Norwich Union - Derisory Endowment Compensation!!

richardfj

Hi, apologies if there is thread elsewhere on this already, couldn't find one.

I belive i was mis-sold our endowment in 1999 due to all the usual reasons such as it was sold to me on the prmise that it would make me money let alone clear off the endowment.

I have written to Norwich Union who eventually upheld my complaint. Bearing in mind the projected shortfall on my endowment expected to be between £2,000 and £5,000 they offerered me £112..!!!

They do not acknowledge that i was miss-sold the policy but do agree that the policy may not have been right for my cicumstances at the time. Without written proof of any guarantee claims or offers made at the time as they believe it is 'unlikely' that any of their agenst would have made such guarantees, clearly i do not have written proof only verbal of this but has anyone?!

It seems i now need to write to the FOS but it seems that the burden of proof lies with me rather than them having to proove they did not miss-sell me the policy. I think that this is grossly unfair and the compensation is derisory in the extreme (they claim it puts me in the same position had i taken a repayment mortgage)

Has anyone else experianced this with Norwich Union? Any advice on this matter would be gratefully received...

silvercar

the compensation is derisory in the extreme (they claim it puts me in the same position had i taken a repayment mortgage

)

That is what the compensation is intended to do; put you in the same position as if you had taken a repayment mortgage.

dunstonh

Norwich Union endowments are generally not bad and many are on track for target or surplus using the original target growth rate (and not the lower projection rates used in shortfall letters which almost by default will show a shortfall even if there isnt likely to be one).

I saw an NU upheld complaint two weeks ago that had £800 redress but the surrender penalty was £1500 so actually the nedowment is better off by £700 than the repayment method.

It seems i now need to write to the FOS but it seems that the burden of proof lies with me rather than them having to proove they did not miss-sell me the policy.

The FOS will sit on it for a while, ask NU what redress calculation was used. NU will confirm they used mortgage fundamentals and the FOS will agree that it is fair. In the meantime, they may choose to do another calculation and the markets may have improved by then and you could find that no redress is then payable.

I think that this is grossly unfair and the compensation is derisory in the extreme (they claim it puts me in the same position had i taken a repayment mortgage)

You are right. It is unfair. However, its not unfair on you. Its unfair on the original seller as its almost certain that you are financially better off with this endomwent as the surrender penalty is likely to be higher than £112. So despite you being better off financially than if you had a repayment mortgage, you are still going to be paid £112.

The term compensation is technically incorrect. It is redress. You complained that you should have had a repayment mortgage. NU agree and to put you in that position you need to surrender the endowment, pay that amount into the mortgage and switch to repayment mortgage. To do all that would make you £112 worse off and that is what NU are paying. Your monthly mortgage payment will almost certainly end up a little higher but that was one of the benefits of going with an endowment. You saying you dont want that is your choice and no doubt one you considered back in 1999 when you should have been shown the cost differences.

Your "problem" is that you havent got a bad endowment. You seem to wish that your endowment was a poor one and that would give you a load more "free" money. Instead you have a fairly good one and you are not happy with that. Crazy!

EdInvestor

richardfj wrote: »

Bearing in mind the projected shortfall on my endowment expected to be between £2,000 and £5,000 they offerered me £112..!!!

The misselling redress is not designed to cover the shortfall.To do that you need to proceed as follows:

1.Surrender the endowment ( making sure you replace the life cover first if you need it).

2. Pay the surrender value and the redress money off the mortgage

3.Increase the monthly mortgage payment by the amount of the endowment premium, thus overpaying the remaining interest/only mortgage.

That should resolve the problem, though the fine detail does depend on the interest rate payable on the mortgage over the rest of the term..

richardfj

Hi, thanks for the advice so far..

Can i just make it clear that i am not after 'free money' i simply want this policy to do what it was designed to, ie pay off the endowment of £15,500. What i was hoping for was some sort of guarantee from NU that they would do this, but clearly i'm not as knowledgable as some as what to expect, hence my questions..

NU do not accept any notion that there policies were miss-sold, this does seem to be at odds with most opinions on the matter and it does seem convenient to demand written evidence of guarantees etc when they know that this is high unlikely to be forthcoming. It also seems that judging by the 'compensation success thread' that other companies are perhaps being more pragmatic about this issue

The policy was originally sold to us as being the best for us, the advisor dismissed any of form of other mortgage with the assurances that no policy that he was aware of hadn't ever paid of the full value and they were designed to creat a surplus.

I still don't quite see how a compensation offer of £112 can redress the expected shortfall of between £2k and £5k on this policy. If i surrender etc presumably my payments go up and i will have to get seperate life cover bith of which incurr more expense. NU did however state that if i die then the £15,000 would be paid, were they implying something?!! very thoughtfull of them

I do appreciate the advice so far, thanks...

Retired_I.F.A.

Three cheers for the FSA hip hip..


Nothing personal mate but it's nice to see that not all financial advisers are fund guilty without any evidence at all.

edit

I said that wrong, what I meant was it's nice to see that although the sale was found to be wrong the FOS have dismissed your claim that a gaurentee was given as there was no evidence to support it.

With most of the casese it seems all advisers were guilty unless they could prove their innocence.

EdInvestor

richardfj wrote: »

NU do not accept any notion that there policies were miss-sold

The fact they have offered you redress means they acceot the policy was missold.

I still don't quite see how a compensation offer of £112 can redress the expected shortfall of between £2k and £5k on this policy.

It can't.It's not supposed to do that, it's just supposed to put you in the same position you would be in if you had been sold a repayment mortgage.

If i surrender etc presumably my payments go up and i will have to get seperate life cover bith of which incurr more expense.

Not necessarily .You need to sit down with a mortgage broker and run the numbers.

Basically, your complaint has been successful, it's just that you haven't lost much.

Crazy_Saver

Retired_I.F.A. wrote: »

With most of the casese it seems all advisers were guilty unless they could prove their innocence.

After following these boards for the last couple of years, I have to agree with you on this.

So why has my case been so difficult!!!!!

The words "balance of probabilites" and "I cannot say for certain" occur so many times in the adjudicator's reports:mad:

He even agrees that it is possible that some documents have been "cobbled" by the firm in question but even so, he has no reason to doubt that the information enclosed in them are a true reflection of our circumstances at the time. If they are forged documents, how can the information be correct:wall:

Sorry Retired I.F.A. .............here I go again:o

dunstonh

The fact they have offered you redress means they acceot the policy was missold.

No they dont. They are saying there is no evidence to support the claims of the OP that it was mis-sold. However, the files also have insufficient evidence to say it wasnt sold correctly either.

Most claims where redress is payable are not upheld technically but still result in redress due to insufficient information. Its that reason why some of the claims companies encourage you to put a complaint in whether you were mis-sold or not. There are fairly good odds that the file is missing or incomplete or not documented to a required standard.

NU do not accept any notion that there policies were miss-sold, this does seem to be at odds with most opinions on the matter and it does seem convenient to demand written evidence of guarantees etc when they know that this is high unlikely to be forthcoming.

Lets say I gave you perfect advice but we fell out for some reason and you decided you wanted to get nasty and put a complaint in about a product. You could make up all sorts of lies. What you are saying is that all your lies should be accepted as truth without any evidence. Would that be fair?

I have only ever had one complaint and that was a fraudulent complaint where I was accused of not saying certain things and the person was claiming about £9000 redress. Luckily, I have always been a bit heavy on the documentation and documented on the factfind, suitability report and had photocopies of payslips.

background for those interested...the person told me they were considering a career break in a couple of years. I told them they should review and probably stop the FSAVC is they took a total career break. I checked current eligibility and documented what was said. 11 months later and into a new tax year she took the career break. 5 years later she complained that I should have told her to stop the FSAVC and she was claiming back contributions and the tax penalty. I was accused of all sorts of things in the complaints letter which never happened. The main thing was that I never told her to check eligibility. The complaint was rejected with reasons given why it was rejected. She then followed up saying that none of the reasons given were correct and that I was telling lies. At that point copies of the documentation were supplied to her and a few days later the she withdrew the complaint. I was certain that her letter was scripted by a complaints company. If I hadnt documented the events at the time I could have had a balance of probabilities or insufficient ruling against me.

Anyway, you can see that you cannot rely on what people say. There are four truths to every story. Your truth, their truth, what actually happened and then how that is interpreted.

The policy was originally sold to us as being the best for us, the advisor dismissed any of form of other mortgage with the assurances that no policy that he was aware of hadn't ever paid of the full value and they were designed to creat a surplus.

In 1999, no endowment had failed to hit target so its correct. Saying that doesnt make it a mis-sale.

I still don't quite see how a compensation offer of £112 can redress the expected shortfall of between £2k and £5k on this policy. If i surrender etc presumably my payments go up and i will have to get seperate life cover bith of which incurr more expense. NU did however state that if i die then the £15,000 would be paid, were they implying something?!! very thoughtfull of them

At this point in time you dont have a shortfall. Projections are just examples of what you may get back if certain growth rates are used. You can get back more or less than these. Projections can overstate and understate the likely outcome.

In your case, given that you are in year 9 of the policy and the redress is just £112, it suggests that your endowment is on track for a surplus using the original target growth rate. If the original growth rate was 7% to hit target but the projections show 6% then it will show a shortfall by default. It doesnt mean it will fall short though.

The redress method looks at where you today and compares how the endowment is valued (minus surrender penalty) and compares that to where you would be on a repayment mortgage had you done that from the start.

At this moment there is £112 difference in the figures. Hence the amount that is due to you.

Endowment mortgages are typically cheaper than repayment mortgages. A very common reason why people went with them. If you want to go repayment then you have to accept a small increase in the cost. It wont be much on £15k but its the consequences of you choosing to complain that you would have gone with the more expensive option.

richardfj

Thanks once again for the advice, i thought i had a strong case but it's seems to be crumbling around me!!!

That said i'm not looking for anything above and beyond what i felt i was due under the original policy.

I appreciate it's my word versus theirs and i can understand why so many IFA's seem respond to this to protect their profession as they are probably as much victims by association in all this debacle also. I don't even think the guy miss-sold for personal gain but was merely preaching the gospel according to the industry at the time i.e Endowments are currently the best policy.

What I am confused by is that if £112 compensation indicates that my policy may actually be doing okay why does the literature from NU scare the life out of me into thinking i could be up to £5000 short at the end of the term, they tell me what the shortfall could be at certain levels of return but never seemingly state what it's currently tracking at, ie if the current returns are 6%-8% then i've not much to worry about if it's 6%-4% then maybe i should be concerned. Would i be right in saying that the longer i leave it the less chance i have of any redress but the more potential chance i might have of a market change and the policy doing what it was intended to...

The biggest issue for people like me i feel is that we simply don't fully understand all this either then or now (although thanks to these forums i am learning fast!!) and i just have this fear (irrational perhaps) of being shafted by large companies that probably could do more if they really wanted too.

silvercar

The £112 is designed to put you back in the situation you would have been if you had taken a repayment mortgage, not to make up any shortfall in the endowment policy.

I sympathise with where you are coming from, we were shown a piece of paper with wads of money, a plane jetting off and a sports car and told to tick which we thought we would spend the money on, that the endowment would produce over and above the mortgage.