L&G Endowment Crooks

BookerTee

Hi all

I started an endowment policy many years ago with Legal & General and it is due to mature in two years time. Inevitably there is a considerable shortfall, looking back a more recent statements was pretty shocking. In the last 10 years the basic endowment fund has grown by only £1500 which represents a truly pathetic growth rate of approx 1.1% a year. However over the same period I actually paid in £4644 all of which has basically vanished! I have asked L & G for details of where all the money has gone, they have basically said ‘it varies’ so have refused to say anything. I have had a few dealings with L & G over the years and they have always been highly evasive and downright condescending, it typically takes 4 or 5 persistent letters to get past all the lies and waffle. My preference at the moment is to take it to the financial ombudsman because this is not shameful mismanagement its outright fraud! I just wanted to get a few other opinions and comment, has anyone else pursued a similar case?

dunstonh

In the last 10 years the basic endowment fund has grown by only £1500 which represents a truly pathetic growth rate of approx 1.1% a year.

Not unexpected given that period in question and the guarantees that are in place.

However over the same period I actually paid in £4644 all of which has basically vanished!

No it hasnt. If you have a conventional with profits plan, you have four parts to the policy. The guaranteed basic sum assured which is gained from day one but paid for over the whole term. The annual bonuses (which tend to be very low) and the final bonus paid in full on maturity. The last bit is the cost of life assurance.

I have had a few dealings with L & G over the years and they have always been highly evasive and downright condescending, it typically takes 4 or 5 persistent letters to get past all the lies and waffle.

I would not disagree with your views on L&G. I have had similar experience and that is from someone L&G wants to be recommending their products.

My preference at the moment is to take it to the financial ombudsman because this is not shameful mismanagement its outright fraud!

The FSA does not allow complaints about investment returns and the figures are in line with expectation for the period in question. No wrong doing there. The FOS will not be able to rule on a complaint like that.

BookerTee

Thank you for your reply, let me add a little more.

dunstonh wrote: »

Not unexpected given that period in question and the guarantees that are in place.

L&G's own figures for with profits plans for this period show returns of -9%, 14%, 12%, 19%, 11%, 4%, -18%, 14%, 13%, 2%, 11%. No Idea what guarantees you mean?

dunstonh wrote: »

No it hasnt. If you have a conventional with profits plan, you have four parts to the policy. The guaranteed basic sum assured which is gained from day one but paid for over the whole term. The annual bonuses (which tend to be very low) and the final bonus paid in full on maturity. The last bit is the cost of life assurance.

Yes there is a basic 'amount' that remains unchanged however I have paid in way more than the amount they quote. Annual bonuses I have quoted. The final bonus is NOT necessarily paid it has also been as low as 15% over this period. Even at 100% its less than the shortfall. The life assurance is about £8 according to their own webpage which I accept is where some of the money goes.

dunstonh wrote: »

I would not disagree with your views on L&G. I have had similar experience and that is from someone L&G wants to be recommending their products.

I phoned them and was eventually put through to the duty manager who simply dodged every question he didnt like by giving a completely irrelevant answer. When I persisted he simply talked round in circles to take the p*ss.

dunstonh wrote: »

The FSA does not allow complaints about investment returns and the figures are in line with expectation for the period in question. No wrong doing there. The FOS will not be able to rule on a complaint like that.

The returns bare no relation to what was expected or L&G's own figures for the period. My complaint is that all of the money I pay in disappears without being accounted for. Between 2004 and 2005 the endowment value rose by less than £30 every penny paid in vanished.

Edit: An building society savings account would have produced way, way better returns than currently being received. Plus they dont steel all of your capital in exchange for 1.1% interest!

dunstonh

Between 2004 and 2005 the endowment value rose by less than £30 every penny paid in vanished.

And how much did it go down by in 2000-2003? The stockmarkets fell by over 40% in that period. I suspect you saw nothing of the sort. The smoothing on it would have seen the WP fund fall less but also in the growth period that followed, it would have gone up less as well. Not helped by the regulator insisting on increased solvency in that period onwards meaning the WP fund is mainly invested to meet guarantees and liabilities as a priority.

Dave_the_Ginger_Cat

If people are unwilling to take any form of risk with their investments, then I would recommend they do not enter into an endowment or market linked savings plan

Stick to interest paying accounts, and please don't complain when they are volatile

Let_Us_See

You have to remember that the investment part of your endowment can go up and down. Unfortunately, for you it is the latter.

BookerTee

dunstonh wrote: »

And how much did it go down by in 2000-2003? The stockmarkets fell by over 40% in that period. I suspect you saw nothing of the sort. The smoothing on it would have seen the WP fund fall less but also in the growth period that followed, it would have gone up less as well. Not helped by the regulator insisting on increased solvency in that period onwards meaning the WP fund is mainly invested to meet guarantees and liabilities as a priority.

In 2002 the bonus was only 15%, thats 15% of the already pathetic total bonuses accrued (in my case the bonus would have been less than £600!!!!). Anyones endowments maturing in those years would have got hammered despite all of the profits made by L&G in the years leading up to that period (the stock market had risen to an all time high). They were not shielded from the stock market crash in any way by 'smoothing'

BookerTee

Dave_the_Ginger_Cat wrote: »

If people are unwilling to take any form of risk with their investments, then I would recommend they do not enter into an endowment or market linked savings plan

Stick to interest paying accounts, and please don't complain when they are volatile

23 years ago these 'with profit' endowments (a relatively new thing at the time) were sold as long, long savings plans, there was never any real suggestion that there was any risk. The predicted growth rates were very modest at that time. This endowment was supposed to pay off the mortgage after 18 years or hold on till 25 years for the 'profits'!!

Had I simply put the money in a building society I would have been better off, despite L&G making good returns for themselves.

BookerTee

Let_Us_See wrote: »

You have to remember that the investment part of your endowment can go up and down. Unfortunately, for you it is the latter.

Did you read ANY of my previous posts?

As I have already said L&G's own figures (see previous post) show they have made very high rates of return on these very investments. The odd negative years are greatly out weighed by all of the other years. The average over the last 11 years is 6.64% a year but they have given bonuses of 1.1%.

When I say 1.1% that is calculated without any payments going into the endowment i.e just stagnant grow. ALL payments over this period are 100% unaccounted for.

BookerTee

My complaint really has nothing to do with how the crooks at L&G have massaged the figure in the past to benefit themselves as abysmal as it is.

Currently from one year to the next the full surrender value of the endowment (including final bonus) is increasing by about half the amount paid in. In other words I would gain twice as much if I simply cashed it in and stuffed the money under my mattress. I cant see this as anything other than fraud!

dunstonh

23 years ago these 'with profit' endowments (a relatively new thing at the time)

With profit endowments had been around for many decades before that. What was newer was the low cost endowment. Previously full cost was the norm.

Had I simply put the money in a building society I would have been better off, despite L&G making good returns for themselves.

L&G would almost certainly love to get rid of the with profits fund just as most other insurers have tried to. Its a mill stone for most insurers and actually forced many to close their doors as they could not afford to carry on running.

They were not shielded from the stock market crash in any way by 'smoothing'

The underlying fund wasnt but the end investor was largely protected at the time but it took the next decade for the underlying fund to catch only for the financial crisis to shove them back under again.