Last gasp attempt on Endowment Mis-sold

Most_Wanted

As part of her house purchase in 1993 my mother took out an interest only mortgage with a Standard Life endowment to pay for the £30k capital at the end of the policy term.

At the time of taking out the endowment she was not explained any of the risks that are now likely to be realised. i.e. endowment shortfall. She was in fact told that there is most likely to be some more left over after paying the mortgage.

I since managed to rearrange her mortgage to a repayment basis (albeit with 5 more years on the term). She still has her endowment policy making monthly payments into it.

My mother raised a complaint in 2003 with Standard Life and the IFA. They gave a generic response ( no responsibility, no compensation etc.). I lodged a complaint again with Standard Life, the IFA and FSA last year and was told that all the time periods which might entitle her to compensation have expired.

My question is, what can we do for her?
i. continue with the underperforming endowment making monthly payments?
ii. Sell the endowment to one of these endowment trading companies
iii. Pursue the complaint further with FSA - but on what grounds?

This is a genuine case as my mother (who speaks little english) was clearly cajoled into taking out an endowment which she would have otherwise have not taken out had she been made aware of the risks.

What do you suggest?

Thanks

EdInvestor

Most_Wanted wrote: »

My mother raised a complaint in 2003 with Standard Life and the IFA. They gave a generic response ( no responsibility, no compensation etc.).

At this point, the complaint having been rejected, you had six months to take it to the Ombudsman.As you didn't do that, unfortunately that's the end of the process unless you want to take it to court.


Post some info about the endowment for a view on what to do with it:

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

Interest rate payable on mortgage


You can also seek quotes for a sale by applying here: https://www.apmm.org

dunstonh

She was in fact told that there is most likely to be some more left over after paying the mortgage.

Nothing wrong with that. Indeed, it possibly suggests that she was told about risk. If you are told that there may be some left over, then its probable that you were told that it could fall short as well.

My mother raised a complaint in 2003 with Standard Life and the IFA. They gave a generic response ( no responsibility, no compensation etc.). I lodged a complaint again with Standard Life, the IFA and FSA last year and was told that all the time periods which might entitle her to compensation have expired.

That is correct. As Ed says, you have 6 months after rejection to take it further.

i. continue with the underperforming endowment making monthly payments?

Is it underperforming? Many Std Life endowments are getting back on track and some are still paying surpluses (despite projections showing shortfalls)

ii. Sell the endowment to one of these endowment trading companies

Its an option but consider why someone would buy it if its bad? Are you missing out on something that they see but you dont?

iii. Pursue the complaint further with FSA - but on what grounds?

The FSA do not deal with individual complaints. They only deal with complaints on a corporate level or where there may be issues of fraud or continued malpractice.

Most_Wanted

Sorry I meant the FInancial Ombudsman.
This is in fact a genuine case. Her ability to understand English is very basic and so the way she was told it was that you will have money left over at the end of the term. She definitely was not made aware of the risks as well.
The literature that accompanied the policy did not disclose that risk either

dunstonh

The literature that accompanied the policy did not disclose that risk either

I have never seen any literature that doesnt disclose the risk. Indeed, from the late 80s and increasingly more obvious in the 90s risk warnings appeared on multiple documents in multiple places.

A 1993 endowment would have had risk warnings on the illustration and key features document. The key features document would have had an aim, commitments and risk warnings section on the first page and the risk warnings section would cover it.

The problem here is that the complaint has timed out and it only tends to get overuled when there is significant grounds to do so, such as being in hospital for the 6 months after or new evidence.

On the upside, standard life endowments have been improving quite a lot and it may be heading back on track again (even if projections dont show it as Std life dont include final bonus and mortgage promise values in the projections so they always understate the real position).

Mr_helpful

Most_Wanted wrote: »

At the time of taking out the endowment she was not explained any of the risks that are now likely to be realised. i.e. endowment shortfall. She was in fact told that there is most likely to be some more left over after paying the mortgage.

Thanks

I find it strange that even people with limited understanding of English manage to understand the meaning of the word more but never understand or hear the word less.

Crazy_Saver

Mr_helpful wrote: »

I find it strange that even people with limited understanding of English manage to understand the meaning of the word more but never understand or hear the word less.

Hi Mr helpful, haven't heard much from you lately.

Please don't shout me down, as I am normally a supporter of your posts, but I would like to ask the IFA's out there a question.

I know that things in the financial world are very much different now compared to 15-20 years ago but......
can you honestly say,
hand on heart,
that you believe,
that back then,
the majority of endowments were sold by advisors who really did explain that there was a risk that your endowment may not mature with enough funds to pay back your mortgage in full.

I agree that most people were told that the figures were not guaranteed, but I really don't believe that they came away knowing that there could be a substantial shortfall. In fact the not guaranteed part was more than likely to have been interpreted as.........may not make exactly the figure shown on the quote.

Again, I must stress that I know that the way IFA's practice today really is a different kettle of fish compared to the way they practiced in the 80s and 90s.

Regards

dunstonh

I know that things in the financial world are very much different now compared to 15-20 years ago but......
can you honestly say,
hand on heart,
that you believe,
that back then,
the majority of endowments were sold by advisors who really did explain that there was a risk that your endowment may not mature with enough funds to pay back your mortgage in full.

Yes, I think most just about said it enough. I am sure the most common things said would have been along the lines that they are invested and that they may not hit target but that has never happened in the past. So it shouldn't be a problem.

I think many of the advisers got into the buy to let mindset we have today and believed they would always pay a surplus and that probably came across in the presentation.

Also, many of these meetings go back decades. I do find it strange that people can remember to the word what was said. My experience of it is that many of the people I saw wanted the cheapest mortgage repayment method as a priority and didn't care if it had the risk. They wouldn't remember what was or wasn't said just as much as I cant remember what was and wasn't said.

I am sure that a good number, and far too many, were mis-sold but not to the level that we have seen. Opportunistic complaints have been sent in.

In fact the not guaranteed part was more than likely to have been interpreted as.........may not make exactly the figure shown on the quote.

The figures in the quotes often showed one example not hitting target.

The problem when we get discussions like this CS is that there will be a poster or two who will join in and try and polarise the comments you make or I make to give the impression that you are saying that they were all mis-sold or I am saying none of them were. So, to pre-empt that happening. This is not the case.

There are still mis-sales going on today. I have persuaded someone recently to put in a complaint against another IFA over mis-selling on pensions with transactions that are done purely to generate a commission. Disgraceful actions to be honest and I am confident we will get at least £7000 redress. However, it saddens me that it still happens occasionally nowadays. With the lower regulation in the past, it would have happened more but not to the same level as the complaints suggest.

I have known lots of advisers over the years and I can tell you which ones are dodgy and which ones are average, good or excellent. The dodgy ones do tend to get caught. It may take a while but they are finding it harder to survive nowadays. There are too many average ones though and the FSA proposals should deal with them. Although not necessarily to the benefit of the consumer.

kelloggs36

some of us do remember exactly what was said at the time as it may have been odd. When we took out our endowment (now switched to repayment) I remember distinctly challenging the advisor as I had made it clear that we wanted a repayment mortgage, but all she quoted for was for endowments. I said to her that I had heard that endowments weren't great and may not pay off all the debt and she just said 'it has never happened'. I felt pushed into it but then regretted it.

terrierlady

yes I remember being told it was similar to a saving plan ,would make profit or at the very least pay off the amount borrowed nothing was mentioned of a shortfall 20 years ago

ManAtHome

Well I remember (nearly 30 years ago) saying "better go somewhere else if you only do endowments" and a repayment quote magically appeared. Most of the people I knew at the time who took endowments did it because the repayments were lower, and didn't seem to give a !!!!!! why they were...