Endowment Mis-selling - Don't give up!

Rachel999

Thanks for this - since posting my original query I'd checked the Ombudsman web-site and realised that this was just the response from the caseworker, and have responded to say I would like another opinion.

Your other comments are useful - again, similar to my own views, but reassuring to know that you do not consider this to be 'sticking my head in the sand'! Thanks.

marrbett

Hello,hoping someone can advise here:

We bought our endowment policy in 1992,from sunlife of Canada to cover a £45,000 mortgage with the lump sum at the end!!
Our main gripe with it is that we feel that we should never have been sold it due to the financial situation we were in.
The rep who sold it to us was the rep that our company pension was with(my husband and I both worked in the same place.)He would have been aware that our jobs looked dodgy(we were working for a drug rehab,a charity and things were getting bad with funds.Our pay was being paid in dribs and drabs and eventually we were all made redundant.)
The mortgage was in my name and was an equity release type,paying normal repayment on 1/2 of £45000 and a fixed 4% on the remainder,with a view to buying the rest out over time.This was on a repayment basis as it was cheaper than anything else at the time.
We were persuaded to switch to endowment by the SunLife of Canada guy because it was wasting our money to keep with repayment because we would get this nice lump sum at the end!!We agreed to this despite the total cost of the mortgage increasing from what we had been paying.
A few months later we found the cost too high,things at work were erratic(paywise) and we contacted the rep to cancel the endowment as we couldn't afford it-he persuaded us to keep with it (otherwise we would lose our payments made sofar!)and that he would extend it by 5 years to bring the cost down by £30 a month.We discovered in the up-dated documents that he actually extended it by 7 years,not 5,taking us up to my husband's 65th birthday.
Our main beef (other than a large shortfall that we are facing!)is that he should not have advised us to take this on knowing how precarious our financial situation was.
Do we have a case here?
As an aside,my husband had just taken on an endowment mortgage a year previously(before we were married) but he had no more idea of it possibly not paying off the mortgage at the end than we did when we took out our joint one I am complaining about.We cashed that one in about a year later.Does this make our case worse?

anglepoise

Can anyone answer some questions please?

I have an endowment that was taken out in 1986 and the company still agreed to compensate me on the basis that a repayment mortage may have been more suitable.

I was able to repay the mortgage capital in full in 1997 and decided to keep the endowment purely for investment purposes.

I was not made aware of the potential shortfall until 2001.

I now have the calculation and I am puzzled by the following:

The company have done the comparison on the period from taking out the policy to the date I cleared the mortgage capital in 1997. I don't really understand why they have done this and would have thought that the calculation should have gone to the date I was warned of a possible shortfall at the earliest. After all, it seems as if my good fortune in being able to repay the mortage early has counted against me in terms of the company being able to discount their woeful post 1997 performance.

The effect of this is that they are saying that I am in fact better off than I would have been had I taken out a repayment mortgage. This is based on the fact that the 1997 surrender value exceeds the extra amount I had paid by having an endowment + interest + a refund of premiums plus interest to 2001.

I don't get why they have taken a refund of premiums post 1997 into account. This seems to acknowledge the miss-selling but is almost certainly a lot cheaper than the cost of using 2001's (or today's) surrender value against how much I would have left on a repayment mortgage.

FWIW, the 1997 surrender value was just over £17K and the current surrender value has only increased to about £20K.

So can anyone confirm that this method of calculation is correct, and if so, is it on view anywhere, such as the FSA?

Thanks

dunstonh

The company have done the comparison on the period from taking out the policy to the date I cleared the mortgage capital in 1997. I don't really understand why they have done this and would have thought that the calculation should have gone to the date I was warned of a possible shortfall at the earliest. After all, it seems as if my good fortune in being able to repay the mortage early has counted against me in terms of the company being able to discount their woeful post 1997 performance.

The company is correct. The compensation is to calculate the difference between the repayment mortgage and endowment mortgage for the period you had the mortgage. In this case, 1 year.

The effect of this is that they are saying that I am in fact better off than I would have been had I taken out a repayment mortgage. This is based on the fact that the 1997 surrender value exceeds the extra amount I had paid by having an endowment + interest + a refund of premiums plus interest to 2001.

Sounds about right for the years involved.

I don't get why they have taken a refund of premiums post 1997 into account. This seems to acknowledge the miss-selling but is almost certainly a lot cheaper than the cost of using 2001's (or today's) surrender value against how much I would have left on a repayment mortgage.

You are not financially out of pocket so there is nothing else to compensate. The plan ceased being a mortgage plan in 1997. Therefore the original advice ceased to apply. Had you sought new advice in 1997 and been advised to keep it and it later turned out to be inappropriate, then you would have grounds to complain then. Instead, you chose to keep it yourself, without getting advice. You cannot complain to yourself.

FWIW, the 1997 surrender value was just over £17K and the current surrender value has only increased to about £20K.

Sounds fine. We had a stockmarket crash in that period so no surprise with the figures.

So can anyone confirm that this method of calculation is correct, and if so, is it on view anywhere, such as the FSA?

The figures sound accurate and the reasons behind them are accurate.

Pazzer_2

I have followed this thread with interest, and was motivated into doing something- ( I have a ScotAm endowment, sold by Bradford & Bingley for £35K, which had a projected shortfall ). I took some action in December via the endowmentaction link, and have been offered a £3000 compensation. Whilst this does not cover the shortfall, it's not bad for 20 minutes constructing a letter, and en evening's form filling. Don't be put off by the lengthy questionnaire - just be as honest as you can.

Thanks to you all

myk_2

Hi all, this is my first post.
I followed the advice and used the online help to fire off a letter of complaint to my endowment providers (Clerical Medical sold via Halifax BS).

I have recieved a letter saying they have upheld my complaints on the following grounds:
The endowment may not have been the correct way to repay my mortgage, the risks of a shortfall were not discussed or wether the sale followed the rules. Also that no other options were fully discussed.

The have declined my other complaints ie a guarantee that it would pay off the loan and leave a lump sum, fees were not explained and the method of investment was not explained.

I have been asked to choose 1 of 2 options instructing them to do the calculations to see if I am due compensation:

1 - Using my specific mortgage history, or
2 - Using edowment details and making assumptions about my mortgage ie that it was never in arrears or advance; there were no part payments etc

I no longer have the mortgage, but still pay the endowment (it matured in 2014). I made overpayments of over £2000 in the last few years before I paid the loan off in 2003. It was never in arrears.

Can someone please advise me what the best option to choose would be, which would give the best chance of a higher compensation amount (assuming the award me one!)?

Thanks in advance

dunstonh

Can someone please advise me what the best option to choose would be, which would give the best chance of a higher compensation amount (assuming the award me one!)?

Both options have the potential to pay more or less than you are entitled to depending on your personal circumstances. We cannot tell you what was best for you as we dont know your rate history.

myk_2

thanks....what do you need to know?

dunstonh

myk wrote:

thanks....what do you need to know?

The exact dates of every mortgage rate change since you had the mortgage and the exct rate is was changed to.

myk_2

hmm, a big ask that !!
I am sure it was the base rate from 1989 until Jan 2001 when it was changed to a tracker.
It then went from 6.5 in Jan 2001 to 4.75% in Sept 2003. It was then paid off in full.

Is that any help?

If not, does the fact that I made overpayments affect a possible compensation award one way or another?

And does the fact that it is no longer being used to pay off a mortgage make any difference?

thanks again