Lloyds refusal to compensate for PPI mis-selling

DonRich

We took out an endowment mortgage in 1994, which was supported by Life Assurance policies.  We surrendered them all (at a loss) in 2001, but decided to make a PPI claim in 2019.  Aviva (on behalf of Commercial Union Policy) upheld our complaint, stating the policy may not have been suitable for us, and made a significant offer of compensation, which we accepted.  Standard Life also upheld our complaint - however they claimed we had not lost out but made an ex gratia payment anyway. 
Lloyds Bank (on behalf of Black Horse Life) rejected our claim on the basis of elapsed time and the fact that they had informed us (in a Scottish Widows letter) in January 2001 advising there was a high risk the policy would mature with a shortfall.  Their case was reviewed and upheld by the Ombudsman.
I'm interested to know how the cases differed so much.  Two companies upholding my case but Lloyds rejecting it.  Does the letter they sent absolve all responsibility?

dunstonh

Lloyds Bank (on behalf of Black Horse Life) rejected our claim on the basis of elapsed time and the fact that they had informed us (in a Scottish Widows letter) in January 2001 advising there was a high risk the policy would mature with a shortfall.  Their case was reviewed and upheld by the Ombudsman.

Can you clarify what PPI has to do with it as it appears your complaints were endowment complaints and not PPI complaints?

Putting that aside and assuming it has nothing to do with PPI and that is a mistake, the response from Lloyds Bank is consistent with expectation.     I'm surprised Standard Life didn't apply the timebar either but as there was no redress to pay, then it's cheaper to uphold the complaint than reject it as it avoids any FOS fee if you took them to the FOS.      Aviva also operated a timebar on many of their plans but didn't kick it in until after you surrendered.

Shame you surrendered really as both Aviva and Standard Life had mortgage endowment guarantee payments added to their plans on maturity and you didn't get that amount if you surrendered early.   That actually made them good value in the long run.

The black horse ones were unit linked and most of those set up with low target growth rates.   I have seen 4.4% on them and those went on to hit target despite warnings.  Their low start ones were not so good or their high target ones at 7.7% (maybe 7.6% but it was 7.x%)

Does the letter they sent absolve all responsibility?

Yes.  Timebars in financial services are similar to that in law.  You have to raise a complaint within 6 years of purchase or three years of being reasonably aware of an issue.   Whichever is the longer.    The regulator set the timebar rules for endowments back in early 2000s to mean the 3 year rule could only be hit if you were written to saying there was a high risk of a shortfall.  You then had 3 years from that date to raise a complaint.

I know what the old reason why letters for Black Horse cases said around 1994.  They were required to state the target growth rate needed on the plan to hit target and state that if they failed to get those returns then there would be a shortfall. And they were required to compare the cost of the repayment mortgage plus life assurance with the interest-only mortgage plus endowment.  So, as long as the report gave that warning (and assuming no other failures) they would normally reject the complaint anyway.   Even if they did look at it, if the rep at the time had done their job correctly, it would have been rejected.

DonRich

Thanks for the advice, very thorough - glad we accepted the Aviva offer.  Don R.