Can anyone advise re. Standard Life takeover?

Bogof_Babe

Sorry, not sure which board to put this on. I tried including it in another thread on Mortgages and Endowments, but no-one has answered my question there yet, and I would like a fairly quick reply if anyone at all can help.

The question is - does anyone know whether Standard Life are in line for a buy-out (of the "windfall" creating sort)? I want to cash in a disappointing SL endowment policy as it is not required for a mortgage now, but don't want to rush into this if there is a chance of a windfall at some point in the future.

I seem to remember some discussion on this when they were in the news a year or so ago, due to underperforming investments, but I don't know whether the situation has changed, or if it is still on the cards.

Any advice would be most gratefully appreciated. (Would it be cheeky to ring Standard Life and ask them? ).

dunstonh

The question is - does anyone know whether Standard Life are in line for a buy-out (of the "windfall" creating sort)?

A vote is almost certainly going to happen and a demutualization benefit would follow. How it would be paid and how much are not yet known.

I want to cash in a disappointing SL endowment policy as it is not required for a mortgage now, but don't want to rush into this if there is a chance of a windfall at some point in the future

How do you know its bad? You are aware that Standard Life have a history of showing shortfalls on their endowments yet on maturity paying out in excess of target? You are aware that the projections do not include any terminal bonuses that have accrued and may accrue again in the future (terminal bonuses are beginning to increase again)? You are aware that Standard Life projections often use the lower surrender value to project from rather than a real current value as their systems cannot produce a real current value (this gives a lower figure than what you would really get)? You are aware that we just had a stockmarket crash and looking at any stockmarket based investment after a crash is going to show poor figures to those before the crash?

Projections are there for guidence. An endowment that was set up needing to grow by an average of 6% a year is always going to show a shortfall when the projection now being used is 4%. It doesnt mean you are going to get 4%. You could get 2%, you could get 8%. Its just a projection.

Depending on the term of the policy, the target growth rate and the terminal bonuses on the plan, in addition to what you have told us, its impossible to know whether the plan is any good or not.

EdInvestor

Hi Bogof Babe

Should be a DM (staockmarket flotation) next summer, after a vote in April, so don't cash in. There may also be some special offers to move policies to better investments after the DM, so keep a look out for them as well.

Bogof_Babe

Good morning Dunstonh, and many thanks for your most helpful reply.

To clarify our situation, we had a red alert letter in February this year, and have only just got around to doing anything about it, as we had a red alert letter from our other endowment provider Zurich the other day, so decided to take an overview as to whether we are throwing too much good money after bad. I moved immediately to cash in the Zurich one, as there was quite a serious predicted end of term shortfall, and I can better invest the monthly premiums elsewhere.

I have now had a cheque from Zurich, who to be fair were very prompt, and have only lost around £75 of the money paid in over the last 17 years, plus of course whatever interest I might have made with that money.

I thought that after almost two years of stock market recovery (sorry I'm not very well up on these things, but going by the Bank of England base rate increases), it was time there was some improvement filtering through in the endowment forecasts. I appreciate that they have to compensate for the lean years, but other types of investments seem to be coping, and offering a better return nowadays. Also, I am angered that so much of people's payments went in fees to agents who turned out to be dispensing duff advice!

Our SL plan has 7½ years to run. It was taken out for £15K cover (being supplementary to the Zurich one), and the red alert letter says that even at 7.5% growth the eventual pay out would be £10.7K. The minimum would be £8.4K. If I read the form correctly, both these figures include all bonuses.

However, as a result of your reply I am now having a re-think, as I've worked out that we will have paid in just under £7K, so I suppose it is not such a bad return. It's not that the monthly payments are huge (they are tiny really for nowadays) but I am trying to do the right MSE thing - and getting hopelessly confused!

Anyway I'll have another juggle with the figures, and many thanks once again for your valuable guidance. I appreciate you taking the time and trouble.

Bogof_Babe

Many thanks to you too Editor - now that does sound promising!

EdInvestor

Definitely worth waiting for the DM with a small and long-held policy like that BB

This is because there are two windfalls - a flat rate one (historically 500 quid) and a percentage based variable rate one, based on the value of the policy and the length of time you have held it.

Let's say the variable rate was 10% ( IMHO we can hope for higher, but being conservative) and the policy value now is 5k.

The total windfall would be 1k, which is a 20% return.

Better than a poke in the eye.....

realaledrinker

Editor - you are just guessing surely as past experience with other DMs is no guide to what SL will do.

Babe - make a claim for endowment mis-selling on SL. If you take the approach that your advisor told you "the endowment was guaranteed to repay the loan & there would be a nice bonus as well", SL are in no position to argue as they did not keep proper records. May be more difficult to pursue if you arranged the endowment via an agent, but we have had two results out of two claims on SL policies, one with SL direct, one indirectly, from Britannia BS.

It's not difficult to do - don't use those claims cowboys, but start by researching here:

http://www.which.net/endowmentaction/index.html

carnet

If you make a succesful claim re. mis-selling of a Std.L. WP endowment policy can you still retain your policy ie. your windfall rights or must the policy be given up/surrendered ?

If the latter, might it not be better to refrain from making any claim until the DM "cut-off" date - or will the cut-off date for making any mis-selling claim arrive first ??

ReportInvestor

realaledrinker wrote:

Editor - you are just guessing surely as past experience with other DMs is no guide to what SL will do.

There may be slight variations.

But they've just appointed Mike Arnold as the independent actuary to look after members' interests. And he supervised most of the previous major DMs.

I doubt that Standard Life will depart far from what is perceived to be the past norm. They get enough flak from the press anyway, without giving the Fleet Street rottweilers more red meat.

Bogof_Babe

How on earth do you guys remember who you took out your endowments through? It is embarrassing to say, but after 17 years we can barely remember even sorting the mortgage out, never mind the endowment details.

I know our Zurich (was Allied Dunbar then) one was organized by the estate agent who we bought the property through - he practically frogmarched us up the road to an insurance co. where a chap who he was obviously in league with got us to sign before we'd really thought about it.:mad: We were comparatively young and naive - I mean you don't buy a house very often anyway do you - and he said it was some special offer that had to be agreed there and then - yeah right :rolleyes: .

Anyway I've assumed there was no point pursuing an estate agent for mis-selling, and can't even remember who the insurance outfit was. The only documentation we have is from the insurance company (now Zurich), not the broker.

As for the SL one - same thing. It was a house my husband bought during a brief period when we were living apart. I bought a house too but was on the ball enough to insist on a repayment mortgage. Pity I didn't have the same degree of sense when we bought together again . I think I sort of thought that the whole value of the house had to be on endowments if we wanted to transfer the SL policy.

I have no idea who his arrangements were through, and we transferred the endowment part to our new home, topping it up to the value of our new home via the Allied Dunbar contract.

Sorry to waffle on. I hope my tale serves as another warning to anyone who might get bamboozled with "offers" and false promises in the future.

Thanks for everyone's input. We will stick with the SL one and hope for a windfall to take some of the sting away!

johnllew

Bogof_Babe wrote:

The only documentation we have is from the insurance company (now Zurich), not the broker.

Zurich should know who sold you the policy - ask them.

As for the SL one - same thing.

Ask them as well. Then pursue two claims for mis-selling - in general terms, they will need to prove that you weren't mis-sold the policy. What have you got to lose?

Start here: http://www.which.net/endowmentaction/complaint/index.html You can use their "complaint letter generator" - all quite easy & straightforward. I used the Which? advice and got compensation of £1800 for a 16 year old SL policy, even though I didn't think I had much of a chance. Go for it.