Apologies......a missold endowment issue

nickmatthews

I'm after a bit of advice! I have been chasing for 3 years (3 bloody years) compensation for a mis-sold endowment of £35,000 from back in '87. The broker is no longer with us & as a result it has gone through the FSCS. After numerous phone calls & getting no where very fast, they have sent me a letter offering me £867.
They justify this amount by saying "We know that many people have received projections from the endowment provider indicating their endowment is not estimated to meet the intended target figure at maturity, so they nay expect a shortfall. Our offer is not designed to meet this projected shortfall. This is because the endowment is linked to the stock market & may perform better, or worse, than predicted. FSCS can pay compensation only for actual financial loss"
I thought these compensation claims were meant to cover any shortfall. Why do I read numerous cases of people receiving compensation of £1000's but I only get offered this?? Why do most people seem to get compensation within weeks & mine takes 3 years?? I did call them & asked some questions but the guy on the phone was so rude & unhelpful that I got no where.
I'm not sure whether to accept this amount or whether I fight on. The fact they have offered money surely means they accept a mis-sold endowment but it has taken 3 years to get this far!
Rant over! Any advice would be much appreciated

dunstonh

I thought these compensation claims were meant to cover any shortfall.

That is incorrect. Redress payments are designed to put you in the position you would have been had you gone with a repayment mortgage.
Projections are notoriously unreliable and a good many understate the likely result (as well as some that overstate). Your complaint is that you would have gone with a repayment mortgage. The outcome is that if you take your surrender value and redress payment and pay that amount off the mortgage and switch to repayment, then you have got your wish.

Indeed, if your surrender penalty on the endowment is more than the redress payment, there is a good chance that your endowment is in a surplus position at this point in time.

Why do I read numerous cases of people receiving compensation of £1000's but I only get offered this??

Recovering stockmarket has slashed the redress payments from those that were being paid years ago. Plus a lot of people include the surrender value of their endowment in their figures which distorts the real redress payment.

It is common to see no redress paid on upheld complaints nowadays.

Why do most people seem to get compensation within weeks & mine takes 3 years??

Weeks would be extremely rare. 3 months-6 months is more common. However, you had to go to the FSCS which takes much longer.

I'm not sure whether to accept this amount or whether I fight on

You have no choice. You accept that amount or you accept nothing. The legal entity of the company no longer exists so you cannot take it through the courts so its game over.

Retired_I.F.A.

I thought these compensation claims were meant to cover any shortfall. Why do I read numerous cases of people receiving compensation of £1000's but I only get offered this.

You've got a "projected" shortfall though as yet you have not really lost anything as it has not matured yet. The investment may well pick up and leave you with a surplus in which case the £867 or the surplus could be reclaimed back from you AFAIK I suspect the smallprint with the offer is worded so that should you accept it you also accept that if there is a final shortfall whatever it may be you accept it.
(I've never had a client with a claim so I may well be wrong so dont take my word for it hopefully others will give you better info later on)
EDIT: I posted this without refreshing the page and thought I was the first to answer )

Do they say how the £863 has been calculated? It should be again AFAIK the figure you'd need to pay off your mortgage and switch to repayment basis leaving you in exactly the same position as if you had took out a repayment mortgage in the first place. If that's so it'd go a long way toward the 3 year wait you've had as they'd need all the info about the rates charged during the mortgage.

EdInvestor

nickmatthews wrote: »

Our offer is not designed to meet this projected shortfall. This is because the endowment is linked to the stock market & may perform better, or worse, than predicted. FSCS can pay compensation only for actual financial loss"
I thought these compensation claims were meant to cover any shortfall.

It's a common misconception: but I must say the FSCS explanation is very poor. What the offer means is that they have calculated how much you would have paid off the loan if you had taken out a repayment mortgage. They have then awarded you the difference between that and the surrender value of the endowment.

What you need to do now is as follows:

1.Surrender or sell the endowment
2.Pay the lump sum plus the redress amount in to reduce the size of the mortgage loan
3.Increase the monthly mortgage payment by the endowment premium so as to overpay the mortgage

Once you've done that you will have a proper idea of what your actual shortfall is: usually it is either non-existent or small and can be easily dealt with by increasing the overpayment. Some people like to remortgage when doing this: since you will have a lump sum from the endowment, have a look at offset mortgages, along with repayment mortgages and better I/O deals if this appeals.

If you need the life cover, it's a good idea to replace it before surrendering the endowment.

nickmatthews

Thanks all, for some great advice. I agree - the FSCS explanation is poor & the staff that I've spoken to on the phone are unhelpful........maybe I've just been unlucky & I've just got the crap ones!!
Surrender or sell the endowment?? - is there any difference in total I would recieve. I have 3 going at the mo......one for £35K that only has approx 5 years to go, another for £28K that runs for another 12 years plus a further one for £15K that has approx 15 years to run.

Nick

EdInvestor

Go here to seek quotes for selling them:

https://www.apmm.org