Standard Life endowment mis-selling help required

MM2005

Hi

I'm thinking of putting in a complaint (or two!) regarding the Standard Life endowment policies I have. Your advice would be much appreciated...

Myself and my girlfriend took out a SL policy when we bought our first property in 1990. The mortgage was with the Halifax and the HPS advisor told us an endowment was best due to it paying off your mortgage and getting the lump sum (an obvious mis-selling point). I seem to recall just being told this was the best etc. Now, the documentation I have is in a folder with Standard Life and Halifax logo's all over it - so I assume this was because SL were tied in with Halifax at the time? If so, does the complaint go to Standard Life and not Halifax?

In 1994 we sold up and moved to another property and took out a further endowment policy to make up for the increase in house price. I honestly cannot remember much at all about whether we were advised (either rightly or wrongly) on whether this was the best thing to do. This was through the Norwich and Peterborough building society (again, a SL enowment). I assume it was 'oh well, you've already got a SL endowment, might as well get another to top up etc.)? Anyway, again - would I complain to SL (if I did) about this or N&P?

With regards to the Halifax endowment - HPS no longer have a branch at the address I have for their HPS advisor. If I complain to Halifax (rather than SL) do I write to their HQ (or the local branch)? If it's the local branch, what do I do in this case?

As with N&P, again their local branch seems to have disappeared - do I write to their HQ?

Finally, I seem to recall SL writing to me a while when they originally advised people of the potential shortfall. Did they have a cut off point for complaints? I also seem to remember something about them doing their own investigation and deciding I hadn't been mis-sold. Does this sound familiar to people? In this case what can be done?!

Looking forward to your advice!

Cheers
MM2005

EdInvestor

Hi MM

MM2005 wrote:

If so, does the complaint go to Standard Life and not Halifax?

Correct, both of them to Standard Life.

I seem to recall SL writing to me a while when they originally advised people of the potential shortfall. Did they have a cut off point for complaints?

The timebar starts 3 years after you get a "red" letter advising you there is a "high risk" of a shortfall.

I also seem to remember something about them doing their own investigation and deciding I hadn't been mis-sold.

No idea what this might have been and would not worry about it at this stage.

https://www.endowmentaction.co.uk has loads of info on how to proceed and grounds for complaint.

MM2005

Cheers EI - already created my letters from that website! :-)

Thanks
MM2005

MM2005

I've just received letters today from Standard Life regarding my claim. They have asked me to complete a form for each of the endowments I have. They've said if I don't reply or know all the details they will make certain assumptions. Now, I don't know if the assumptions would favour me!

What criteria do they use for working out any compensation due? They are asking questions about my mortgage changes etc. But surely any shortfall should be based on whether I'd taken out an alternative mortgage at the time (i.e a repayment)?

Has anyone else had experience of completing these forms? Also, how can they work out what is owed before the policy matures? And then comparing the payout with the repayment figures.

I can post figures/mortgage change dates (if allowed) if that is any use to the experts here?!

dunstonh

What criteria do they use for working out any compensation due? They are asking questions about my mortgage changes etc. But surely any shortfall should be based on whether I'd taken out an alternative mortgage at the time (i.e a repayment)?

There are two ways to calculate the compensation. Once based on variable rate and is used when you cant give (or dont want to) your mortgage rate history. The other is based on your mortgage rate history which you have to give to them to get it. To give you an accurate sum, they need to know the rate history. However, the inconvenience of getting that information may put some off so the variable rate option is available. That option may or may not give the best result. If you have a history of lower rates than the variable rate, then the variable rate option will pay you less.

Has anyone else had experience of completing these forms?

Yes. Just fill in what you know and if you dont know, say so. Do not guess or lie because the advising company will be supplying information as well and if they have evidence which contradicts what you claim, you are more likely to get a refusal.

Also, how can they work out what is owed before the policy matures?

This is where the whole compensation method fails and has irritated a lot of people in the industry. Many endowments are showing a shortfall at this time as we have had a stockmarket crash in recent years. There is more likely to be a shortfall after a crash than before. Indeed, shortfalls (on unit linked or better with profits plans) have been decreasing in the last 12 months. Many argue that the compensation should be paid at the maturity point. i.e. if there is a shortfall at that time, then you pay the difference. If there is no shortfall and a potential surplus, then you get the proceeds and the insurer pays nothing. Saying that, compensation payouts are generally getting smaller as the stockmarket recovery means that surrender values are generally getting higher and that reduces the overall payout that may be required.

I can post figures/mortgage change dates (if allowed) if that is any use to the experts here?!

No need. Its all done by software based on FSA publications. Give that info to SL and they will use it to calculate the difference.

MM2005

Thanks very much for your reply. I switched to a repayment mortgage a few years back, out of curiosity would any compensation be higher if I still had an interest only mortgage?

That is the thing with this comparison in working out compensation. Why compare it to anything?! I mean if I could have taken out the policy without buying a house they wouldn't be able to work out what I'd lost other than to say I wouldn't get the amount I was told I'd get at the beginning.

So, surely they should only be looking at the shortfall given my complaint (i.e. I was told the mortgage would be paid off and I'd get a lump sum too)?

dunstonh

out of curiosity would any compensation be higher if I still had an interest only mortgage?

No, as they will base it on the interest rate. That is the same with either method.

I mean if I could have taken out the policy without buying a house they wouldn't be able to work out what I'd lost other than to say I wouldn't get the amount I was told I'd get at the beginning.

Thats classed as a pre-sold endowment and is more often than not treated as a mis-sale nowadays. That usually results in return of premiums plus interest.

So, surely they should only be looking at the shortfall given my complaint (i.e. I was told the mortgage would be paid off and I'd get a lump sum too)?

Indeed. However, you say that. Chances are the advising company says different.

I used to say there are three truths. Yours, theirs and then what really happened. However, I learned that there was a fourth truth during the week. You have yours, theirs, what really happened and then how its interpreted.

MM2005

OK. Thanks for your help - I guess I'll fill the forms in and send them off and see what happens!

FOSman

The reason why they compare what you have now to what you would have had if you had taken a repayment mortgage is because you need to prove that the policy was guaranteed to meet its target amount. regardless of what the adviser said to you 99 times out of 100, the paperwork says something different. As the firm are very likely to deny what they may have advised you, complaint handlers look for evidence and then assess the suitability of the policy.

If they think the policy was unsuitable, then they will put you back in the place had you taken a repayment mortgage. Now people disagree sometimes that this is unfair and that they should be made to make up the shortfall. In reality, most people through the early 90s benefited from lower premiums by taking out policies.

Many firms argue that these savings should also be taken into account, but the FSA and FOS say that unless it can be proven that these savings were used later for investments to contribute towards the mortgage, firms should not take it into account.

So, putting you back in place of repayment mortgage, without penalising you for the savings you have enjoyed is in my view fair and reasonable.

MM2005

Had a compensation offer from SL for just over £800.

Oddly, it was about £250 for the earlier policy taken (1990) and £550 for the one taken in 1994. Bot complaints upheld on slightly different issues - I assume the usual stuff, like attitude to risk, etc.

They've included the original Halifax Faxt Find documents and it's interesting to note the advisor in the 1994 document writing they discussed Repayment/Endowment but advised Endowment due to life assurance, possible bonus at maturity AND because it tied in with our current terms (that is, already having an endowment at the time)!

Does this seem a fair payout?

1990 Mortgage/policy was for £26000.
1994 Mortgage/policy was for an additional £21000.
Changed to repayment in 1999 once I first had wind of the poor performance.

Many Thanks
MM2005

dunstonh

MM2005 wrote:

Does this seem a fair payout?

1990 Mortgage/policy was for £26000.
1994 Mortgage/policy was for an additional £21000.
Changed to repayment in 1999 once I first had wind of the poor performance.

Many Thanks
MM2005

We cannot calculate it here. If you read FOSmans post you will see what they have to offer. If the compensation payment does that, then its fair.