Endowment Misselling or just misleading?

Grey_Nomad

Back in October 1983 I took out a 25 year endowment policy with Scottish Life to cover off a £40K mortgage. For the last few years Scottish Life have sent me a "green letter" annually advising me my plan was on track to pay out the required £40k - the last being 28th Feb 2007. This week I received a letter from Scottish Life advising me that my plan, which matures on 26th October 2008 is now expected to pay only £29.6K. Clearly this letter was just what I wanted to receive! Can anyone explain how such an organization can repeatedly tell me I need take no action on my plan to improve/match the expected payout, then in the last 5 months announce a near 11K shortfall?
The nice man at Scottish Life did point out however that if I died before that date the would pay out the £40K!!!
Their letter nearly caused this outcome!!

Ideas anyone?

turbobob

Mis-selling is to do with the advice you were given to take out the policy. I.e. you were told it was guaranteed to pay off your mortgage and give a cash surplus, or weren't made aware of the risks etc. etc. If those applied then you could consider making a complaint about the advice you were given to take out the policy. Have a look through the FSA fact sheet.

If you feel you have a valid complaint the good news is it cannot be time barred if you have only ever had green status letters. The bad news is, if the advice was given by an independent firm (rather than one of their reps, or a bank or building society) then they probably won't look at your complaint as it was taken out before 29 April 1988. If it was an independent firm that is now out of business then you have no recourse.

Can't really say much on why the projections have gone the way they have. From my limited experience with them surrender values on Scottish Life policies have been dropping sharply recently. In order to project a final value they have to work from a current value I believe. So if the policy value has dropped sharply that is likely to explain it. Might be worth posting up the policy details like the Basic Sum Assured and the bonuses that have been added to your policy, and current surrender value for some more information from others.

EdInvestor

Yes, post some more details, preferably from both last year's statement and this year's.

Guaranteed sum assured
Declared bonuses
Monthly payment
Maturity date
Maturity forecasts

That's a very large shortfall to develop right at the end even given the fact that markets have performed poorly in the past year.

Suggest you also call them up and ask for a surrender value now, and also for the composition of the ScotLife With profits fund ( ie, what percentage is invested in equities, property bonds and cash).

EdInvestor

Scottish Life seems to be prone to endowment maturity errors:

http://business.scotsman.com/personal-finance/Rosemary-Gallagher-So-much-for.4118169.jp