Endowment Mis-selling - Don't give up!

iwilliams0511

Ok

I didn't want to hear this but i guess i will have to move on an make other financial arrangments

Binbun

Hi Everyone

Can anyone offer some endowment mis-selling advice please, I'm in the position where I still have endowments, which I am relying upon, but the original mortgages have ceased due to a divorce.

I have two endowment policies one from 1987 for £20,600 and a second from 1989 for £5,000, both arranged by the old Leeds Permanent BS with Norwich Union. Both NU policies are still running and I discover have substantial shortfalls. However, the original mortgages that these covered are no longer in existence. They were paid off to the Halifax (who took over Leeds Perm) in Jan 2005 when my ex husband and I divorced! Family home was sold and these endowment mortgages and a further repayment mortgage were settled. We decided to keep the policies running jointly and made our son the beneficiary of them when they mature in 2012.

Thanks to MSE advice, I have taken the plunge to complain about our endowment policies taking on the smaller 5K policy first. I filled in the questionnaires as best I could and after a couple of weeks have been told the Norwich Union have upheld the complaint. I have now had an offer of £570 ex-gratia payment and I am not sure if this is a fair offer. They say the policies present value is £2100. Nevertheless, a couple of things puzzle me in the offer (although the whole calculation I do not really understand) Firstly, they have said that their calculations have taken into account that the mortgage has already been repaid, but don’t say how this has affected the offer.
Would this have made the offer less? I hope not, I cannot see that is fair if it has! Although this mortgage is repaid I have had to start again post divorce and now have a massive repayment mortgage round my neck for the next 24 years remaining (I'm sure I'm not the only one who's been here). I was hoping that when the policy matures it would give my son a decent amount of cash to help with his student fees/loan etc.

Secondly, they say that their calculations show that outgoings for an endowment mortgage have been less than those under a repayment mortgage and have excluded this amount from their calculations. What on earth does this mean? Has that made the offer less too? I'd like to try and understand a little better before I send off the £20k complaint to the Halifax.

The NU says my choices are to:
Accept the offer and surrender the endowment and life cover will cease.
Or
Accept the offer, keep the policy running, and accept the risks.
Or
Reject the offer.

What is best to do with endowments these days? Should we keep them going or should we surrender them? I've always thought it was a bad move to cash in your endowment, and wasn’t expecting the NU to offer this as an option. Although I haven’t tackled the Halifax yet to complain, I have a two year old statement from the NU that suggests that the 20k target endowment is projected to reach 13.5k at maturity. How accurate are these projections now? Can we trust them?

I was typically mis-sold these endowments in the 80's boom, with the promises of profits like many people. I was asked in the questionnaire what I would have done if I hadn’t taken the endowment, and knowing what I know now, I answered I may have taken a repayment. But, I can’t honestly say I know what I would have done as I wasn't offered an alternative! I assume that’s why they have compared the two in their compensation calculation.

Any advice on what I should do would be greatly appreciated.
Many thanks

silvercar

The compensation is designed to put you in the situation you would have been had you taken a repayment mortgage in the first place; it is not designed to give you the "promised" target amount.

The theory is that you would have always paid off your mortgage when you did so this is taken into account in the calculations. They would have compared the costs of the endowment mortgage with the theoretical repayment costs upto the point at which you paid off your mortgage.

their calculations show that outgoings for an endowment mortgage have been less than those under a repayment mortgage and have excluded this amount from their calculations

So you are not due any compensation for this as your costs have been lower.

I have now had an offer of £570 ex-gratia payment

I would guess that this is to reflact the fact that you have continued to pay premiums even after paying the mortgage off.
I would say you are lucky to be offered an ex-gratia payment, compared to what other people have reported.

The NU says my choices are to:
Accept the offer and surrender the endowment and life cover will cease.
Or
Accept the offer, keep the policy running, and accept the risks.
Or
Reject the offer.

Some would say you complained the policy was missold so you should now surrender the policy, after all you said you were missold it.

In practice you need to decide whether it is worth keeping on. Post some details on here of the bonuses, assured sum, monthly premiums etc and I'm sure experts (not me!) will advise.

Rather than surrender the policy you may want to try and sell it (search TEP - traded endowment policies - on google).

If you reject the offer you may have to wait ages for the ombudsman to make a decision. By which time the offer could be withdrawn and you would lose the payment offer. All the endowment companies use set calculations to determine compensation so I dodn't know that you would gain anything by rejecting the offer unless there are other circumstances to those you mentioned that haven't been taken into account.

dreamylittledream

W_s_n wrote:

Thanks again dreamylittledream. I actually got a reply today regarding the letter I sent.

To quote the letter it says
'As we were acting as Appointed Representives of Winterthur Life at the time of the policy sale it is to them that any complaint regarding the advice should be referred and I have, therefore, forwarded your letter to their complaints manager, who should respond to you shortly.

Does this sound about right? Or are they fobbing me off?

Regards, W_s_n

Sorry for the delay in reply.

If the selling agent was 'tied' to Winterhtur at the time (meaning they only sold their policies) then the liability for the sale rests with Winterthur and not the actual adviser that sold you the policy.

Ordinarily this would be a good thing (as life firms are more inclined to uphold complaints then small advisers - simply because the costs are less serious) however, Winterthur do not have the most reasonable view to of endowment complaints. Expect probably to be sending this one to FOS

W_s_n

dreamylittledream wrote:

Sorry for the delay in reply.

If the selling agent was 'tied' to Winterhtur at the time (meaning they only sold their policies) then the liability for the sale rests with Winterthur and not the actual adviser that sold you the policy.

Ordinarily this would be a good thing (as life firms are more inclined to uphold complaints then small advisers - simply because the costs are less serious) however, Winterthur do not have the most reasonable view to of endowment complaints. Expect probably to be sending this one to FOS

I've not logged in for a few days so no probs for the delay.... life goes on
eh. Sorry for asking yet another question, but in your post you mention the FOS... what does this stand for?

Thanks, W_s_n

dreamylittledream

W_s_n wrote:

I've not logged in for a few days so no probs for the delay.... life goes on
eh. Sorry for asking yet another question, but in your post you mention the FOS... what does this stand for?

Thanks, W_s_n

Sorry - jargon alert.

FOS stands for Financial Ombudsman Service - rather like a court of appeal for complaints with fiancial services companies. If you feel your endowment complaint has not been fairly reated by a selling agent you can appeal your case to the Ombudsman within six months.

BigDonut

Hi All,

Thaks to Martin's prompting I decided to complain and my complaint has been upheld.

One part of the compensation calculation refers to "compensation in lieu of gross interest at FOS rates"

Does anybody know what these rates are or could they point me to the rates.
I'd like to double check the calculation made because it seems like the rates they used were quite low.

Or If I give someone the figures and dates could they give me what they think the figure should be

Its probably right but I already found a misprint in the letter where the calculation date was stated as 2 years earlier than was used in the calculations

Thanks

dreamylittledream

FOS interest rates are sometimes known as 'court rate' (ie they are the interest awarded by law courts)

They are 15% simple up to 1993 and 8% simple thereafter

Not bad really...

tigertiger_3

Hi, my husband and I have been pondering wether to put a claim in for this.....he has X2 endowments that are not linked to a mortgage and have 9 years to run ( sold house)
the problem being is these were sold through a broker who is a family friend and puts a lot of work our way ( hub is builder). When making a claim for being missold do we have to involve the broker? The endowments are with norwichunionand principality
any help appreciated.

savingnow_2

I'm probably going to upset many people who were genuinly mis sold endowments, however the normal premise applies, that you get nothing free in this life which was true in the 80's as it is now.

Easy for me to say since I took out a repayment since I decided to pay more off my mortgage rather than go for the greed element of a potentiallty a big carrot at the end of the endowment. I was given the selling of endowments by a broker and bank and both the statements which i would have had to sign did state that the investment could go up or down.

Yes there were mis sellings but how many people were told the truth only to find their greed made them blind.

It was a choice you made therefore don't complain and certainly don't expect any compensation.

What about those people who lost as a result of equitable life, did they get compensation.

Apologies again to all those people who were genuinley mis sold, which I believe is only a small proportion.

Don't forget, nothing is free. free today means someone else needs to pay tomorrow.