Endowment miselling

fredericka_2

14 months ago I instructed a company to pursue a claim for 2 mis-sold endowment policies, with a predicted shortfall of £83,000. The company charged an initial fee of £350. The 2 policies have a further 5 years before cessation (2012) my monthly contributions amount to £300 per month. 4 months ago the company informed me that they had referred this matter to the FOS. In 1998 I sold my family home which over the years had fortunately increased in value and by renting a property I was able to pay my mortgage in full. At this juncture I was widowed with 3 children to care for and requested a surrender value of the policies but was informed that I would forfeit £13000 a sum I could not afford to lose.

This weekend I received a letter from the company informing me that the FOS have stated that if my complaint is upheld then the loss calculations will be capped to the date in 1998 when I sold my house and there is a strong possibility that it may not produce a compensation figure. The company say that the outlook is bleak. In April this year I had my 60th birthday and will have to continue working for the next 5 years in order to finance the said policies, I am at a loss to understand why my claim should be effected by the sale of my house as this is now my only means of a pension for I have not been able to afford alternative pension schemes.

I would really appreciate any advice you could offer.

defender_of_the_weak

Who is telling you this and why did they not explain this scenario from the outset (Perhaps the 350 up front may give a clue) Redress is supposed to put you back in the position you would have been in if you had taken a repayment mortgage so if you cleared your mortgage in 98 that is the date of the calculation. You need to get some independent advice on keeping the policies going, are they with profits or untised/unit-linked policies you should not keep on working just to finance endowment policies unless there is a strong financial gain at the end.

From the details posted I am guessing the plans were sold in 1987 and given the amount of premium it may well be that redress still leads to an offer based on the overall monthly expense involved when compared with a repayment mortgage but its not going to be 83,000

dunstonh

The 1998 date not "possibly" not resulting in redress is because the markets hadnt started the crash at that point and most endomwents would have been on track for surplus.

If you have a good endowment, then it is unlikely you will get redress. A bad one could still pay a very small amount but it is likely to be very small.

with a predicted shortfall of £83,000

There isnt any insurance company that issues predictions of what they final value will be. They issue projections at three example rates. The actual returns could lower or higher than those projections. They are just examples only. If with profits, the terminal bonus is not normally included in those projections and if there is a mortgage promise value, then that wouldnt be included either (NU, Std Life and Pearl).

In April this year I had my 60th birthday and will have to continue working for the next 5 years in order to finance the said policies

Like DOTW says, you shouldnt just keep working if the only reason is to pay the endowments.

this is now my only means of a pension for I have not been able to afford alternative pension schemes.

That is unfortunate but not something that you can really complain about. The monthly cost on endowment compared to repayment would have been largely the same (some periods would have seen endowment cheaper, some more expensive). So, funding for retirement wouldnt have been effected by either option.

and requested a surrender value of the policies but was informed that I would forfeit £13000 a sum I could not afford to lose.

Did you seek finanancial advice from an independent source at the time (or the tied agent from that company if applic)? If not, then the decision to keep it running after the mortgage stopped was yours and not a recommendation from an adviser. Therefore you have no grounds to complain about being told to keep it.

Who is the insurance company and is it with profits or unit linked?

EdInvestor

Post some information about the endowments so we can see what you should do with them.

Provider

Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity date
Maturity forecasts