage was yours and not that of the original advisor/advising company. They cannot be responsible for you changing your plan. So, again, they are correct in calculating it to that point. As it happens, with improving markets, reducing MVRs and surrender penalties, had you not done that, your compensation could possibly have been lower.

By paying some of the mortgage off, you are no worse off had you done that on a repayment mortgage. So there is no financial loss to you and nothing to compensate.

hammy_the_hammer

in my case when i received a shortfall letter and also a letter 'withdrawing' the standard life promise with a very unclear version of what might happen in the future i scraped money together to reduce my reliance on the endowment by paying money off my mortgage. it appears that because i did this my compensation has been reduced . is this really correct?

dunstonh

hammy_the_hammer wrote:

in my case when i received a shortfall letter and also a letter 'withdrawing' the standard life promise with a very unclear version of what might happen in the future i scraped money together to reduce my reliance on the endowment by paying money off my mortgage. it appears that because i did this my compensation has been reduced . is this really correct?

Yes.

You chose to do it. No advice sought. So the person or company paying the compensation shouldn't be responsible for your decisions made without their input. Plus, you would be in exactly the same position had you paid that money into a capital and repayment mortgage so there is no loss financially and no requirement to compensate you when you have suffered no financial loss.

hammy_the_hammer

thanks for the reply ..it looks like i'm going to accept the offer of compensation as i can't be bothered to go down the 6 month waiting by appealing to the ombudsman. morally i know what went on in our case ( and i really would say 99% of other cases) was a disgrace. we went in to see the FA and only wanted a repayment mortgage but came out with an endowment ...it was sold to us on the basis of paying the same payments as a repayment motgage but ending up with a lump sum at the end of the policy ...the only unclear bit was how much this was going to be ..it could be £2k it could be £4k. at no time was it ever intimated that the mortgage wouldn't be repaid. the FA also said "you do realise that you could borrow a lot more than this with the wages you are on " again i believe this to be totally unethical as the house that we couldn't have borrowed lots more to buy the house that we were undergoing the purchase of. the only conclusion again i can come to is that we were being advised that we could buy a bigger and more expensive house. after the sell we found ourselves with an endowment mortgage. i really can't believe that if the true merits of both types of mortgage were clearly spelt out to homebuyers that more than a minimal amount would take out an endowment. in our case it would be hard to sell something where you have a chance to make £2k or £4K but if you gamble you might have to find 10 grand from somewhere to pay off your mortgage....sorry but no ones going to take that one on.

hammy_the_hammer

i should of also added that standard life confused matters with their mortgage promise as although your endowment was performing poorly it looked as if the deficit was going to be made up.

afwone

In 1987 I experienced a hard sell from someone in an estate agent's who tried to sell me an endowment policy with Standard Life. He was very persuasive, assuring me that my mortgage would be paid off, and that I would receive a substantial lump sum after the policy matured. I was completely won over, but rather than sign up there and then, I approached an accountant and suggested splitting the commission. A 50/50 split of the first year's commission was agreed.

Now of course, the endowment is flagged up as being unlikely to cover the mortgage. Could I claim for being miss-sold the policy and by whom?

Perhaps being savvy with the commission wasn't such a smart move if I cannot claim off the accountant who I asked to help with this.

dunstonh

n our case it would be hard to sell something where you have a chance to make £2k or £4K but if you gamble you might have to find 10 grand from somewhere to pay off your mortgage

Many endowments are going back in to surplus again and an increasing number will do so over the coming years at this rate.

Most of the problem is the lack of understanding of the product. Especially in the past. This hasnt been helped with providers altering projection rates every year and showing rates which are not realistic to the potential of the fund resulting in good endowments getting surrendered and poor ones being kept. There has also been a large misunderstanding that a projected shortfall from that point is going to be the actual shortfall and not just an example of what may happen. For many people, the stockmarket crash has been a blessing in disguise and their endowments are going to benefit massively from that and have far greater potential for surplus than before. Even though they may have got shortfall letters over the last few years.

The problem is identifying the good ones from the bad.