Endowment Mis-selling - Don't give up!

dunstonh

I followed the advice and wrote in May to the 3 endowment companies that I had bought from. I'm now confused since all 3 have replied that they have nothing to do with my complaint and that I need to contact the organisations that sold me the endowment policies.
Is this correct?

Yes it is. You are complaining about the advice. Not the product. Therefore the complaint goes to the advising company.

And do I just send the same letter to these companies or do I send the letter to the Ombudsman, since the policies were sold in the 1980's.

The ombudsman only deals with complaints if you and the advising company cannot agree with the outcome. They will not review complaints if you havent gone through the process first.

Regulation didnt come in until 1988 and any policies sold by IFAs, solicitors and accounts before regulation took affect will be rejected and there is nothing you can do about it. As the insurance companies have rejected the complaints saying it wasnt them, its quite probable that this applies to you.

IanS

Hi,

I took out a 20 year policy with an original target value (at 7% growth) of, and life cover for, £27,500 in July 1997. I moved house in Dec 2004 and took out a repayment mortagage for my new property but am using the endowment as life cover.

I complained directly to the company that sold and manage the policy and I've just been offered £1,200 compensation.

Is this good, bad or about par?

dunstonh

I complained directly to the company that sold and manage the policy and I've just been offered £1,200 compensation.

Is this good, bad or about par?

Far too many variables to take into account. However, the calculation process is defined so unless you think the input figures are wrong, then it should be right.

IanS

Thanks dunstonh :-)

In round figures, up to Dec 2004 when I changed mortgage...

Cost of repayment mortgage: £6,400
Surrender value of plan: £5,750

---

Difference: £650
Add..
Adjust for costs: £450
Interest: £100
Total: £1200

The numbers add up - I don't necessarily agree with the formula. Personally I think they should consider the life of the plan, or at least up until the time that you claim and not when you change mortgage. In my case the reason why, and therefore the date I changed was down to a chance occurance that altered the direction of my life. Had I left the house 5 minutes earlier, caught a different bus, had a curry the night before things would have been very different and I might still have the original mortgage and therefore be entitled to more compensation.

dunstonh

The numbers add up - I don't necessarily agree with the formula. Personally I think they should consider the life of the plan,

Many in the industry think the same as well. Especially when you consider that most 25 year endowments are expected to come in with a surplus despite the projections showing otherwise (usually down to flaws in the projection method). It seems to be taking hold higher up as well that lots of people are getting redress but will also see a surplus meaning the advice they complained about came in right at the end. The ends dont justify the means but if the redress calculation was left to the end at least it would be fair and simple to understand. The stronger financial services companies would probably have preferred that but the weaker ones would have suffered big time and it may have made a number insolvent. This is probably why the current method was chosen instead.

phingers

I complained to the fiorm of solicitors which, via their IFA sold us an endowment in June 1998. We corresponded back and forth for 4 months with them requesting more info. Finally got a dossier(!) with all the paperwork (client questionnaire etc.) showing we 'had a balanced view towards risk' and basically covering their backs. The IFA had done her paperwork extremely well...Also stated that they cannot be held responsible for the downturn in the stock market/ war in the middle east etc.

So I wrote to CM and said it should be they who make an offer of compensation for causing us to switch to a repayment mortgage at much higher cost as we do not wish to arrive at end of mortgage with an insufficiently loaded repayment vehicle.

They said....Nope! Not their fault. Funds managed correctly. If I wish to complain further then write to the FSA.

But is it really worth it? I'm thinking not but if anyone has a similar experience and had success I'd love to hear.

Thanks.
Miffed of Ashford!

SomeBozo

Hi all

Just to let me know my expereince.

We got a endowment from Allied Dunbar in 1998 for £42000

In early 2003 we swapped to an repayment mortgage and kept the endowment.

We followed the advice here on MSN and sent a letter. They sent back a questionnaire that meant me digging out my old bank staments and I am not kidding within a week we had a cheque (well actually 2 cheques) totalling £2600.

My argument was that I was never told there was a risk. They agreed 100%!

Thanks all!

Some Bozo

dunstonh

I complained to the fiorm of solicitors which, via their IFA sold us an endowment in June 1998. We corresponded back and forth for 4 months with them requesting more info. Finally got a dossier(!) with all the paperwork (client questionnaire etc.) showing we 'had a balanced view towards risk' and basically covering their backs. The IFA had done her paperwork extremely well...Also stated that they cannot be held responsible for the downturn in the stock market/ war in the middle east etc.

A 1998 case "should" have decent paperwork and the result doesnt surprise me.

So I wrote to CM and said it should be they who make an offer of compensation for causing us to switch to a repayment mortgage at much higher cost as we do not wish to arrive at end of mortgage with an insufficiently loaded repayment vehicle.

CM have nothing to do with this so there is no point doing to them.

If I wish to complain further then write to the FSA.

But is it really worth it? I'm thinking not but if anyone has a similar experience and had success I'd love to hear.

No point writing to the FSA. They dont get involved in complaints and would only return your letter to CM who in turn would pass it to the advising firm.

sondheimsoc

Sorry this is so long but I wanted to get everything in and I really could do with some advice.
I followed all the advice on here and wrote to the broker who sold us two endowments (sadly a family friend). He asked us to complete the usual form which we did. We have now received a lengthy reply from him,saying there is no fault on his part. He tells us we have a right to go to the Ombudsman, I just wanted to check whether we should now give up.
He didn't address one of our points which is that the endowments were due to mature 2 years after my retirement, which when we took them out was age 60.
His points:
Scottish Equitable policy
Original proposal signed Feb 4th 1988, advice given was before the FSA came in, duties were different.
At the time:
It was always my practice to compare costs of repayment and endowment
Tax advantages were enhanced for “standing” or interest only mortgage
Practice of insurance companies to issue endowments with a minimum of underwriting questions
Low start endowments were attractive to keep costs down

None of theses points could have been covered had the various options not been considered
You were offered 2 illustrations, a level premium and a low start.
The illustrations clearly show a guarantee of mortgage repayment of death during the period of the policy but that the maturity values on survival to the end of the contract could only be estimated using various assumed rates of return. The illustration shows that at a lower rate of return, the target amount may not be reached (NB neither of us have any memory of being told that , but to be fair it was 28 years ago).
At the time, no adviser would have any reason to suppose an endowment would not meet the mortgage liability it was meant to (so how come any claim has succeeded?)
There was no requirement to establish an attitude to risk.
It was my normal practice to use well-established and reputable companies where I believed clients would maximise returns. I believe that the advice I gave you at the time, having known each other for many years on a social level, was made in good faith with the information available at the time.
First letter from Scot Eq in November 2000 showed possibility of a substantial surplus at 8% and a very small deficit at 6% (which is why we didn’t worry at the time)
Things deteriorated again but by May 2005 a surplus was anticipated at a growth of 7.5%.
During this time you sought advice from me and another IFA but eventually made your own decision to surrender the policy which you did in August 2005 for £22,884.28

Friends Provident policy
Same comments
Contract taken out shortly after the other one, at which time you were content with the concept on an endowment mortgage. The new contract was taken out with another reputable insurer to spread the investment risk between two companies.


During the 18 years you have re-arranged your mortgage on more than one occasion and I can only assume that you took advice from those who were making the new arrangements and saw no reason to make any remarks at that time.
I therefore have to conclude that the main source of your concern is the investment performance of the contracts in light of the recent financial conditions rather than the concept of an endowment.
This is borne out by your covering letter.
Notwithstanding the above it is clear that your complaint cannot be considered as it falls outside the time limit: six years from the time our advice or service was provided or three years from the time of discovery of the fact that the alleged negligent action has resulted in damage.
Advice given in 1988, first shortfall letter November 2000, your letter February 2006, so your complaint is legally disbarred.

dunstonh

Scottish Equitable policy
Original proposal signed Feb 4th 1988,

He has no liaiblity to even review the complaint on this policy as it is pre-regulation. You won't get anywhere with this one. It is also before the ombudsman's time as well so they wont review it either.

Friends Provident policy
Same comments

Taken out shortly after but when? This is important as the date of signature on the application is the date the ombudsman will look at to see if you can complain to them. As regulation came in during 1988, the exact date could come into play here.