just a rant

onlyroz

We have an endowment policy taken out by my husband in 1995 due to mature in 2020. I have no idea if he was mis-sold but I know he would have signed anything his "financial advisor" put in-front of him so it is possible that he was. The policy is for £45k and the red letters we have been sent every year for the last decade currently estimate a shortfall of £15k. Instead of ranting and raving about the unfairness of life I've made sure that I have arrangements in place to make up the shortfall. The OP has not made clear how long they have been aware of the shortfall in their policy and what steps he is taking to rectify the situation. Some enlightenment would be appreciated.

lisyloo

why ever would any rational person want to start a mortgage for the most expensive thing they will ever buy and a savings scheme at the same time?

It was advertised as a "no brainer" and plenty of people (like parents) were extolling their virtues.
It's very easy to look back and criticise but the non-sophisticated are not to blame for being taken advantage of by sophisticated professionals who know how to sell.

nevertheless there were plenty of warnings about the 'low cost' endowment mortgages

I don't know what period you are talking about and I don't recognise that term, but we were lied to by our salesmen who we belived when he said the 6%, 9% and 12% figures were just a legal formality and on recent performance stupidly low.
Given that our parents and plenty of other people said the same then I think it's very easy to see why people would do this.

However it was a time when people 'trusted' their bank manager and other financial institutions.

My belief is that someone off the street being advised should be considered to be completely unsophsticated.
I don't think it would be that ridiculous to expect to trust a plumber, mechanic, roofer etc. (although common sense says get more than one quote).
We don't expect people to necessarily have knowledge of trades when they get work done so there shouldn't be a presumption that people are sophisticated investors - only reasonable common sense.

You seem to be criticising people when I don't believe there should be any obligation to become an expert before you do anything.
If a garage or plumber rips you off then it's not your fault simply because you weren't an expert in their trade.

lisyloo

we have been sent every year for the last decade currently estimate a shortfall of £15k

Just out of interest, if you think he may have been mis-sold then why have you not investigated that avenue?
I'm not saying file a claim automatically, I'm asking why you wouldn't at least look into that possibility as you seem to think it's possible.

But good on you for not ignoring the letters and doing something about it.

ukcarper

CLAPTON wrote: »

whilst the whole principle of endowments mortgages was a typical financial services fraud (why ever would any rational person want to start a mortgage for the most expensive thing they will ever buy and a savings scheme at the same time?), nevertheless there were plenty of warnings about the 'low cost' endowment mortgages.

However it was a time when people 'trusted' their bank manager and other financial institutions.

I don't think there were plenty of warnings about endowment mortgages in the late 70s and early 80s and there were reasons that made them attractive one of which was the built if life insurance.

Andy_L

ukcarper wrote: »

I don't think there were plenty of warnings about endowment mortgages in the late 70s and early 80s and there were reasons that made them attractive one of which was the built if life insurance.

Didn't MIRAS favor them over repayment as well - since you didn't pay off the mortgage principal until maturity you received more tax relief

CLAPTON

well the salesmen did indeed use the 'life insurance benefit' and the miras benefit to sell the product but they were obviously nonsense for the vast majority of people.

there were many newspaper articles counselling caution about low cost endowments

lisyloo

but they were obviously nonsense for the vast majority of people

That sounds like mis-selling.

there were many newspaper articles counselling caution about low cost endowments

That may be true, but if you're "joe public" and they are the professional then they still have an obligation towards you - whether you saw the newspapers or not.

ukcarper

CLAPTON wrote: »

well the salesmen did indeed use the 'life insurance benefit' and the miras benefit to sell the product but they were obviously nonsense for the vast majority of people.

there were many newspaper articles counselling caution about low cost endowments

In the 70/80s I'm not sure there was. Why do you think the life insurance benefit was nonsense.

ukcarper

Andy_L wrote: »

Didn't MIRAS favor them over repayment as well - since you didn't pay off the mortgage principal until maturity you received more tax relief

Also I believe endowment policy also had a tax advantage.

CLAPTON

ukcarper wrote: »

In the 70/80s I'm not sure there was. Why do you think the life insurance benefit was nonsense.

because life insurance is dirt cheap and the additional cost of endowment wasn't cheap


MIRAS tax benefit meant you paid massively more interest over the life of your mortgage and got a bit of tax back : letting the tax tail wag the dog.