Endowment Mortgage - Claim?

mcooke999

My parents had an endowment mortgage in the late 90's early 00's. I was only a teenager at the time but I remember them getting bombarded with letters telling them the values had plummeted after 9/11 and warning them the value wasn't on track to cover the mortgage etc... As I understand it the letters included offers for them to sell out 'before things got worse' etc... In the end they did sell up and used the money + savings to pay off the mortgage a few years later, however, the value of the endowment when they sold was a fraction of what it should have been and now I look back, it's almost like they were 'scammed'. At the time I had no clue about what an endowment was but now I look back and wonder if they made a mistake and was this common at the time?

Is there any sort of claim they could make similar to PPI?

davidmcn

It sounds like they did make a claim at the time. 

Thrugelmir

Endowments failed to deliver forecast returns. With markets serially underperforming. That's the nature of investing.  What actual evidence do you have of them being scammed?  How was the endowment policy sold at a fraction of it's value? 

dunstonh

 As I understand it the letters included offers for them to sell out 'before things got worse' etc.

No.  Providers would make no such recommendation or offer.  It would be treated as regulated advice if they did and they do not hold that remit.

now I look back, it's almost like they were 'scammed'.

Who by and how?  (as you dont mention any scam in your post)

 At the time I had no clue about what an endowment was but now I look back and wonder if they made a mistake and was this common at the time?

Those warning letters issued at the time allowed providers to trigger the three year timebar for complaint.  i.e. you have to raise a complaint within three years of that.   Also, surrendering the policy and taking action also triggers the three year time bar.  So, take your pick as both were more than three years ago.

Is there any sort of claim they could make similar to PPI?

The majority of endowments were timebarred by 2007/8.     Even then, most endowment complaints failed.  it was a big issue at the time but nothing on the same scale as PPI.

Sadly, like investments usually do, the values went back up again in the following years.   Projections typically understated what was likely and many people getting maturities now are finding they are not far off what the targets were.   And with endowment mortgages being cheaper than repayment mortgages, they could afford for endowment to be around £6k short on maturity and still be better off thanks to the lower monthly payments.

Old_Lifer

You say   ' the value of the endowment when they sold was a fraction of what it should have been '

The endowment was a long term savings product.    Your parents decided to stop paying the premiums and  surrender the policy.    They would have received whatever was the surrender value of the policy at that time.   

If  instead,   they had continued paying the premiums to the end of the term,   the policy would have paid-out in full.

Socajam

Old_Lifer said:

You say   ' the value of the endowment when they sold was a fraction of what it should have been '

The endowment was a long term savings product.    Your parents decided to stop paying the premiums and  surrender the policy.    They would have received whatever was the surrender value of the policy at that time.   

If  instead,   they had continued paying the premiums to the end of the term,   the policy would have paid-out in full.

That's exactly what mine did when I switched my mortgage from interest only to repayment.
I could cashed in the policy, but decided to continue paying and receive the premiums on the end of term - which I did.
It seems that now is the time to start looking for another meal ticket like PPI - don't think this going to happen.

dunstonh

It seems that now is the time to start looking for another meal ticket like PPI - don't think this going to happen.

Endowment complaints have had their time over a decade ago. With not many left and most of those timebarred, it is just the odd straggler now.  Plus, many people are finding that the returns on their endowments are not as bad as the projections and getting more than they thought they would.    (the problem was never the rate of return.  It is was the target growth rate needed being set too high and not able to be adjusted when the economy changed).

mcooke999

Thanks everyone. I must admit I don't fully understand Endowment mortgages but I just thought I'd better check there wasn't any dodgy behaviour around them back in the day.