Endowment Diary

kenfrost

I have been battling for over two years to obtain compensation for my two mis-sold, and underperforming, endowment mortgages.

I have kept an online diary during this time, charting my progress (and lack of it) together with salient news and information.

I have also set up an online petition calling for the industry to underwrite these useless products.

If you are interested in reading the diary, or signing the petition, please drop by at **Site link removed as it contains referral links/banner adverts - Edited by Abuse Controller **

Good luck to all who hold these worthless products.

Ken

dunstonh

Which? says that it wants the Financial Services Authority to levy penalties that are big enough to alarm institutional investors that own shares in the companies facing fines.

Which? believes large penalties would persuade investors to put pressure on financial services companies to prevent mis-selling.

Not a moment too soon in my view.

First article on your site mentions which? This is the same which? that was promoting endowments and recommending them back in the "old" days. Nothing to do with your site but it is interesting that this consumer champion chooses to ignore its own past advice and throw out statements like that.

According to Independent Financial Adviser, Alan Lakey of Highclere Financial Services, not all endowments linked to a mortgage, where red or amber warning letters have been issued, will suffer a shortfall.

Absolutely agree. I have seen endowments mature with surpluses when there were shortfall letters produced in the years previous. I have also seen endowments which are above track where they should be, according to the original illustration, yet show as red/high risk shortfalls on the projections. The straight line projection method doesnt work on plans with guaranteed sum assureds, final bonuses or those with increased allocation rates later in the plan life.

To my view the best way for the life assurance industry to restore some of their shattered credibility, and brand value, would be for them to unconditionally underwrite their endowment products.

This would, at a single stroke, eliminate the need for a compensation industry which is living off the misery of policy holders.

Dont think you would find many complaints from anyone in the financial services industry to that. Except the FSA who thought the current way was best. It doesnt take anyone with a brain to work out that an endowment is more likely to be in a shortfall position directly after a stockmarket crash and that over the long term, the shortfalls will be reduced or removed. If the upheld complaints had the plans underwritten to pay out the required amount on maturity, then there would never have been this high profile hassle.

FOSman

I agree with dunstonh. Just because a policy is now underperforming, it does not automatically mean that it was mis-sold. Which? are the biggest bunch of hypocrites I have ever come across. There was a time when which? wrote that only a fool wouldn't take an endowment policy.

The reality is, most complaints are upheld by firms because they want to maintain their corporate image, or they haven’t held on to any file information to prove that the sale was complaint at the time.

I have very little sympathy when a couple complains about their 5th endowment policy, and still say they were not aware that it was invested in the stockmarket.

defender_of_the_weak

That wil be the same Which that says you do not need third party assistance then. This lot live in a middle class myth of a world where everyone is literate, numerate have computers and access to the internet as well as the capacity to understand the opaque charging structure of with profits funds, front end loading, reduction in yield etc etc.

The reason most claims are upheld is because the advisers and their managers were insufficiently trained to understand what they were doing. They believed the marketing dept shiny brochures and league tables and ploughed on regardless

kenfrost

The policies were sold as products, like TV's and cars, designed to pay off mortgages.

It looks like that they will fail.

Since they were sold like TV's etc the rules applicable to defective products should be applied, namely the product should be repaired/replaced.

In this case the life assurance companies should unconditionally underwrite them.

This solves the problem, restores the shattered reputation of the life assurance industry, and removes the need for a claims industry that has sprung up and is feeding off the misfortune of others.

Ken

** Repeated Link Removed - Edited by Abuse Controller **

EdInvestor

I do wonder about Which? myself.

Not long before they launched their big endowment complaint campaign, they also brought up the AXA case, in which the insurer was trying to take money from the policyholders in the With-profits fund and give it to its shareholders.

I agreed with their action there, because there were far too many companies extracting money on the quiet from WP funds in those days. They are all STILL paying misselling compensation from the policyholders' money - this is exactly what is happening with endowment compo.

The money is coming from the insurer's WP fund. So people with pension policies and WP bonds are seeing their returns reduced to pay compo to endowment policyholders.

Is this fair?

When you look at the state of the assets of the endowment holder - especially the value of the property he or she took out the endowment to buy - do we really feel that on the whole an endowment WP policyholder is more deserving than a pension WP policyholder at the same company, whose policy will have gone down just as much?

Is it reasonable that the pension policyholder should be further deprived of money to pay the endowment policyholder's compensation money? Because that is exactly what is going on.

I have a problem accepting endowment victims are more deserving than pension victims or WP bond victims, we have all suffered from the same stockmarket crash.Which is not to say people shouldn't complain about misselling if that's what happened to them - far too many people had no idea their money would be in the stockmarket, and they don't deserve the losses.

But Which? was perhaps the best placed organisation outside the industry to know that whipping up an endowment compo campaign would impact mainly on other WP investors, not on the companies or their shareholders.

Couldn't they not have found a way to reduce the effect on other policyholders who now have to bear worse losses to pay the endowment victims?

Or should we now have a WP pensions misselling campaign, followed by a WP bond misselling campaign to even things up?

defender_of_the_weak

Ken

I was enthralled by the links to the endowment compensation site from your diary, please let them know, if you have any contact with them that their sie is hugely misleading and should be reported to the Advertsing Standards Authority. I will pop back next week and see if it has changed. At 20% plus VAT they are nowhere near the cheapest in the country an I can think of loads of companies that would beat this figure, obviously including my own.

These sites and the information contained therein are just the sort of thing that the FSA want to regulate against. Having read it I fully agree

Ian_W

EdInvestor: They are all STILL paying misselling compensation from the policyholders' money - this is exactly what is happening with endowment compo.
The money is coming from the insurer's WP fund.

Here's a query for you folks re endowment mis-selling.
I took out a Standard Life £40,000 endowment in 1988, I knew at the time that the guaranteed sum assured was £13,000 and that the rest was dependent on Stock Market returns. The saleman [who I knew] made it clear that whilst it should make it's targets on the projections, it couldn't be guaranteed to do so. Although I assumed the policy would do better than it has, I knew there was a risk - I think there was a SM crash around 1984 which was fresh in the memory. The reason I took it out was simply a cheaper way to get the mortgage I wanted at that time.

I assume there is no claim on that basis for any compo and wouldn't bend the truth in order to seek it.

A risk that wasn't outlined to me, one which if it had been I would have declined to take, is the one outlined by EdInvestor above. Namely, that not only was the payout at risk if the market underperformed, it was also at risk if the company was found to have mis-sold policies to other persons, as their compo would come from the very Endowment funds I have been relying on for my policy to perform up tp standard.

Mis-selling?

FOSman

Even if you did try and complain about what EdInvestor has mentioned, I doubt very much that the life company is going to admit to milking the funds to pay for the complaints they are settleing. :rotfl:

kenfrost

defender_of_the_weak wrote:

Ken

I was enthralled by the links to the endowment compensation site from your diary, please let them know, if you have any contact with them that their sie is hugely misleading and should be reported to the Advertsing Standards Authority. I will pop back next week and see if it has changed. At 20% plus VAT they are nowhere near the cheapest in the country an I can think of loads of companies that would beat this figure, obviously including my own.

These sites and the information contained therein are just the sort of thing that the FSA want to regulate against. Having read it I fully agree

Defender,

if you have evidence of untruths/misleading comments in the site that you mention you should present that evidence to the FSA.

That is the only way to ensure that it is "moderated" or shut down

Ken

** Repeated Link Removed - Edited by Abuse Controller **

EdInvestor

FOSman wrote:

Even if you did try and complain about what EdInvestor has mentioned, I doubt very much that the life company is going to admit to milking the funds to pay for the complaints they are settleing. :rotfl:

FOSman

I'd be very interested to hear where Standard Life would say it got the money from other than its WP fund. It is a mutual after all, it has no shareholders to stump up.

People are never told about the company risk of investing in WP at mutuals -instead it's all nudge nudge, maybe you'll get a windfall ;) Equitable members had no idea they had to cover losses if the company incurred unexpected liabilities, as it did.

Fortunately this problem is about to go away as Standard Life is the last of the large mutual insurers and it will DM soon.

Of course the plc lifecos also pay compo money out of their WP funds as well, from money that 90% belongs to policyholders, so it's an unexplained risk for pretty well everyone, in fact.[There are a few non-WP houses, where shareholders may be forking out, though I wouldn't bet on it....]

Jolly good thing With profits is being phased out IMHO. It's a very risky way to invest your money with loads of hidden costs and charges as well as unexplained risks. Might work in booming markets, but quite unsuitable these days.