Endowment misselling query

Legacy_user

Earlier this year my husband and I put in 2 claims for misselling to the Prudential. We got a very quick offer reply (£1124) to the first but have only just received an offer for the second. However also in the post was an "amber alert" letter advising that the first policy had a projected shortfall of £2325 at 4%, £1025 at 6%. Bearing in mind the original offer of £1124 can anyone tell me if I should decline the offer of £1124 or do you think it is fair?

FOSman

The money being offered is designed to put you back in the position had you taken out a repayment mortgage, not make up the shortfall that you might face when the policy matures.

You might want to get the Financial Ombudsman Service to have a look for you, but if it is correct, then they will not be under any obligation to do any re-calculations later on.

dunstonh

If you take it to the FOS, they will probably withdraw the offer pending decision from the FOS. This will lead to a recalculation. With recovering markets and Prudential having the best with profits fund on the market currently, you may find that revised settlement is lower.

You have quite a small shortfall. Have you checked with Pru to see what the current terminal bonus is? Its quite possible that when that is included, you have no shortfall. Projections on with profits plans mostly do not include terminal/final bonus.

You may be complaining here, getting compensation and still potentially hit target or end up in surplus.

SaTScB

Hi There, I am not sure is this is the right place to post this, But I also have a query (well my parents).

My parents took out an Endowment policy with the Prudential in 1986/7 and obtain letters stating they would have a short fall. Currently my parents have done nothing about this (kinda put there head in the sand), I have spent the morning reading all the threads related to this issue and I am confused. Are my parents out of date to put a case forward? and if they are not what do they need to get the ball rolling?? Any help would be greatly appreciated.

Thanks

dunstonh

SaTScB wrote:

Hi There, I am not sure is this is the right place to post this, But I also have a query (well my parents).

My parents took out an Endowment policy with the Prudential in 1986/7 and obtain letters stating they would have a short fall. Currently my parents have done nothing about this (kinda put there head in the sand), I have spent the morning reading all the threads related to this issue and I am confused. Are my parents out of date to put a case forward? and if they are not what do they need to get the ball rolling?? Any help would be greatly appreciated.

Thanks

Perhaps starting your own thread would have been better. Thread hijacking isnt fair on the original poster.

However, if sold through an IFA or company not owned by Prudential, then it is unlikley your parents can do anything about it due to it being taken out before 1988. If sold by Prudential, then it is possible that Pru would consider the complaint.

However, a projection showing a shortfall doesnt mean there will be one. Its an indication that based on current value (without final bonus in many cases), if it was to grow at x% a year, then it would end up at x amount. However, because of the way many endowments work (allocation rates, charges and final bonus to name a few), it means that the final value could be a lot more or in some cases a lot less.

At this stage, it may be better for the Pru endowment to be reviewed by an IFA. Especially if your parents are the type to do nothing until prompted to.

I got a list of Pru endowments on my agency last week and it showed that all of them had lower shortfalls this year and were mostly back to 2001 levels. If that same rate continues (which is unknown of course) then they would end up with no shortfall in about 5-7 years and thats without utilising the final bonus.

SaTScB

Thanks for the reply, I am sorry for posting on another memebers thread but I am new to this and as the title of the thread was the same I thought I would ask. I am now going open a seperate thread... Thanks and sorry again.

System

Thanks for the replies. I keep forgetting about the terminal bonus and now that you have mentioned it I seem to remember someone advising before that the Pru were one of the better companies.
I have discussed your points with OH and we are going to accept the compensation offered. We aren't greedy but don't want to risk getting a lower offer if we take it further.