Endowment compensation offer

Pots'o'dosh

Our deficit is about £16,000. We have been offered £3500 in compensation. The offer states we have to accept within 28 days but also that we can apply to the ombudsman if we are not happy. This could take six months, and if the Ombudsman doesn't agree that we are entitled to any more, might we lose the original offer because we did not reply within the 28 days.

Hope this is clear.

dunstonh

You forgot to post your question. I will assume what it may have been.

The compensation is to place you in the postion you would have been if you had gone with a repayment mortgage. Which, after all, is why you are complaining and what you would have done as an alternative.

If you take the case to the ombudsman, assuming the calculation was done correctly, then there will be no difference in the payout. Indeed, the payout could be lower (or higher) because of time passed and potential differences in investment performance. Unit linked endowments would have seen bigger increases in recent months which would reduce any compensation payment. Some with profits endowments have had improvements, some have had reductions, some no different. Therefore a recalculation may or may not benefit you.

FOSman

If you are planning to surrender the policy anyway, do that and then the compensation will not change. Then you can take it to the FOS. However, if the firm have not actually admitted that the policy was mis-sold, then they may choose to withdraw the offer. If that happenes, the FOS will look at the merits of the complaint. This means that your complaint may or may not be upheld.

dunstonh

FOSman, if the company agrees a compensation but the policyholder takes it to the FOS and the provider then withdraws the offer (as some do), is it likely for the FOS to then turn round and say actually, it isnt a mis-sale and you dont get anything.

I know it depends on a number of things but it would interesting to learn if there have been cases where payment has been offered by the insurer/advice firm but the FOS has gone on to reject the complaint and the policyholder end up with nothing.

FOSman

dunstonh wrote:

FOSman, if the company agrees a compensation but the policyholder takes it to the FOS and the provider then withdraws the offer (as some do), is it likely for the FOS to then turn round and say actually, it isnt a mis-sale and you dont get anything.

I know it depends on a number of things but it would interesting to learn if there have been cases where payment has been offered by the insurer/advice firm but the FOS has gone on to reject the complaint and the policyholder end up with nothing.

If an offer is on the table when the complaint comes to the FOS, then the FOS will look at the offer, and advise the complainants if they believe it is ok. If they think it is wrong, then they will ask the firm to re-calculate it. This is assuming that the firm are still admitting that the policy was mis-sold.

I have to say, I have seen firm's make ex-gratia offers to stop a case coming to the FOS, then withdraw these token offers (usually same as case fee), only for the case to be rejected by the FOS.

Morally of the story, if the firm are not admitting they did anything wrong, but are offering some cash to get rid off you, they are doing it because that will only have to pay the FOS to look at the case. If you don't think there is much evidence to support your complaint, you might want to take the cash and run.