Endowment policies and shortfalls thereof
Discussion
Well the Red Alert letter has arrived from Scottish Widows - given a modest 4% each year, it's still going to fall £7K of its £26K target. Truly pathetic, especially given SW's reputation and the growth in the market recently.
2-3 years ago I made £10K of the amount into repayment, so I won't be hit by a bill. I'm not a 'compensation' type but obviously if I can get a few bob back from the financial industry (which is about to scatter bonuses around to all but the punters it seems) what's the best way?
The policy was taken out through a broker in 1988, but that broker is no longer trading. Do I approach SW, or one of those 'no-win no-fee' outfits, or the FSA? And do I have a cat's chance in hell anyway? Scottish Widow's suggestion, of course, is to send them mmore money... thanks guys...
Cheers all!
2-3 years ago I made £10K of the amount into repayment, so I won't be hit by a bill. I'm not a 'compensation' type but obviously if I can get a few bob back from the financial industry (which is about to scatter bonuses around to all but the punters it seems) what's the best way?
The policy was taken out through a broker in 1988, but that broker is no longer trading. Do I approach SW, or one of those 'no-win no-fee' outfits, or the FSA? And do I have a cat's chance in hell anyway? Scottish Widow's suggestion, of course, is to send them mmore money... thanks guys...
Cheers all!
I have a few endowment policies, some will win, some lose. Until recently I was of the opinion that it would be churlish to try to claim compensation for a mistake I made - not researching the alternatives at the time. Then come the bonuses for city workers. Kind of makes you wonder, when you have paid in for 25 years out of money that actually you worked damn hard for too, if they aren't just taking the p*ss just a tad. I mean, fair dos, if they deserve a bonus they deserve a bonus, but what about the lean years when my investments were haemorraging cash? Did they give some of their earlier bonuses back?
victormeldrew said:
Until recently I was of the opinion that it would be churlish to try to claim compensation for a mistake I made - not researching the alternatives at the time.
No member of the public is likely to be able to 'research the alternatives' because the market is so complex - possibly deliberately (rather like a BT phone bill). That's why IFAs exist. But yes, one does get the opinion that the market is ripping the piss out of investors. Spread over the last 10-15 years (the industry is always quick to tell us in times of hardship that investment is a 'long term' thing) we'd probably have done better to keep it in the building society.
That is a discrace, the w@nkers ATG said:
The only basis for a claim is if you believe you were mis-sold the policy. The performance of the policy is not relevant.
Very good point. It was actually sold to me by my cousin, who was an IFA in the days before they had to pass lots of exams... BTW I've mentioned the claims idea to him and he doesn't mind at all; his business was bought years ago and he's got a new life in Wales.
victormeldrew said:
That would be something along the lines of "you already have an endowment so you'll be wanting another of those then" when your original endowment is already 10 years down the line? Or maybe being sold an endowment by the vendor who just happens to be an IFA?
To be fair I can't remember the exact conversation from 1988! I don't know how I could prove mis-selling so that would seem to be curtains for me. How would one do that anyway?
Thanks for the replies. But I'll never cease to wonder why, when all those fund managers, traders etc are sitting in front of their screen watching the market going south, they don't liquidate and stick it in the building society until the market levels off...?
Ah, it would appear that i am not the only ones who has fallen foul of the endowment policy trap. Back in early 1981 I took out my very first ever endowment recommended by a financial adviser working on behalf of my building society, then about 5yrs after that I took out a home improvement loan and again I was recommended a endowment policy, then a third, all for reasonable amounts.
In 1999/2000 I moved home still with the same with mortgage company, who then suggested an ISA for the new amount borrowed to purchase our new home, no mention was made to the then two endowment policies which I still had running one for £7500 with 3yrs to run and one for £20000 with 5yrs to run. The building society never asked me or they made no enquiries as to whether the policies were going to reach there projected figures.
They gave me a monthly quote including my built in ISA payment which I agreed and signed to, then we moved I always leave the building society to sort out the payments for the policies which was then then, but now apparently it was up to me to arrange the setting up and paying of the ISA via another department.
In 2005 my 5yr fixed mortgage was coming to an end so I decided to try and shop around this is when my nightmare started. I went to another society who asked me to get projected figures for both my policies and ISA before they could quote me on a new mortgage. So, off I went to ask for quotes and to my horror my 7500 was worth 2100 and my 20000 was worth 10100 both way under value, but thats not all when I asked about my ISA I was told that i did not have one, so, for the past five years I have been paying an interest only morgage with no ISA in place which put me 5yrs behind.
I had not been receiving my yearly statements from them as they had not changed my address from old to new on there records even thought they had lent me the money to move, they blamed me as it was my responsibility to do so, this I admit I did not and would appear to be an oversight on my behalf.
I complained setting out everything in a letter to them over the years, but they were having none of it they said that I took the risk which they said was an informed risk based on the projection figures over the years and also that they did not have to inform me that the policies were not going to hit there projected figures ,that I should have been making the enquiries my self.
It took them months to investigate it according to them and at the end they gave me a £100 compensation for letters and telephone call costs. I am only glad that I found out when I did not in 10yrs when I retire only to find I still owe £ 30000 still to pay on my morgage. So. my word is be ware.
Stephen
In 1999/2000 I moved home still with the same with mortgage company, who then suggested an ISA for the new amount borrowed to purchase our new home, no mention was made to the then two endowment policies which I still had running one for £7500 with 3yrs to run and one for £20000 with 5yrs to run. The building society never asked me or they made no enquiries as to whether the policies were going to reach there projected figures.
They gave me a monthly quote including my built in ISA payment which I agreed and signed to, then we moved I always leave the building society to sort out the payments for the policies which was then then, but now apparently it was up to me to arrange the setting up and paying of the ISA via another department.
In 2005 my 5yr fixed mortgage was coming to an end so I decided to try and shop around this is when my nightmare started. I went to another society who asked me to get projected figures for both my policies and ISA before they could quote me on a new mortgage. So, off I went to ask for quotes and to my horror my 7500 was worth 2100 and my 20000 was worth 10100 both way under value, but thats not all when I asked about my ISA I was told that i did not have one, so, for the past five years I have been paying an interest only morgage with no ISA in place which put me 5yrs behind.
I had not been receiving my yearly statements from them as they had not changed my address from old to new on there records even thought they had lent me the money to move, they blamed me as it was my responsibility to do so, this I admit I did not and would appear to be an oversight on my behalf.
I complained setting out everything in a letter to them over the years, but they were having none of it they said that I took the risk which they said was an informed risk based on the projection figures over the years and also that they did not have to inform me that the policies were not going to hit there projected figures ,that I should have been making the enquiries my self.
It took them months to investigate it according to them and at the end they gave me a £100 compensation for letters and telephone call costs. I am only glad that I found out when I did not in 10yrs when I retire only to find I still owe £ 30000 still to pay on my morgage. So. my word is be ware.
Stephen
simpo two said:
... I don't know how I could prove mis-selling ... ?
I don't know if this was the case at the time that you were sold your endowment, but the onus is now on the vendor to not sell a product that is inappropriate for the client. I'd therefore imagine one way of proving mis-selling would now be to demonstrate that your financial position meant the product was inappropriate for you. Would probably be a lot harder to prove that you were misled into buying a product if the product was a reasonable choice. simpo two said:
But I'll never cease to wonder why, when all those fund managers, traders etc are sitting in front of their screen watching the market going south, they don't liquidate and stick it in the building society until the market levels off...?
But who will buy the shares off them? The only people who can buy are other fund managers and traders. When a marekt crashes, anyone who owns shares is along for the ride whether they like it or not. There are simply no buyers to sell to. Everyone is trying to sell at the same time. So the prices fall almost instantly to a new lower level at which people are prepared to start buying again. When markets are really crashing the price charts look a little like a staircase; lots of big vertical gaps. I was paid some compensation for y endowment. It helps if you were single when the policy was taken out, as arguably you don;t need the life insurance element then. The Which website has some standard letters you can send to the provider (in your case Scottish Widows). I put it in my own words as I thought it would be better and after several "we are looking into your complaint we'll contact you agin in x weeks" I received an offer.
Most of the companys offering to act for you do no more than you can do yourself, and some life companies are refusing to deal with them. Have a look at the Which site, and search back on here (possibly Pie and Piston) and you'll find some interesting and helpful information.
Thanks Chris, YHM.
Interesting point. This brings me on to something I've never quite understood, which is how the price of a share is determined by the market. Even when stocks are falling, they always have a quoted value. And so, if I had a share which was 90p and then suddenly fell to 60p, I assumed that was because someone was prepared to pay 60p. But maybe not; maybe it's like goods in a shop that nobody wants.
ATG said:
But who will buy the shares off them? The only people who can buy are other fund managers and traders. When a marekt crashes, anyone who owns shares is along for the ride whether they like it or not. There are simply no buyers to sell to. Everyone is trying to sell at the same time. So the prices fall almost instantly to a new lower level at which people are prepared to start buying again.
Interesting point. This brings me on to something I've never quite understood, which is how the price of a share is determined by the market. Even when stocks are falling, they always have a quoted value. And so, if I had a share which was 90p and then suddenly fell to 60p, I assumed that was because someone was prepared to pay 60p. But maybe not; maybe it's like goods in a shop that nobody wants.
I know it'll seem hard for many younger people to believe but when we took the mortgage out for our current house in the early Eighties if you wanted the mortgage then you pretty well *had* to take the providers recommended endowment. Ours was with the Halifax and it was all we could do to resist their demands to transfer our current account to them too.
I complained about the Endowment which was with Clerical & Medical (now a HBOS company) mainly because when the shortfall issue first reared its head I rang them up & they literally laughed at the suggestion that they would ever allow one of their policyholders to suffer a shortfall.
So I was somewhat dismayed when the shortfall letters started to arrive. I filled in a downloaded form, sent it off,and a few wks letter a cheque arrived
I complained about the Endowment which was with Clerical & Medical (now a HBOS company) mainly because when the shortfall issue first reared its head I rang them up & they literally laughed at the suggestion that they would ever allow one of their policyholders to suffer a shortfall.
So I was somewhat dismayed when the shortfall letters started to arrive. I filled in a downloaded form, sent it off,and a few wks letter a cheque arrived
Mrs Seb here.
I deal with mortgage endowment complaints (or did until December when my contract ran out), so may be able to help out with any issues you may have.
As previously mentioned, poor performance alone is are not grounds for a complaint, but mis-selling is, eg not made aware of the possibility of a shortfall, not made aware of alternatives (repayment mortgages).
The rules and regulations surrounding the selling of endowments have changed over the years. If your policy was sold prior to 29 April 1988 you may have a problem with a complaint of mis-selling, but this may depend on who sold you the policy (not neccessarily the same as the policy provider) and how they treat these claims.
My advice would be not to go through any third parties. My experience is that they do not save you any work, may prolong the investigation, and take a large chunk of any compensation due. The Which website is a good place to look: www.which.co.uk/reports_and_campaigns/money/campaigns/endowment_mortgages/index.jsp It has a reasonable explanation of the grounds for complaint and how to go about making one.
The FSA and FOS websites also have a lot of information.
I am happy to help out if I can (especially as I seem to have a lot of time on my hands at present!). I can be contacted through Mr Seb's profile.
Cheers
I deal with mortgage endowment complaints (or did until December when my contract ran out), so may be able to help out with any issues you may have.
As previously mentioned, poor performance alone is are not grounds for a complaint, but mis-selling is, eg not made aware of the possibility of a shortfall, not made aware of alternatives (repayment mortgages).
The rules and regulations surrounding the selling of endowments have changed over the years. If your policy was sold prior to 29 April 1988 you may have a problem with a complaint of mis-selling, but this may depend on who sold you the policy (not neccessarily the same as the policy provider) and how they treat these claims.
My advice would be not to go through any third parties. My experience is that they do not save you any work, may prolong the investigation, and take a large chunk of any compensation due. The Which website is a good place to look: www.which.co.uk/reports_and_campaigns/money/campaigns/endowment_mortgages/index.jsp It has a reasonable explanation of the grounds for complaint and how to go about making one.
The FSA and FOS websites also have a lot of information.
I am happy to help out if I can (especially as I seem to have a lot of time on my hands at present!). I can be contacted through Mr Seb's profile.
Cheers
Thanks for the info and the the links all, Mrs Seb I might be in touch!
I knew my endowment was under performing (Scottish Life I think - another Halifax victim here) but came across the prediction last night which seems to indicate that (can't remember the exact figures) but that my little £30k endowment from 1989 is going to underperform by around £17k
I must get my act togehter, what info am I likely to have to provide about the original sale? (I know the links probably tell me)
I was single when I took mine out and really was under the impression that there was very little alternative if I wanted the mortgage - I do also remember discussing what I might spend the "bonus" on!
I knew my endowment was under performing (Scottish Life I think - another Halifax victim here) but came across the prediction last night which seems to indicate that (can't remember the exact figures) but that my little £30k endowment from 1989 is going to underperform by around £17k
I must get my act togehter, what info am I likely to have to provide about the original sale? (I know the links probably tell me)
I was single when I took mine out and really was under the impression that there was very little alternative if I wanted the mortgage - I do also remember discussing what I might spend the "bonus" on!
Piglet said:
Thanks for the info and the the links all, Mrs Seb I might be in touch!
I must get my act togehter, what info am I likely to have to provide about the original sale? (I know the links probably tell me)
I was single when I took mine out and really was under the impression that there was very little alternative if I wanted the mortgage - I do also remember discussing what I might spend the "bonus" on!
I must get my act togehter, what info am I likely to have to provide about the original sale? (I know the links probably tell me)
I was single when I took mine out and really was under the impression that there was very little alternative if I wanted the mortgage - I do also remember discussing what I might spend the "bonus" on!
The fact that you were single at the time you took out the policy may mean that you did not need the life cover associated with the policy. However, some lenders insisted on life cover regardless.
If you use the Which letter generator to make your complaint, it will lead you through the questions regarding the areas of your complaint, and then produce the letter to send to the company who sold you the policy. Doubtless, you will then be sent a 'Mortgage Endowment Questionnaire'. This will ask you about your recollections of the sale and your circumstances at the time. Quite possibly your mortgage history as well. You are not expected to remember everything back to the date of the sale, or your whole mortgage history, so may not be able to fully complete the questionnaire - but that's OK. A case handler might then contact you to clarify various issues, such as how the product was described to you, what alternatives were discussed, any other investments you may have held, etc. The company will examine any paperwork it holds from the date of the sale, your answers to the Mortgage Endowment Questionnaire and any further contact, and will make a decision from there. Sometimes the Adviser will be asked for their recollections too.
You will not be expected to produce any paperwork.
Hope this helps.
Mrs Seb
Edited by seb400 on Wednesday 3rd January 18:39
The resolution of mine (with the Halifax) was a bit strange because after I sent in a letter based on the Which? letter, they replied with 3 pages of point by point rebuttals of the complaints I'd made (this was a policy taken out in 1985) but buried in the middle of a huge paragraph on page 3 it said (completely out of context) that they accepted my claim.
Edited by deva link on Wednesday 3rd January 21:35
OK, a bit of advice then please 
I had the red letter ages ago, but it was accompanied with a covering note basically saying that although the endowment would come up short (like £20K+ short), I was no worse off financially than if I'd put the same payments into a repayment mortgage. So, I've taken their [Friends Provident] word for it and haven't taken it any further on the basis that there wasn't any 'loss' to claim, just a shortfall. But in fairness, if I'd known up front it was going to come up short then either on endowment or repayment I'd have paid in extra per month. So, is it correct I have no claim if I'm allegedly no worse off?
Thanks.
I had the red letter ages ago, but it was accompanied with a covering note basically saying that although the endowment would come up short (like £20K+ short), I was no worse off financially than if I'd put the same payments into a repayment mortgage. So, I've taken their [Friends Provident] word for it and haven't taken it any further on the basis that there wasn't any 'loss' to claim, just a shortfall. But in fairness, if I'd known up front it was going to come up short then either on endowment or repayment I'd have paid in extra per month. So, is it correct I have no claim if I'm allegedly no worse off? Thanks.
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