FINANCIAL OMBUDSMAN SERVICE [Merged]

Ditzy_Mitzy

Manxman_in_exile said:

I know nothing about the buying or selling of financial products, but wouldn't the provider of this income protection plan have been under some sort of duty to inform the OP back in 2011 that the plan was failing?

As I understand it - and I may very well be wrong - isn't that the OP's main complaint, together with the fact(?) that statements between 2011 and 2022 didn't show the plan to be failing, thus preventing the OP from exercising an informed choice as to whether to continue with the plan?

(I accept we don't know what the OP's complaint to the FOS was, and that it might not have been clear exactly what the complaint was)

Quite the reverse, assuming that the policy provider aren't regulated advisers in their own right.  Non advisory (execution only) firms - the vast majority of those who actually provide and administer products - cannot give customers information of the type that may be construed as financial advice.  Such information encompasses all that may influence the customer to make an investment decision, meaning that firms cannot say 'buy this', 'our new product will be better for you' or, indeed, 'your policy is failing, sell it'.  The only obligation is to provide factual information, generally in the form of an annual report.  Illustrations are allowed for the reasons explained in my previous post.  

It is up to the customer to decide whether the factual information is evidence that the policy is or is not working, and to take any queries to his or her adviser.  Indeed, the customer should be submitting the annual reports and what have you to his retained adviser in advance of the yearly review - like that ever happens, but a lot of this stuff relies on the ideal world model.  

As with most collective investment derived products: play silly games and, usually, fail to win prizes of any sort.  I feel sorry for the OP, but he is simply one of the many ordinary people who have had their fingers burnt by products of this nature.  

Manxman_in_exile

Fair enough, but isn't the OP complaining that he wasn't given the factual information that the plan was failing?

I don't think he's complaining that he wasn't given financial advice as to whether he should continue with it or sell it, or necessariIy that he wasn't told when he bought it that the value of the plan "might go down as well as  up".  Isn't he complaining that he wasn't given the necessary factual information to allow him to make his own decision, informed by that factual information?

It seems a bit strange to me that a provider, apparently knowing that the plan was failing, wouldn't be under a duty to inform the OP of that and give them the opportunity not to throw more good money after bad.

(That's all assuming, of course, that I've understood what the OP's actually complaining about!  And that he wasn't informed... )

Jenni_D

From reading this thread, it seems to me that the OP was unaware that the value of "units" (supposedly accrued to provide a cash pay-out) would be redeemed to make up any shortfall in premiums vs what the OP was paying (monthly). It seems that the provider only contacted the OP about the shortfall once they ran out of "units" to redeem.

Manxman_in_exile

Thanks.  I think that expresses what I was trying to say far more eloquently than I did.  (At least I think that's what I was trying to say!).

Wouldn't you have expected the provider to have explained to the OP that this was happening sometime between 2011 and 2022?

Maybe not?

[Edit:  Or maybe he was told and ignored the warnings... ]

born_again

Jenni_D said:

From reading this thread, it seems to me that the OP was unaware that the value of "units" (supposedly accrued to provide a cash pay-out) would be redeemed to make up any shortfall in premiums vs what the OP was paying (monthly). It seems that the provider only contacted the OP about the shortfall once they ran out of "units" to redeem.

You would think that would be clear in the annual statements that get sent out.

But I suppose many people simply file them away, rather than compare previous years.

DullGreyGuy

Manxman_in_exile said:

Fair enough, but isn't the OP complaining that he wasn't given the factual information that the plan was failing?

I don't think he's complaining that he wasn't given financial advice as to whether he should continue with it or sell it, or necessariIy that he wasn't told when he bought it that the value of the plan "might go down as well as  up".  Isn't he complaining that he wasn't given the necessary factual information to allow him to make his own decision, informed by that factual information?

It seems a bit strange to me that a provider, apparently knowing that the plan was failing, wouldn't be under a duty to inform the OP of that and give them the opportunity not to throw more good money after bad.

(That's all assuming, of course, that I've understood what the OP's actually complaining about!  And that he wasn't informed... )

They presumably were sending annual statements and these would have shown that the investment aspect was being used to cross fund the insurance part. This is exactly what it was designed to do and so its harsh to call it "failing".

Why the OP didnt understanding this from the statements? Maybe they werent clear? Maybe they never looked at them? Maybe because they didnt really understand the product they misunderstood what the statements were telling them? 

Wynn2022

Thank you all for your comments.

To try to clarify matters:

The salesman worked only for this company. He was ex Royal Navy and seemed a genuine trustworthy person. I can remember our discussions as if they were only yesterday and have little doubt of what I was told.

What I believed I was sold was a plan that:

1.      The payments and benefits would only increase by RPI or 12% whichever was lesser until end of plan age 65, this was stated on initial precontract documents, contract documents and annual statements.

2.      Every year I would accrue units which would be mine, separately held, to reclaim at the end if I did not make a claim.

3.      Numerous illustrations were provided pre-contract and in contract documents which all indicated there would be an amount at the end, the amount depending on growth. Over half the initial documents consisted of statements of final payment and illustrations of outcomes, this was a major selling feature.

Every year I would get a letter stating the amount the premium was increasing which always appeared to reasonable average 3%. Then later an annual statement showing premium and benefit, it also clearly stated they had reviewed the policy and no change required. It all looked OK so I filled it away. That is what I was expecting, a plan that needed no action and running OK until I was 65.

Only when I had the non-sense letter informing me of major changes and choices did I look more closely into the matter.

The whole matter still makes no sense to me. I was outraged that they were changing the premium contrary to the contract, then there would be absolutely no end of plan payment when I had made no claim, that I had not been informed that the policy had been in trouble since 2011, the fact that for months they could not inform me what the correct premium and benefits were. The delays seemed to be due to numerous complaints they could not handle which indicated issues with the company. It appeared that subsequent annual increases were liable to be unsustainable with premiums becoming more than benefits.

I wanted to bring the matter to the attention of a financial regulator to investigate the issues as well as getting some redress. I would feel better if I could be shown where I went wrong, a clause in the contract to allow such a significant change to premiums and benefits.  How could a plan which had been running for years and in 2020 be reviewed and be apparently OK, suddenly require such major changes. How could such a plan have what appears to be negative growth. Why had they not informed me and provided projections and illustrations as the plan progressed every year similar to initial documents. Was it because they did nothing and offer changes in 2011 that the plan has failed so badly? Is it a ploy to take the money in early years when people are less likely to claim and then send clients a shocking letter so they cancel the plan when they are getting older and more likely to make a claim?

My conclusion is that the plans are sold with a fundamental flaw and cannot provide what is claimed. The plan should be investigated but there appears to be little or no interest, or way of progressing the matter.

Ditzy_Mitzy

Wynn2022 said:

My conclusion is that the plans are sold with a fundamental flaw and cannot provide what is claimed. The plan should be investigated but there appears to be little or no interest, or way of progressing the matter.

And there's the rub, sorry.  You've done what you can in terms of complaining and it hasn't gone your way.  Next steps are either press or court, depending on whether you've the stomach for it and/or anyone else involved with either profession feels it worthwhile.  Nobody here can say anything of particular value in light of the dismissal by the ombudsman.  

Fight on or forget about it, but beware of those seeking to make money - solicitors and hopeless causes spring to mind.  How much is the plan worth to you and, crucially, how much is your time worth?  

eskbanker

Wynn2022 said:

I wanted to bring the matter to the attention of a financial regulator to investigate the issues as well as getting some redress.

[...]

My conclusion is that the plans are sold with a fundamental flaw and cannot provide what is claimed. The plan should be investigated but there appears to be little or no interest, or way of progressing the matter.

This comes back to earlier comments about misunderstanding the role and remit of FOS - they're not the regulator and can only adjudicate based on reviewing the merits or otherwise of the specific complaint that you logged with the institution, rather than conducting a wider investigation.

nilequeen

FOS are fundamentally flawed and should be disbanded. They make terribly outrageous decisions that are bank centric, no care of duty toward complainants.
why are they still allowed to operate?
. Anybody who challenges their underhand practices is then restricted to rep. Not to be trusted