Norwich Union - Derisory Endowment Compensation!!

dunstonh

i thought i had a strong case but it's seems to be crumbling around me!!!

Strong enough that the complaint was basically upheld and you are getting the redress that you are due.

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

Projections are just examples at those rates. Whilst 4, 6 & 8% are being used, you can look at the NU Balanced Managed fund for example and see that it has been exceeding 8% p.a. in returns. Indeed, in the last 5 years it averaged out above 10%. p.a.

So, you could end up being paid a surplus. We just dont know what future returns are going to be. This is why they look at the position now and not in years to come.

Projection rates are designed to be low so they err on the side of caution in general and reflect the lower end of the market which is often the mass market end. My own investments are currently standing at an average annual return of 26.4% p.a. and thats going back over just 10 years. For medium risk investors you typically look for long term averages in double digits. However, default funds (such as cautious managed, balanced managed and FTSE 100 trackers) tend to be sold more by the tied agents who cater for the larger market and these tend to reflect more closely to the projections.

At this moment in time you are £112 worse off. If you find out what the current value is and what the surrender value is then the difference could put you into being better off. If you stay as you are and 4% p.a. is achieved then you get the 4% figure. Same with the 6% and the 8%. However, what if your investments are growing at 10% or 12% or 2%. Projections are just examples.

To help us explain it better, tell us what investment fund(s) you are in. We can then give you some recent performance stats so you can see how your endowment has actually been doing.

You also need to look at the logic of your complaint. You complained that you should have been sold a repayment mortgage. NU have agreed and are now willing to pay the surrender value plus £112 for you to pay into your mortgage and if you convert to repayment mortgage then you will be in the exact position you would have been had you been in a repayment mortgage from the start. The monthly payment may be a little higher but it would have been had you been on a repayment mortgage from the start. That is no difference and is part of the pros and cons of a repayment vs endowment mortgage. On 15k though it really wont be enough to worry you. We are almost certainly talking less than £5pm.

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.

You didnt see an IFA and I have no reason to protect tied agents. I personally feel that tied agents in general are not qualified or experienced enough for investment business. Tied agent salesforces account for more mis-sales than any other distribution channel.

The concepting of investing to repay a mortgage is a sound one when done correctly and utilising decent investments which are kept under review. Using default funds on an invest and forget basis is always going to result in lower returns over the long run and that just isnt ideal for 25 year (or so) mortgages.

richardfj

Thanks gain..

Sorry i assumed he was an IFA at the time and since, my mistake. Maybe if i had spoken to an IFA i might be a bit mopre knowledgeable about all this at least..

In regard to my policy and as far as i can make out i have a with profits Homemake Plus policy..Target amount was £15,500 based on £34,97 per month over 25 years from Aug 1999

Reading through some other bits i have, i've since come across the 2 letters, one from CGU dated 9/1/2001(the original endowment company) stating that providing my investment return doesn't fall below 6% then tney will top up the policy upon maturity, providing policy remians wholly invested in their with-profit fund. Another letter from NU tals of a similar 'promise' again based on 6% return. Both do mention that these will only be honoured if they have free cash reserves to do so. These were not mentioned in any of their recent correspondence?

regards