endowment mis-selling

arealbasketcase

Hi guys, I'm trying to help my sister out with a few financial problems. I'm posting a couple of questions over a couple of posts in the hopes that someone who knows more than me (not hard) can help out.

My sister took out a mortgage almost 20 years ago, she wanted a repayment mortgage but was sold an endowment mortgage. In the world of mortgages it's tiny, she borrowed £28,000. 10 years ago she was told her endowment would fall short and re-mortgaged, again asking for a repayment but instead being sold a replacement endowment mortgage but with an element of repayment to make up the shortfall: £21000/£7000 split. Believe it or not, her insurance is actually unlikely to even make it to the £21,000 she needs to pay off her endowment mortgage in about 5 years.

When she took out these mortgages she was in a good job (local government), earning a decent salary. On both occasions she took advice from a financial adviser.

I had no idea about any of this, my sister has done a sterling job of hiding her problems from the rest of the family. She's finally opened up to me this weekend, basically because she has been made redundant from a third job in four years. How unlucky can one person be?

She knew about the mis-selling kerfuffle a few years ago but didn't think it applied to her. Do you? If you do, can she still make a claim?

She was also charged an early settlement fee on the A&L mortgage she remortgaged away from, cheeky to add the question on but if someone could tell me what you reckon her chances are of getting back the £225, pile in.

She really is skint, any tiny bit of money we can send her way is going to help.

dunstonh

10 years ago she was told her endowment would fall short and re-mortgaged, again asking for a repayment but instead being sold a replacement endowment mortgage but with an element of repayment to make up the shortfall: £21000/£7000 split. Believe it or not, her insurance is actually unlikely to even make it to the £21,000 she needs to pay off her endowment mortgage in about 5 years.

Are you sure she was sold a second endowment policy. There were hardly any endowment sales in 2004 and the last providers that had hung on pulled out that year. Normally with these things, the shortfall would be switched to repayment basis and the projected figure left on interest only to be covered by the endowment. Then told to review it again in future in case further tweaks are needed. I am going to assume that is what you mean rather than a new endowment policy being sold. However, can you clarify please?

She knew about the mis-selling kerfuffle a few years ago but didn't think it applied to her. Do you? If you do, can she still make a claim?

She will be well and truly time barred (as are most). She had 3 years from being reasonably aware of an issue to make a complaint if there was one. Her clock started ticking when she switched part of it to repayment basis.

She was also charged an early settlement fee on the A&L mortgage she remortgaged away from, cheeky to add the question on but if someone could tell me what you reckon her chances are of getting back the £225, pile in.

Is there any wrongdoing on the £225 being charged? For an A&L mortgage, that amount was typical for the era and didnt change for years. So, if it matched the contract she took out then she was charged what she should have been charged.

She really is skint, any tiny bit of money we can send her way is going to help.

not seeing anything on the complaint front though to help that.

arealbasketcase

Hi Dunstonh

I think I mixed my terms: It's definitely an interest only mortgage for £21000 plus a repayment mortgage for £7000, I've seen the paperwork with my own eyes. Even her monthly payments show the two loans with one balance reducing whilst the other isn't. She was not sold a further endowment (insurance) policy, just replaced one interest only mortgage for £28,000 with the one for £21,000.

I figured she was time barred because she took action to switch but you can't blame a girl for trying.

I'm still hoping someone can keep my dream alive. Do they take my sisters lack of understanding into account?

As for the £225 settlement fee, I thought the FSA had ruled these fees were inappropriate: http://www.moneysavingexpert.com/reclaim/mortgage-fees#why and wondered if others agreed with me that my sister would be entitled to at least reclaim these.

dunstonh

As for the £225 settlement fee, I thought the FSA had ruled these fees were inappropriate: http://www.moneysavingexpert.com/rec...tgage-fees#why and wondered if others agreed with me that my sister would be entitled to at least reclaim these.

The regulator had not ruled these were inappropriate. It ruled that lenders should not increase them above what was agreed in the contract. So, if the contract said £225 and she paid £225 then the correct amount was paid. However, if she paid £500 and the contract said £225 then the difference should be refunded.

arealbasketcase

thanks dunstonh, I'll see if she still has the info, I doubt it but you never know:)

I'll clutch at any straw to save her some money.