Norwich Union Endowment Shortfall

sassybird

Have just received our first 'red letter' showing that our endowment policy is not on-track to cover our mortgage.

We took out the endowment when we bought our house in 1987 over a 25 year term (policy matures 2012, 7 years time).

We have already changed our mortgage to a repayment mortgage in 2001, but kept on paying the endowment as we were told at the beginning of the policy that it would pay out a sum to cover the whole of the original mortgage sum PLUS a lump sum for ourselves.

Our endowment mortgage was taken out with a Building Society in 1987 and they advised us to have an endowment and they put us in touch with an Insurance Broker who dealt with that side for us.

I need to know how I go about putting a claim in. Also, I've heard of companies/internet sites that will do the legwork for you and claim a commission on any payment made. Does anyone know of a company with a low percentage claw-back and any pros and cons we should know about??

Many thanks for your advice.

Alison_B

I would personally do it yourself. We wrote to the building society that sold us the mortgage and stated that we believed they had mis-sold us the endowment - wasn't a complicated letter either. They wrote back within a week with a questionnaire to fill in. We had a letter from them saying they had a backlog of approximately 10 weeks, then a week later we received a letter saying they were giving us compensation (3 weeks from writing the first letter).

We have had absolutely no trouble from our building society. Why would you want to pay somebody else for just writing a simple letter? Or maybe we have just been lucky,

Alison

EdInvestor

https://www.endowmentaction.co.uk, the Which site, gives useful guidance on the grounds for a successful complaint and how to proceed.

dunstonh

Although you should prepare yourself for rejection. A 1987 policy sold by a "broker" will almost certainly be rejected. There are still certain times it would still be considered. For example, if the "broker" was an employee of the insurance company (or advice arm of the insurance company). However, best not get your hopes up at this time.

dibbs26

Hi Alison,
What was the name of your building society?, I have just lodged a complaint with my bs over my norwich union/commercial union endownment....

Alison_B

We were with the Yorkshire Building Society.

Milarky

dunstonh wrote:

Although you should prepare yourself for rejection. A 1987 policy sold by a "broker" will almost certainly be rejected. There are still certain times it would still be considered. For example, if the "broker" was an employee of the insurance company (or advice arm of the insurance company). However, best not get your hopes up at this time.

That being the case, what is 'advice' to someone with no automatic right to complain? Should they try to 'sell' the policy rather than either surrender it or maintaining it with enhanced payments to the mortgage?

Could I just say that 'getting out' has to be seriously considered as an option, but that this can be a difficult thing to judge. Currently, there appears to be demand for TEPs [traded endowment policies] so the premium over surrender value is significant - but this could be transitory. As a general point, whatever can be realised from the value of the policy has to be put towards the 'compensation figure' - so that all that a successful claim can gain the endowment owner is the difference between what the amount insurance company will give you for it on surrender and what the premiums would have reduced the mortgage by over the years.

EdInvestor

Each endowment is different.Some are worth keeping to maturity, some should be surrendered.A few can be sold for a premoum(not many these days). An "endowment mortgage" is actually three products - an interest only mortgage, an investment plan (the endowment) and a life assurance policy.You need to "unbundle the package" and consider each product, your need for it and its replacement cost separately to find the best way forward.

dibbs26

Alison_B wrote:

We were with the Yorkshire Building Society.

Funny that so was I. I have just lodged a complaint with them over my Norwich Union endownment.
Did you originally have a commercial union endownment or has it always been with NU?, my reason for asking is that if it was orignally a CU policy then NU have a sort of buffer zone in place...I think mine is £5k incase there is a shortfall...which there is.....about £9k in all............

Alison_B

The endowment policy we had was with Scottish Widows but we got it through the Yorkshire Building Society. We have got a shortfall of approximately £20,000 and have another 10 years to run on the policy and they have offered us £4,500 compensation.

We didn't think this was much - escpecially as the shortfall was so high, but reading through posts on here, they are not offering to pay the shortfall. The compensation awarded along with the endowment if it was cashed today would put us to where we would be with a repayment mortgage. Unfortunately, they don't take into account the fact you were sold your endowment with the promise of paying off you mortgage and then to have a sizeable bonus as well.

EdInvestor

Hi Alison B

I guess you got quite a nice demutualisation windfall from Scottish Widows as well, did you?

Their windfalls were the highest of them all, just before the markets crashed.

So that will have helped.