"Endowment compensation hotline"
Discussion
Sorry but when I took one out 16 years ago, I was a young man with no great knowledge of financial products. A 'professional' adviser advised me to take out an endowment as this would pay off the mortgage at the end of term and I was almost sure to receive a nice 'nest egg' payment. At no time was I told that they may turn round as they have now and tell me that I might have to cover a shortfall to pay the mortgage at end of term.
I am not a stupid person, but if somebody brought me a motorcycle to fix, I tell them what it needs in layman's terms as that is my field of expertise and not necessarily theirs. I think it is down to professional integrity, but apparently the 'advisers' were driven by high commission payments to sell a particular product. I could take this short term get-rich-quick approach in my business, but ethically and morally it's wrong.
I only expect to be treated fairly and not 'conned' in dealings with subjects outside my sphere of understanding, especially when dealing with appointed 'experts'.
Rant over!
I am not a stupid person, but if somebody brought me a motorcycle to fix, I tell them what it needs in layman's terms as that is my field of expertise and not necessarily theirs. I think it is down to professional integrity, but apparently the 'advisers' were driven by high commission payments to sell a particular product. I could take this short term get-rich-quick approach in my business, but ethically and morally it's wrong.
I only expect to be treated fairly and not 'conned' in dealings with subjects outside my sphere of understanding, especially when dealing with appointed 'experts'.
Rant over!
andygtt said:
but if the endowment is predicted to shortfall don't they write to you? I know they did with mine.
The fact that we did not read or understand the small print is not anyone else's fault but our own.
I think the point is we weren't told at the time when we were encouraged to take out an endowment policy that there COULD be a shortfall.
I think the point is that somebody could go in when arranging a mortgage, as I did, and say they want a repayment mortgage because it actually reduces the debt which is important to me.
They are persuaded against their better judgement to go for an endowment because its a flexible device, which is expected to perform so well that you can pay off early any ime after 10 years from the start. It was predicted to pay off after 17 of the 20 years.
As inducement to go this route commission was shared between me and the solicitor.
We know where all that went and since have been gradually shifting % from endowment to repayment to try and counter problems later.
Now as it happens I'm not complaining and claiming compo. You can call me a mug for not doing so and that I may very well be but I could have stuck to my instincts. I didn't, my decision. Yes it pees me off but water under the bridge.
We are where we are, lets make the best of what we've got left.
Am I wrong in taking that view? Opinions welcome.
They are persuaded against their better judgement to go for an endowment because its a flexible device, which is expected to perform so well that you can pay off early any ime after 10 years from the start. It was predicted to pay off after 17 of the 20 years.
As inducement to go this route commission was shared between me and the solicitor.
We know where all that went and since have been gradually shifting % from endowment to repayment to try and counter problems later.
Now as it happens I'm not complaining and claiming compo. You can call me a mug for not doing so and that I may very well be but I could have stuck to my instincts. I didn't, my decision. Yes it pees me off but water under the bridge.
We are where we are, lets make the best of what we've got left.
Am I wrong in taking that view? Opinions welcome.
People are complaining about the poor performance, not about how it was sold & because the financial services complaints procedure is so geared up to protect the customer, life providers are paying out with out asking to many questions. I have had numerous chats with clients who have endowments that are performing fine & they ask if its worth putting a complaint in as they may well get some money, I tell them you might aswell as every other bugger is.
When the older policies were sold it probley had to achieve a growth rate of about 8% (if i can remember)which at the time would have been easily achieveable. People forget the mortgage interest rate they were being charged was about 8% or 9% aswell. An average good fix rate now is about 4.5%ish so in theory the money saved on your debt ( the mortgage) should have been invested to compensate the reduction in investment returns.... who did that? No one of course, they just buy more as they feel better off.
One thing that was miss sold was the fact if you move house you can take the endowment with you thus keeping the same mortgage term, a repayment mortgage you pay off no capital in the early years. This is wrong. A repayment mortgage will reduce the capital in the early years as quickly (if not more so) than the growth on your endowment. If your policy was sold on this basis then you have grounds for complaint, but hurry up as the clock is ticking....
Garry
CeFA CeMAP MLIA(dip)
When the older policies were sold it probley had to achieve a growth rate of about 8% (if i can remember)which at the time would have been easily achieveable. People forget the mortgage interest rate they were being charged was about 8% or 9% aswell. An average good fix rate now is about 4.5%ish so in theory the money saved on your debt ( the mortgage) should have been invested to compensate the reduction in investment returns.... who did that? No one of course, they just buy more as they feel better off.
One thing that was miss sold was the fact if you move house you can take the endowment with you thus keeping the same mortgage term, a repayment mortgage you pay off no capital in the early years. This is wrong. A repayment mortgage will reduce the capital in the early years as quickly (if not more so) than the growth on your endowment. If your policy was sold on this basis then you have grounds for complaint, but hurry up as the clock is ticking....
Garry
CeFA CeMAP MLIA(dip)
Wot the Axe sed.
SO BORED with people claiming for EVERYTHING. Everyone KNOWS that investments can go down as well as up.
There was some stupid fat chav on the TV in tears saying she was suing for compensation about her endowment mortgage. She was crying about her "shortfall" of £20,000. So just get another loan and keep paying, fatty.
SO BORED with people claiming for EVERYTHING. Everyone KNOWS that investments can go down as well as up.
There was some stupid fat chav on the TV in tears saying she was suing for compensation about her endowment mortgage. She was crying about her "shortfall" of £20,000. So just get another loan and keep paying, fatty.
And that my dears is why people can claim compensation.
We were never advised the investment Could go down, We were not told of how much commission was being paid, We were not told of how the money was being invested.....yadda yadda yadda.
So that's it in a nutshell, mis-sold a poilicy.
kevin
We were never advised the investment Could go down, We were not told of how much commission was being paid, We were not told of how the money was being invested.....yadda yadda yadda.
So that's it in a nutshell, mis-sold a poilicy.
kevin
warmfuzzies said:
We were never advised the investment Could go down, We were not told of how much commission was being paid, We were not told of how the money was being invested.....yadda yadda yadda.
So that's it in a nutshell, mis-sold a poilicy.
kevin
But 99% of punters are bored shitless when you mention anything to do with mortgages & investments, somehow you have to try & make it interesting & enjoyable then try & expalin why its important they hear & listen to whats being advised. 1st time buyers often just say they just want a mortgage, how can you give sound advice that you know wont get you sued in 5 years when the market changes again if the client finds it hard to remember the advisers name let alone anything he said!
Who cares about how much commission is earned. its all disclosed up front now & often clients look at me with a 'so what?' face when they hear how much is earnt.
& so to where the money is invested, most dont want to know about pound cost averaging, unit linked V with profits... all they want to know is how much will it cost, until they hear they can complain...
I'm off now dudes for Christmas but ill catch up on this thread in a few days, Happy Christmas everyone & heres to a great Pistonhead new year
theaxe said:
This stuff does confuse me, surely when you take out an endowment you accept the risk. How come people get compensation?
If I don't win the lottery can I get my money back? The adverts suggest I'll win...
Total bullshit ...... Endowments were heavily sold in the late 80's because of the fat upfront commissions to IFA's - not because they were what the customers needed . They were sold as a "risk-free" or "low-risk" way of paying off the mortgage , as most of the money was in low-risk asset classes (alledgedly)
The true nature of the product was ( deliberately ? ) hidden from customers who generally believed they were getting "independent" advice from their "independent financial advisor" ( and why would they not believe the advice was independent ?)
The very high upfront (hidden) charges , and buried management fees were not explained to customers either , in most cases.
agent006 said:
Wow, i've not seen a thread's point so widely missed in years. Classic.
Yep, and I haven't regretted posting a thread so much since the 'has tony blair gone mad' one: www.pistonheads.com/gassing/topic.asp?h=0&f=141&t=223553
which also turned into one of the most boring threads ever on pistonheads!
Russell
alfaman said:
Total bullshit ...... Endowments were heavily sold in the late 80's because of the fat upfront commissions to IFA's - not because they were what the customers needed . They were sold as a "risk-free" or "low-risk" way of paying off the mortgage , as most of the money was in low-risk asset classes (alledgedly)
The true nature of the product was ( deliberately ? ) hidden from customers who generally believed they were getting "independent" advice from their "independent financial advisor" ( and why would they not believe the advice was independent ?)
The very high upfront (hidden) charges , and buried management fees were not explained to customers either , in most cases.
Interesting, I was not aware of this (a bit before my time). I guess this is what lead to the standardisation of the mortgage documentation and the disclosure of IFA's fees. Where was the FSA when all this was going on?
alfaman said:
Total bullshit ...... Endowments were heavily sold in the late 80's because of the fat upfront commissions to IFA's - not because they were what the customers needed . They were sold as a "risk-free" or "low-risk" way of paying off the mortgage , as most of the money was in low-risk asset classes (alledgedly)
The true nature of the product was ( deliberately ? ) hidden from customers who generally believed they were getting "independent" advice from their "independent financial advisor" ( and why would they not believe the advice was independent ?)
The very high upfront (hidden) charges , and buried management fees were not explained to customers either , in most cases.
Almost true. But do not forget that low cost endowments where also endorsed by Which magazine as a best buy for a number of years a fact they do not like to mention now.
A fact is that these policies did look a good investment when they where sold. the reason was that at the time inflation was high and so where interest rates. No one expected that inflation would be solved and interest rates fall to much lower levels.
So the polices are worth less than expected. But if the policy was used to buy a house then the result of the fall in interest rates has been a massive rise in house prices. So what you lost on the policy you have more than gained on the property. But in this stupid world I will still end up paying you compensation even though I sorted out my endowment policies years ago.
RANT NOT OVER
Hey, the ambulance chasers have a new calling! How nice for them - they can help joe public to give the amb-chasers 1/3 or more of the compensation that they'll get for either being (a) mis-sold; or (b) ignorant idiots who just want to moan.
Greedy unscrupulous middle-men ripping off the punters who've already been ripped-off by greedy unscrupulous middle-men! Gotta love it!!!
PS - do you reckon any of these ambulance chasers used to be IFAs?!?
Greedy unscrupulous middle-men ripping off the punters who've already been ripped-off by greedy unscrupulous middle-men! Gotta love it!!!
PS - do you reckon any of these ambulance chasers used to be IFAs?!?
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