We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Just received miserly endowment compensation offer, Advice needed please :-(

Options
This is my 1st post so please be gentle with me!

We started our mortgage in 1992 through an independent adviser. We had no savings and we were advised to take a 100% mortgage and an endowment with Standard Life ( Life with profits).

We were told that the endowment would pay off the mortgage after 25 years leaving us with a nice little lump sum afterwards. How naive we were!

Our last prediction dated June 2006 shows the following shortfalls...
RED ALERT:
Shortfalls:
Low Rate - £23250
Intermediate Rate - £19150
High Rate - £14450



I think that I may have gone about my claim for compensation in the wrong fashion. Let me explain...

We started the ball rolling with the FSCS just over a year ago. It appears that the Financial Adviser we used in 1992 ceased trading just after we started the claim. The FSCS has just offered us £492 in compensation!

My main questions are as follows...

Should we have tried to claim from Standard Life?
Have I gone about this in the wrong way?
Can we still claim from Standard Life?


I read about all of these fantastic compensation offers and can't quite believe what we have been offered. At the very best we are going to be nearly 15k short at the end of the term.

Any advice would be most welcome.

Comments

  • toonfish
    toonfish Posts: 1,260 Forumite
    first of all, you don't get "compensation" as such, but financial redress to put you back in the position you would be in had you taken a repayment mortgage at the outset. This is calculated to a set formula so, in effect you would have paid off £492 more on a repayment mortgage than the surrender value of your endowment.

    If you take the mortgage promise into account, potential terminal bonus and the standard life shares you probably haven't done as badly as you think.

    there's nowhere else to claim I'm afraid
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it.
    This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.



  • nickT
    nickT Posts: 4 Newbie
    Thanks for the reply. I am puzzled about these large settlements that I have read about. Are they just rare cases?

    From my point of view if I have been advised to take out a repayment mortgage I would not be looking at a 23 to 15k shortfall now.
  • JoeK_3
    JoeK_3 Posts: 1,374 Forumite
    The size of redress is based on the difference between an endowment and a repayment mortgage assessed at the time of claim. The large figures of redress that you are quoting will have been made at the time of the stock market crash, when bonus payments were at rock bottom.

    The good news is that stock markets have recovered and so has your endowment as a consequence.

    Do see an Independent Financial Adviser (IFA) that understands endowment shortfalls and projections to advise you.

    JoeK
    I am an Independent Financial Adviser.
    Anything posted on this forum is for discussion purposes only. It should not be considered financial advice. Different people have different needs and what is right for one person may be different for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser who can advise you after finding out more about your situation.
  • dunstonh
    dunstonh Posts: 119,609 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Should we have tried to claim from Standard Life?

    No. You cannot claim from them as they have never given you any advice.
    Have I gone about this in the wrong way?

    No.
    Can we still claim from Standard Life?

    No. They have done nothing wrong. One day an application turned up and they processed it as instructed.
    Thanks for the reply. I am puzzled about these large settlements that I have read about. Are they just rare cases?

    You are a few years too late. Endowments have been recovering and the big payouts of years ago are now much smaller as the stockmarket has recovered. Standard Life are not as bad as you think and indeed, if the redress is only £492, that probably means you are currently better off as they look at the surrender value and not the current value. The surrender value usually has a penalty which I would expect to be more than £492.

    Standard Life projections are notorious for understating the real position. They do not include the terminal bonus accrued to date and they do not include the mortgage promise value. At times, Standard life have issued projections which were lower than the guaranteed minimum maturity value which just isnt possible.

    You should ask Std Life for a new projection and you will probably be quite pleased at the improvement. You should also ask them the maximum mortgage promise value and the current terminal bonus. Add those two figures to the projections for a more realistic outcome.

    The people that got redress a few years back and held on to the good endowments have basically ended up with free money as there is a good chance many of them will end up hitting target and paying a surplus as well as being paid redress a few years back.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    To try and put this into perspective (and for some suggestions about dealing with the shortfall), post some more info about the policy:

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

    Interest rate you are paying on the mortgage
    Trying to keep it simple...;)
  • MoaningMyrtle
    MoaningMyrtle Posts: 1,968 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    I know someone who got good compensation she and was mis-sold a pension mortgage. I know she went through SESAME and she also had every piece of paperwork from 1986 onwards. She got the money last year to enable her to pay off her mortgage, otherwise she would have had to sell her flat.
    A minute at the till, a lifetime on the bill.

    Nothing tastes as good as being slim feels.

    one life, live it!
  • dunstonh
    dunstonh Posts: 119,609 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    I know someone who got good compensation she and was mis-sold a pension mortgage. I know she went through SESAME and she also had every piece of paperwork from 1986 onwards. She got the money last year to enable her to pay off her mortgage, otherwise she would have had to sell her flat.

    Strange one. Sesame only deal with IFAs and any case sold before 1988 is automatically rejected as being prior to regulation.

    The shortfall is not paid. If she did get redress as you suggest, then the surrender value of the policy was probably included in the redress which artificially increases the value.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.8K Banking & Borrowing
  • 253K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.8K Work, Benefits & Business
  • 598.6K Mortgages, Homes & Bills
  • 176.8K Life & Family
  • 257K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.