Mis sold equity release?

cckclark

Hi friends

Dealing with my grand estate and I see that she was sold equity release around 20y ago for a £60k loan now at £250k.
The reason I am thinking it was mis sold is basically because she did not need the money. She had savings over that value. And ended up putting a load of cash in a private equity fund that went belly up and lost it all (that's another story).
I can't see in any way how am advisor would have said to a 70y old that borrowing at 7%+ while investing in high risk private equity was sensible. Sounds like fee grabbing to me.
I will be asking some questions of the advisors but any views/advice/experience of this welcome.
Thanks

Browntoa

I doubt very much that it was missold.

Do you still have any paperwork from the initial agreement .

Did she use her own solicitor to handle the paperwork

cckclark

Why do you say that? Not meant in an aggressive way, just can't see how any IFA would be able to say it was a good idea. There was clearly a cheaper route to money (i.e. her savings).
Am digging out the paperwork...there is a lot... Are there key things to look for/criteria for mis selling?

ACG

It is difficult to say it was or was not miss sold as you were not party to the conversation, you did not even know it existed. 
In hindsight and with the way you have described it, it sounds like terrible advice. But what would have happened if the returns would have been better? What if gran did not want to dip into her savings? 

By all means speak to the adviser/lender and investigate it. But there is nothing to say it was (or was not) miss sold, it is just your opinion and half a story. It will be interesting to see what the paperwork says. 

Thrugelmir

cckclark said:

The reason I am thinking it was mis sold is basically because she did not need the money. She had savings over that value. 

Doesn't matter what you think. What written documentation do you have to support your assertion? What's your concern, a loss of inheritance that you expected? 

cckclark

Thanks ACG, I'm going to go through it all and speak to the IFA. I'm not saying it was, it just seems to me to have been the wrong way forward at the time even ignoring what returns may or may not have been achieved. 

Thrugelmir - no, I'm not just trying to up my inheritance but I do want to see that it was done properly and she was not taken advantage of by the sort of people that give this market a bad name. My concern is that there is a pattern of poor decisions here when fully advised - including a material investmemt in a high risk private equity fund for someone over 80 with a documented  low-medium risk threshold.

MWT

Arguably, greatly depleting her savings to invest in a high risk venture could well have worried her a lot more than taking money out of her property using a method that she would not have to repay during her lifetime if the investment didn't work out...

Do check the paperwork and do check with both the advisors and the solicitor involved but try to do it with an open mind as the default position when these questions are presented here is that a vulnerable old lady got 'ripped-off' when you have to roll back 20 years of time to consider how she was back then and not how you last remember her now...

dunstonh

My concern is that there is a pattern of poor decisions here when fully advised - including a material investmemt in a high risk private equity fund for someone over 80 with a documented  low-medium risk threshold.

Every portfolio will have funds that are higher than the persons risk profile and lower than the persons risk profile.   It is what the portfolio is weighted out to as an average that matters.  Plus, savings are taken into account as well.  e.g. someone investing £300,000 with £100,000 in cash can take higher risks on the investing side due to the larger cash float.  Whereas someone with £300,000 to be invested with £10k in cash would take lesser risks on the investment side due to the lower amount of cash to offset it (not that I would suggest someone would leave just £10k in cash - this is just an example).

20-25 years ago, there were some equity release products that were considered an absolute no brainer to get at the time.   With hindsight and the way interest rates went down and house prices went up unexpectedly, they now look pretty awful decisions.  However, there is no benefit of hindsight at the time and any decision on complaints is measured in the rules in place at that time.

There is another thing to note.  Equity release was not regulated at the time you mention.    So, the advice firm can just say sorry, we are not reviewing your complaint as it predates regulation.    They may not have the information on the file.

Nearlyold

What is the connection between the equity release and the investment in high risk private equity funds, were these both arranged by the same firm/adviser and what was the timeline? From your posts it appears that the equity release took place when your Gran was around 70 and the high risk investment was made when she was over 80. If there was a 10 year or thereabouts gap what happened to the equity release monies in the meantime?

Onlooker2

To look for an insight into the workings of Equity release  Go to Lifetime Mortgage in Mortgages & Endowments scroll down to Lifetime Mortgage .Read the comments from both sides of this industry.It may help anyone make their future monetary decisions on their financial lifetime at this moment in time.Consider

Solenoid

My 70 years old father in law did the same thing saying he worked all his life for it and wants to spend it. So they sold and moved into rented house. I think they spent the lot already with holidaying etc. Maybe same reason why your relative did it.