Endowment Mis-selling - Don't give up!

Lally

vinno65 wrote:

Hi Lally,
I wonder if you would expand on your post. On the one hand you say that you work in the industry and have seen illustrations signed by people that clearly show the possibility of a shortfall. This is not in itself enough to make a sale compliant. The salesperson must explain specifically and verbally that an endowment is not guaranteed to pay off a mortgage. How many people, who after recieving a lengthy sales patter about how wonderful endowments are, how much money would be left over, how much cheaper they were than repayments etc etc etc, were the passed a ream of documents and told to sign here, these documents explain all that you have just been told!!. We as consumers have a right to believe what we are beig told by a salesperson is the truth. Salespeople can not rely on product literature later, that they payed scant regard to at the point of sale.

If these sales people had specifically and verbally told people at the point of sale that endowments were not in fact guaranteed to pay of your mortgage, how many people do you think in all honesty would have bought one and in fact gambled their homes on the chance of making a tax free lump sum?

On the other hand you say that like a fool you also bought one. Were you aware at the point of sale of all the risks? and if yes then why did you recieve redress?
regards Vinno

When I bought one it was 9 years ago and I wasn't made aware of the risks. The illustration I was given DID NOT show a shortfall. Such cases are rare but they do occur. At that point I was fresh out of Uni and didn't have any financial awareness whatsoever - all these 'suitability' factors are taken into account too. I was on a low income in my first job and was only 21. No savings or investments, lots of student debts.

In the company I work for the illustrations are pretty clear and show a middle figure which meets the mortgage amount, one lower which shows a shortfall, and one higher which shows a potential surplus. Of course we look at the whole sales process and if it is flawed in any way, even if an illustration is evident, then we uphold the complaint. And also it depends on when the policy was sold, different regulations at different times affect the case. Every single case we pick up sayd "I was promised......" but the illustration shows otherwise. Some people even send one in with their claim form!!

If I can be of any more help then just ask. But don't ask me to say who I work for....

Lally

Typo - it was 9 years ago (changed from 6)

dunstonh

The illustration I was given DID NOT show a shortfall.

Which means that the projection rates used were sufficient to meet the target.

In the company I work for the illustrations are pretty clear and show a middle figure which meets the mortgage amount, one lower which shows a shortfall, and one higher which shows a potential surplus

Which could mean that this endowment is worse than the one above (or better). By itself though, that is no indication of the quality of the endowment.

dreamylittledream

dunstonh wrote:

Which means that the projection rates used were sufficient to meet the target.



Which could mean that this endowment is worse than the one above (or better). By itself though, that is no indication of the quality of the endowment.

Surely it also depends on the growth rates being quoted.

I seem to recall Allied Dunar were still quoting 9% as a matter of course in the late 90s.

dunstonh

dreamylittledream wrote:

Surely it also depends on the growth rates being quoted.

I seem to recall Allied Dunar were still quoting 9% as a matter of course in the late 90s.

I have seen AD policies needing more than 9%. Totally crazy but that was AD for you.

The point I was making was that just because the illustration growth rates didnt show a figure that gave a shortfall, it doesnt make it a bad endowment. Indeed, it could be a very good endowment. For example, a unit linked endowment with a target growth rate of 4% p.a. wouldnt have an illustration showing one of the figures in shortfall. That endowment would be better than a unit linked endowment showing the mid rate hitting target and the lower rate showing a shortfall.

However, the issue can become confused when looking further back in time when higher growth rates were used on projections and then you have the lautro rates period where the projections on the illustrations werent even accurate.

Lally

dunstonh wrote:

Which means that the projection rates used were sufficient to meet the target.



Which could mean that this endowment is worse than the one above (or better). By itself though, that is no indication of the quality of the endowment.

Exactly why my complaint was upheld. The illustration did not allert me to the fact that the target may NOT be reached.

Iona_Penny

I think the thing that really bugs me about the whole endowment thing is that I have kept my side of the bargain and feel let down that somehow the other side did not keep theirs.

Halifax 'insisted' we took and endowment out and switch from our original repayment when we wanted to borrow extra for an extension. It was a Std Life policy and drawn up in 1988. I did complain to the Halifax but had no paperwork and felt they were to blame, but got nowhere.

Now my argument is that I don't expect more than the sum needed to cover the then mortgage (although it was suggested there would be enough extra for a world cruise!) but we paid the policy premiums every month and are likely to be shortchanged (in July) If I knew then as a naive 25 year old what I know since getting older and a lttle more financially astute thanks to this site,... well who knows

vinno65

[QUOTE=Lally
In the company I work for the illustrations are pretty clear and show a middle figure which meets the mortgage amount, one lower which shows a shortfall, and one higher which shows a potential surplus. Of course we look at the whole sales process and if it is flawed in any way, even if an illustration is evident, then we uphold the complaint. And also it depends on when the policy was sold, different regulations at different times affect the case. Every single case we pick up sayd "I was promised......" but the illustration shows otherwise. Some people even send one in with their claim form!! [/QUOTE]

Hi Lally do you not see that the majority of these people were conned by hardsell! You say that every complaint we pick up, people say they were promised, I put it to you that this is because they were! Seriously consider this question. What percentage of people do you truly believe, after having had an endowment explained correctly to them, i.e. that it is NOT guaranteed to pay the mortgage, and dependant on prevailing investment conditions may in fact leave you with a considerable shortfall, how many people do you believe would have gambled their houses?
Salespeople are not allowed to rely on product literature. The sale itself has to be compliant. The product literature is often at odds to what people had been told. People have a right however to accept what they have been told by a saleperson as being the truth. "You should have read the small print" is no excuse. The salesperson should have pointed out the small print to you!!
People who complain are finding that their recollections of what they were told verbally at the point of sale is routinely dismissed. The bog standard reply from firms is" obviously we do not know what was discussed at the meeting, so we have to rely on documentary evidence blah blah blah". This goes completely against what John Tiner the head of the FSA told firms in his letter to them in 2002.
People have been mugged and the financial services industry is getting away with saving itself billions that poor old joe public is going to have to find.
I don't want to know what firm you work for, but from your comments it seems as though most complainants are treated as chancers
regards Vinno

dunstonh

I don't want to know what firm you work for, but from your comments it seems as though most complainants are treated as chancers

A lot complainants are chancers and it's those which have caused companies to take the heavier approach on all complainants. The endowment complaints proceedure allows people with genuinely sold endowments to complain and make up a story with no loss or comeback at all to them.

People have been mugged and the financial services industry is getting away with saving itself billions that poor old joe public is going to have to find.

Thats too strong. Whilst I never sold any endowments as an IFA, I did as a tied agent many years ago (not one has had a complaint in although they were all 4.4% target growth rates and unit linked so thats probably why) and you had people asking for endowments as their parents had them and they had paid out big surpluses. Even after being made aware of the potential for loss, they would still go ahead. Consumers were just as motivated on the greed side as perhaps the advisors were.

Remember, you had the Consumers Association recommending endowments back then too. It was treated as acceptable as until 2001, endowments hadnt failed to hit target. I think it was more a case of people accepting that they would always get surpluses. Just as people doing buy to lets now assume incorrectly that they are dead certs to make money now. The risk is ignored. That is until it goes wrong.

BACKFRMTHEEDGE

We were all defininately mugged. All criminals think there victims deserve it and think it's OK to do what they do...you're just trying to appease your collective guilt. You're no better than the bloke in the balaclava or someone who steals money of old ladies. :cool:

defender_of_the_weak

Most of these policies were sold by people who did not understand what they were doing and believed the latest sales meeting and managers hype. The heavier approach on complaints has absolutely nothing to do with 'chancers' and everything to do with protecting shareholder value and avoiding liability for the management past mistakes. ie 'We forgot to train them properly.

IMHO the criticism of dunstnh is unwarranted, we may not agree from time to time but I dont think your comments are fair