Mis-sold CIS endowment life assurance policy

MarkJosephCarter

In the forlorn hope of some positive comments from some wiser souls on the Forum, I would like to ask a question regarding an endowment life assurance mis-sold to us by the Cooperative Insurance Society (CIS). Is there anything else we can do to make CIS compensate us for the mis-selling and the underperformance of the endowment?

The circumstances and sequence of events are as follows:
• In January 1998, my wife and I required a long term savings product that would, over 25 years, yield the purchase price of a modest home. We lived in tied accommodation on a farm and needed a product that would allow us to eventually purchase our own home rather than being left at the end of our working lives being evicted from our tied cottage and moving into Council housing, as we had seen happen already to several older friends in similar circumstances.
• A CIS agent visited our home and sold us an endowment life assurance policy with the target amount of £54,000. and the verbal promise that it would yield a cash payout in the region of £170,000. at 25 years if we did not use the policy for a mortgage.
• We never used the policy for a mortgage and never intended to, and the CIS agent understood this.
• The policy latterly under performed, but we were unable to obtain proper advice from CIS. For a long period of time our CIS agent was on long term sick leave and out of communication. Each time we received an 'Endowment Policy Update' letter from CIS that warned of underperformance we telephoned the CIS to ask for information and advice regarding the performance of our policy and we were repeatedly told they could not talk to us about the mater as that was the job of the CIS agent, but he was on long term sick leave so CIS refused to answer our questions regarding our policy for a prolonged period.
• When it became completely obvious to us that the policy would never achieve the promised yield, we complained to CIS in September 2009.
• CIS finally admitted that the product they sold us was not suitable for our needs in a letter dated 26th October 2009, therefore they mis-sold us the policy, and CIS offered to repay our premiums plus interest at 1% over Bank of England base rate (£44,507.30), but offered no compensation for the mis-selling of the policy or its under performance.
• We complained to the Financial Ombudsman Service (FOS), but they informed us that the policy start date pre-dated the time from which they could intervene. The FOS therefore did nothing significant to help or support us in the complaint, other than to recommend that we accept CIS’s offer.
• We begrudgingly accepted the CIS repayment offer as there seemed no further avenue of action open to us.

The result of CIS’s mis-selling and under performance of their endowment was that we did not receive the purchase price of a modest home, we received a good deposit for a modest home, and in order to purchase the modest home we now live in we had to take out a repayment mortgage that will not be paid off until we are 70! If the CIS policy had performed as we had been promised, we would have no mortgage now and our home would be paid for outright. We tried to be prudent and take steps to secure our financial future, but CIS let us down. We still feel very aggrieved about this, and strongly feel that we should be compensated, but at the moment we do not see how this can come about.

BoGoF

The time to challenge it was 9/10 years ago. You accepted the offer.

MarkJosephCarter

We did, and the FOS would not back us up.

BoGoF

You don't need FOS backing to take legal action....although that ship has now sailed.

Merlin139

You took a policy out in 1998 for 25 years to buy a house at the end of the policy. So that would be 2023 What would you get in the area you wished to buy in 2023 for £170,000?

The policy was effectively cancelled by CIS after 11 years. What did you do with the money in 2009? Have you been putting away the money you would have been paying on the policy up until 2023?

Did you adjust your actions towards house purchase in 2009? What year will your Mortgage be paid off?

Crag30

I have a similar policy which matures in August, which was hoping to achieve similar goals. The annual paperwork does state quesstimations at various percentages of what it is expected to make at maturity.

3 years into it, instead of making the original projected figure of £32000, going by the mid percentage it was projected to achieve £132,000, and it went downhill from there.
Whist going back 12 years or so it was projected to only give me back the £17000 i had put it in. I shouted about it then, but wasn't getting anywhere with it.

Blackbeard_of_Perranporth

MarkJosephCarter wrote: »

In the forlorn hope of some positive comments from some wiser souls on the Forum, I would like to ask a question regarding an endowment life assurance mis-sold to us by the Cooperative Insurance Society (CIS). Is there anything else we can do to make CIS compensate us for the mis-selling and the underperformance of the endowment?

The circumstances and sequence of events are as follows:
• In January 1998, my wife and I required a long term savings product that would, over 25 years, yield the purchase price of a modest home. We lived in tied accommodation on a farm and needed a product that would allow us to eventually purchase our own home rather than being left at the end of our working lives being evicted from our tied cottage and moving into Council housing, as we had seen happen already to several older friends in similar circumstances.
• A CIS agent visited our home and sold us an endowment life assurance policy with the target amount of £54,000. and the verbal promise that it would yield a cash payout in the region of £170,000. at 25 years if we did not use the policy for a mortgage.
• We never used the policy for a mortgage and never intended to, and the CIS agent understood this.
• The policy latterly under performed, but we were unable to obtain proper advice from CIS. For a long period of time our CIS agent was on long term sick leave and out of communication. Each time we received an 'Endowment Policy Update' letter from CIS that warned of underperformance we telephoned the CIS to ask for information and advice regarding the performance of our policy and we were repeatedly told they could not talk to us about the mater as that was the job of the CIS agent, but he was on long term sick leave so CIS refused to answer our questions regarding our policy for a prolonged period.
• When it became completely obvious to us that the policy would never achieve the promised yield, we complained to CIS in September 2009.
• CIS finally admitted that the product they sold us was not suitable for our needs in a letter dated 26th October 2009, therefore they mis-sold us the policy, and CIS offered to repay our premiums plus interest at 1% over Bank of England base rate (£44,507.30), but offered no compensation for the mis-selling of the policy or its under performance.
• We complained to the Financial Ombudsman Service (FOS), but they informed us that the policy start date pre-dated the time from which they could intervene. The FOS therefore did nothing significant to help or support us in the complaint, other than to recommend that we accept CIS’s offer.
• We begrudgingly accepted the CIS repayment offer as there seemed no further avenue of action open to us.

The result of CIS’s mis-selling and under performance of their endowment was that we did not receive the purchase price of a modest home, we received a good deposit for a modest home, and in order to purchase the modest home we now live in we had to take out a repayment mortgage that will not be paid off until we are 70! If the CIS policy had performed as we had been promised, we would have no mortgage now and our home would be paid for outright. We tried to be prudent and take steps to secure our financial future, but CIS let us down. We still feel very aggrieved about this, and strongly feel that we should be compensated, but at the moment we do not see how this can come about.

At xmas last my top up pension went down by 5%. Today it is 12% higher than it was on boxing day! And since 1998 I have moved three times as well, and I am still paying a mortgage.

That is normally what happens with investments, but I cannot understand why you did not buy a house in 1998.

MarkJosephCarter

"You took a policy out in 1998 for 25 years to buy a house at the end of the policy. So that would be 2023 What would you get in the area you wished to buy in 2023 for £170,000?"

It was the Isle of Wight, so perfectly reasonable to purchase a modest house equivalent to a tied agricultural dwelling.


"The policy was effectively cancelled by CIS after 11 years. What did you do with the money in 2009? Have you been putting away the money you would have been paying on the policy up until 2023?"

The payout was used as a deposit on a house, since then we’ve been paying off a mortgage.


"Did you adjust your actions towards house purchase in 2009?"

As set out in the last paragraph of the OP.


"What year will your Mortgage be paid off?"

2035.

MarkJosephCarter

"That is normally what happens with investments, but I cannot understand why you did not buy a house in 1998."

Working in farming = low wages and little savings, a tied cottage means no collateral, not an attractive prospect for a mortgage provider.

dunstonh

There are inconsistencies in the information.

You say you bought it in 1998. However The FOS seem to think you bought it before 1988 (1988 is when the FOS will consider sales)

We begrudgingly accepted the CIS repayment offer as there seemed no further avenue of action open to us.

And by doing so, you would have accepted it is a full and final settlement. (standard wording on these things). Meaning end of story.

but at the moment we do not see how this can come about.

You need to put it to bed. Its game over.

3 years into it, instead of making the original projected figure of £32000, going by the mid percentage it was projected to achieve £132,000, and it went downhill from there.

That is quite normal. The regulator lowered the projection rates on statements (they have done the same recently on pensions). They are artificial and do not reflect reality. Indeed, many people are now finding their endowments are paying a fair bit more than the projected figures.

e.g. if your endowment had a target growth rate of 6% pa. to hit target and the mid rate projection on the statement was 6%, it would show it hitting target. If the statement projection dropped to 3%, then it would show a shortfall. However, the fund could still be returning 6% p.a.

CIS finally admitted that the product they sold us was not suitable for our needs in a letter dated 26th October 2009, therefore they mis-sold us the policy, and CIS offered to repay our premiums plus interest at 1% over Bank of England base rate (£44,507.30), but offered no compensation for the mis-selling of the policy or its under performance.

This method was used as there was no mortgage linked to it at point of sale. So, it was a "savings" endowment rather than a mortgage endowment. With savings endowments, a refund of premiums plus interest is the method correctly used.

A CIS agent visited our home and sold us an endowment life assurance policy with the target amount of £54,000. and the verbal promise that it would yield a cash payout in the region of £170,000. at 25 years if we did not use the policy for a mortgage.

A 1998 sale would never have shown that. Not even at top rate projection. A 1988 sale on the other could well have as maturities at that point in time were typically 4-10 times greater than the target amount.

MarkJosephCarter

My typo, it was a 1988 start date.