Initiating a complaint about an endowment’s performance

kingstreet

Presumably, this is a unit-linked endowment, rather than with-profits? Barclays Life/Woolwich Life were unit-linked offices if my memory of the late 80s isn't letting me down...

Why are you relying on projections, instead of actually valuing the number of units you hold against the published unit price on a given day?

As the premiums you will pay in the time until maturity are finite as are the charges, you should be able to estimate with a fair degree of accuracy how many units you will hold at maturity and can value them based on the current unit price?

GWAM

Hello kingstreet,

Thank you for responding. Sincerely appreciated.

You are right, the Woolwich Life endowment was/is indeed unit-linked.

The only reason I'm citing projections today is that I have so far only received the annual projection illustration thus far in 2016.

The unit statement comes in August.

So, I'm just comparing like-with-like for the moment, just for exercise purposes. It was the projection illustration that prompted me today to initiate the complaints process and contact the Ombudsman.

But even so, the recent years unit statements have told a similar tale - a gradually stalling fund.

E.g. our fund values of late have been:

2012 = 15.3k;
2013 = 17.7k;
2014 = 18.7k;
2015 = 19.3k;

The actual growth of the fund is clearly slowing. At the same time, the projection amounts have also sharply reversed: e.g. the 1.50pc forecast is now back to 21.5k (roughly where we were at 2012 when the actual fund value was at 15.3k). Although I bear in mind the clear advice given by dunstonh above that it is the regulators that set these projections.

Whatever the factors are/have been, it is clear from correlating both unit statements and projections that the rates of progress of the fund started to stall around 2013.

I don't know, maybe, as I said in my first post, some people will look at the figures and regard them as healthy all things considered. Nonetheless, from a reluctantly resigned point of 5-7 years ago that we would "only" make a shortfall of some 10k, I'm now starting readjust my mind to thinking that it will probably be nearer £16k. In a quarter century of re-adjustment after readjustment, that's yet another most unwelcome blow. To realise, as it's beginning to seem, that I probably have little recourse for complaint about the recent performance, given that we were compensated (a loose term) for the initial mis-selling is quite a sting. I just naively trusted that at least the projections were increasing year-on-year and the fund was clearly growing. But all that good progress seemed to halt circa 2013 and doesn't show any sign of changing.

* Another thing I need to check, which I haven't actually addressed here, is the issue of end bonuses. I'm well aware that the current provider doesn't pay end bonuses. I need to find out for certain, though, whether they were part of the original package that we took out with Woolwich Life back in 1992. The battered old policy document suggests not; however both my wife and I well recall a conversation to that effect (i.e. that there would be an end balloon - but maybe that's a memory fault).

Greatly appreciated your guidance above.

GWAM

Apologies, I realised I've made an error immediately above regarding the citation of the 1.50 per cent projection of 2012.

Thrugelmir

GWAM wrote: »

But all that good progress seemed to halt circa 2013 and doesn't show any sign of changing.

These are the year end close figures of the FTSE 100. Quite sobering.

2011 - 5572
2012 - 5897
2013 - 6749
2014 - 6566
2015 - 6242

Also worth noting that the first quarter of 2016 recorded the greatest number of profit warnings since 2008.

There's no guarantee of what an investment will be worth until the day you cash it in.

AnotherJoe

Given Thrugelmir's figures in post 15 the Woolwich ones in 13 look very good and show absolutely no evidence whatsoever for the poor performance you cite, much the opposite, its done exactly what they purport to do, smooth out bad and good years.

For your claim to succeed, every single fund that didn't at least match its comparable index would be subject to so called "misselling" complaints at the same level and in your case it seems every single fund that didn't just relentlessly increase in geometric progression. Which would be all of them.

If you invest in the stock market you should expect up and down years. You've had 4 years up in a row (Though you've been paying in as well so some of those have likely been down years, whats important is the unit price) , the fact they arent an ever increasing up gives you zero grounds for complaint. I'm not sure if this is compensation culture at its worst, or utter naivety.

Sell it all and put it in a Santander 123 because you arent cut out to be investing.

magpiecottage

kingstreet wrote: »

Woolwich Life were unit-linked offices if my memory of the late 80s isn't letting me down

Woolwich tied to Sun Alliance in the late 80s soon after it took over Gateway Building Society which tied earlier.

Then in the early 1990s they launched Woolwich Life in Redhill (roughly half way between Woolwich and Horsham where Sun Alliance had its head office) as a joint venture. It had Woolwich branding but Sun Alliance staff.

It was entirely unit linked, though, unlike Sun Alliance mortgage endowents which were almost all With Profits.

That, though, is at the heart of the problem. The value of unit linked plans fluctuates in a way that With Profits ones are less prone to.

GWAM

Thrugelmir wrote: »

These are the year end close figures of the FTSE 100. Quite sobering.

2011 - 5572
2012 - 5897
2013 - 6749
2014 - 6566
2015 - 6242

Also worth noting that the first quarter of 2016 recorded the greatest number of profit warnings since 2008.

There's no guarantee of what an investment will be worth until the day you cash it in.

Thank you Thrugelmir,

Food for thought indeed. And yes, sobering. The thread has revealed much to me in terms of perspective and I am indeed grateful.

I clearly need to sit and look as dispassionately as I can at the historic statements and the broad empirical financial evidence over the 24 years.

Thanks again.

GWAM

magpiecottage wrote: »

Woolwich tied to Sun Alliance in the late 80s soon after it took over Gateway Building Society which tied earlier.

Then in the early 1990s they launched Woolwich Life in Redhill (roughly half way between Woolwich and Horsham where Sun Alliance had its head office) as a joint venture. It had Woolwich branding but Sun Alliance staff.

It was entirely unit linked, though, unlike Sun Alliance mortgage endowents which were almost all With Profits.

That, though, is at the heart of the problem. The value of unit linked plans fluctuates in a way that With Profits ones are less prone to.

Thank you again magpiecottage,

Again very instructive; for it's clearly important to establish the correct terms when discussing the vexed subject of endowments from the early 90s. For instance I've heard of several policies from the late 1980s/early 1990s which have matured very well (by that I mean targets either being hit or only just short; it's hard, for me anyway, to pinpoint the tipping moment when these policies began to be so volatile e.g. my sister took out a policy in 1984 [to meet a 24k target] and well exceeded that amount; alas I don't know whether it was UL or WP).

So, I take your implicit point: lay-discussions about endowment comparisons are pretty limited unless you know whether you're comparing like-with-like.

It's very easy to take the linear viewpoint that I've admittedly developed; namely that I took out a policy 24 years ago aiming to meet a target of 38k and knew fairly quickly that it would fall short, but then stayed with the journey anyway in the hope that it would get to maybe 60 of the target and am now disappointed to have to re-adjust my expectations even further downwards.

My thinking has become somewhat tunnelled over the years.

Your info has been most worthwhile.

GWAM

To AnotherJoe, #16

Well, it certainly isn't "compensation culture at its worst"; I would have hoped that the tone and honesty of my posts had rather conveyed that.

I am perhaps prepared to confess to a degree of naivete (though not "utter").

I note your last line, which you clearly intended to be a stinger.

So two things:

1) You say I'm not "cut out" to be investing. Okay, that's a subjective view. You may well be right. But here's the objective reality. We were first-time home buyers in 1992, and ones who were keen to secure a mortgage with the Woolwich especially (it had a very strong market reputation at the time, also my extended family had a considerable family history with them). We were wrongly told (and this was established years later in our complaint) that as first time buyers we could only be approved for an endowment mortgage; there was no choice about a standard repayment option (or so we were told). We were pretty open-minded about the issue but we were rather propelled down the endowment avenue. We were simply keen to deal with the Woolwich more than anything else. We trusted them. The Ombudsman later found that we had in fact been mis-sold the product.

2) I would argue that I've acted quite prudently over the last quarter century. For example, I quickly (by 1993) absorbed the reality that the policy, which again I had no choice about taking out (if I wished to deal with the Woolwich, that is) would fall short. Whichever way you look at things, that's quite a blow when you're just starting out (especially in the analogue world when there wasn't as much financial info available to the layman as there is now). I also took the decision to maintain the policy but abandoned any notions that I ever had about relying on it to pay off a mortgage at some future point. I turned my attentions to saving for another home, moved out a decade later, then secured a 20-year repayment mortgage (with Santander funnily enough!), and indeed we are five years ahead of target. I've aligned things as best as I can (you will note that I've regularly conceded in this thread that I'm not an expert) so that my repayment mortgage on my "new" home will be done and dusted in August 2017...at the same time that the endowment policy connected to the mortgage for my original home finally matures. So on that basis it will be a bonus (we'll have paid some £16.5k in over the years and it looks like we be getting just north of 20k or so). All told, I'd say that I've acted quite stably over the period. Now, whether my activities qualify as being involved in "investment", as such, or whether I've simply been yetanotherjoe just seeking to pay for his home/s and acting by default in the mortgage arena is another discussion.

I've said frequently that I long ago accepted the reality that my policy would realise quite a significant shortfall. But I've clung to the hope that it wouldn't be as severe as now looks likely, given that there are only 15 or so months left until maturity. I well accept market vicissitudes. But forgive me for rather hoping that my policy would at least have got nearer to its original target amount than it seems it will and that I took the view (yes, perhaps naively) that my provider might not have been working as hard for the policy as I'd hoped. You know, when a policy which you already know is not going to meet its original target, and then goes through three-changes of hands over the duration, wouldn't you say it's only natural to be wary about performance?

Anyway, I came here to see if I could garner some sage advice. Though the responses have been frank, and not what I would have hoped to read, they have been most instructive (including yours) and fully befitting everything I've been told about the MSE.com forums and I'm therefore glad that I undertook the exercise, no matter how bruising.

Your last line, though, was quite unnecessary.

kingstreet

magpiecottage wrote: »

Woolwich tied to Sun Alliance in the late 80s soon after it took over Gateway Building Society which tied earlier.

Then in the early 1990s they launched Woolwich Life in Redhill (roughly half way between Woolwich and Horsham where Sun Alliance had its head office) as a joint venture. It had Woolwich branding but Sun Alliance staff.

It was entirely unit linked, though, unlike Sun Alliance mortgage endowents which were almost all With Profits.

That, though, is at the heart of the problem. The value of unit linked plans fluctuates in a way that With Profits ones are less prone to.

Yip. I was a Sun Alliance broker consultant at the time of tying the Gateway in 1986 and then losing them to Woolwich soon after.