1987 Endowment mortgage miss sell

rebel34racing

Hi Forum
In 1987, i took out my first endowment mortgage with the Leeds Building society, they sold me an endowment mortgage on the basis that at the end of the term, it will more than cover my mortgage and i will have extra money payed out. at no time did the sales person mention the word shortfall, or possible shortfall. fast forward 7-8 years, the news is full of shortfall stories, i take out a 2nd endowment in case my first wont cover my mortgage, 5 years later i move house and take out a repayment mortgage for 25 years, cash the two endowments in, which cover approx about 50% of what i owed on original mortgage. Is there anyway i can complain about this miss selling back in 1987

caprikid1

You took out an endowment that paid off 50% of you're mortgage, in 12 years. Even with the additional endowment does not seem so bad.


Did you get a shortfall letter ???


Did you just decide, everyone else had compensation why don't I ?


I think its a bit of a joke to try and get compensation for a loss that never happened as you did not allow the endowment to go full term.

dunstonh

at no time did the sales person mention the word shortfall, or possible shortfall.

In 1987, no endowment had ever fallen short. Most paid out between 4 and 10 times more than their target to that point. So, it was typically downplayed as complacency tends to kick in when risks are no longer viewed as risks because they never happen. That said, in 1987, there were risk warnings on the product literature. As 1987 was pre-regulation, there was very little disclosure required by the individuals.

fast forward 7-8 years, the news is full of shortfall stories,

What news were these? 7-8 years is 1994/5. Yet endowments didnt start getting to shortfall positions until the very late 90s (most were early 2000s).

Is there anyway i can complain about this miss selling back in 1987

No. You have multiple issues.
1 - you have a timebar of 6 years from the date of sale or 3 years from being reasonably aware of an issue to raise a complaint (whichever gives longer time). The 6 year rule is clearly long gone and you had three years from surrender to make that complaint.
2 - 1987 is pre-regulation. Many building societies at that time did not start giving advice in-house until 1988 when regulation started. Many of them used local firms to give the advice. Often the agent of the local firm would use the building society office. So, unless the building society used its own agency, they do not have to consider a complaint as it is pre-regulation.

Looking at your dates, it is unlikely your endowments were actually in a shortfall position as it predates the period that shortfalls started to occur. So, your actions may well have been timely and correct at the point of surrender and avoided a shortfall position.

rebel34racing

my original endowment paid out 4k after 13 years against a mortgage of 19K, the 2nd endowment which i took out paid 5k, also the comment at the top, about it being a joke not to let it mature and see if it was short, you cannot be living in the real world, if something isnt performing you take proactive action , you dont wait until its too late. thanks for all the replys

AnotherJoe

rebel34racing wrote: »

my original endowment paid out 4k after 13 years against a mortgage of 19K, the 2nd endowment which i took out paid 5k, also the comment at the top, about it being a joke not to let it mature and see if it was short, you cannot be living in the real world, if something isnt performing you take proactive action , you dont wait until its too late. thanks for all the replys

That doesnt mean that cashing in prematurely was the correct proactive action to take.
I had two endowments both of which fell far short from what was promised but still gave a reasonable return considering how much I was paying into them. . My proactive action was to run them to the final term and move to repayment.

IMO it wasn't the actual performance that was the issue, eg had I invested a similar amount in another way it would likely have returned a similar final sum it's just that the emdowments were targeted to make an unlikely high return given the small monthly sums.

dunstonh

I had two endowments both of which fell far short from what was promised but still gave a reasonable return considering how much I was paying into them. . My proactive action was to run them to the final term and move to repayment.

That is a fair point. Often the endowment policy was not the issue. It was the target growth rate. When the plan was set up, most providers allowed you to select from a range of target growth rates. The higher the target growth rate, the lower monthly premium but the less that went into the investment.

I have seen endowments with 4.4% target growth rates and some with double digits. The later is far more likely to fail even with very good returns. The actual rate of return on the invested part is rarely the issue and some have done very well relative to market conditions.