endowment shortfall

[cymtriks]

I've just had a letter that states that my endowment is unlikely to pay off my mortgage. Apparently I'm anywhere between 5K to 15K short.

Now when I got my mortgage, on my first house, the builders had arranged a mortgage deal with a building society. I spoke to an advisor from an endowment company. Both the builders and the endowment advisors company are now defunct. I was told that my endowment was guaranteed to pay off my mortgage. The words the advisor used were something like "It's a special deal we've worked out, guaranteed to pay off your mortgage and anything over that will be a lump sum for you."

The paperwork, all 13 pages of it actually states the opposite, i.e. that the policy is not guaranteed to pay anything at all. This is not exactly prominent.

I know there are a lot of people in the same boat. I can't proove what was said as it wasn't in writing but my wife was a witness to this.

Do I have any comeback?

[D_Mike]

I don't know of any of the details but I know my parents are in the same situation. There is some way of appealing (they had to fill in a form from the mortgage company I think) and saying you were mis sold the policy. If they agree you get a fair amount (tens of thousands... suppose it depends on size of mortgage) back... thats what happened with my parents anywya.

[cosmoschick]

cymtriks said:

The paperwork, all 13 pages of it actually states the opposite, i.e. that the policy is not guaranteed to pay anything at all. This is not exactly prominent. Do I have any comeback?

It doesn't look promising

Remember, that having a shortfall on your policy is not in itself a valid complaint, you have to have been given bad advice or had certain material facts concerning the policy withheld from you. Other issues include:

- The policy was presented in an unbalanced way.
- Lack of guarantee not explained.
- The policy did not match your stated objective (clearing the mortgage at the end of the term).
- The policy did not suit your attitude to risk.

But unfortunately you have paperwork clearly stating the policy is not guaranteed to pay anything at all.

However, verbal evidence will be taken into account in claims against the policy provider.

Each case is individual and assessed on its own set of criteria. Independent Financial Advisors are generally more difficult to claim against but if they turn you down, it'll be referred to the Financial Ombudsman Service.

There are around six million policies that could potentially fall short of the mortgage they support

There is now a time limit in which you have to make a claim for compensation, generally this will be 3 years from when you first received a letter from your provider stating there was a high risk that the policy may not repay the mortgage. Act now - otherwise you may find yourselves 'Time Barred'.

[srebbe64]

I've sold a number of IFA's (Independent Financial Advisors) in recent years, and they're all worried about the mis-selling of pensions and mortgages. What you might want to do is contact the FSA and tell them that you think you've been mis-sold an endowment policy. Website is:

www.fsa.gov.uk/

[towman]

You have my sympathies, but haven`t there been warnings about this possibility for the last few years?

[percy]

We have just successfully complained about our endowment policy and received a generous settlement plus compensation for the mis-selling (15 years ago). You should write to the company holding your policy, in the first instance, and ask whether they are prepared to sort out the situation. If this is not satisfactory, contact the Financial Ombudsman www.financial-ombudsman.org.uk . This is the route we had to take and the process involved lots of form-filling and took about a year in total. We are now in a much better situation and don't need to worry about a massive shortfall.
Cymtriks - If you need any more information about the process, email me - but bear in mind I'm no financial or legal whizz-kid!!
Good luck

>> Edited by percy on Saturday 18th December 22:17

[voyds9]

I'm presently suing my IFA for failing to give me bad advice, if that doesn't work I may have to sue myself for being clued up enough to get the right information.

[srebbe64]

This situation was a disaster waiting to happen. IFA's are sales people who's income is largely commission based. An average IFA will earn a hell of a lot more commission selling an endowment policy than a repayment policy.

They all claimed that the the vast amount of contingency for stock fluctuations would more than likely not only pay off the mortgage but give you a big fat check as well.

When I opted for a repayment mortgage years ago, the IFA looked almost angry and insulted at my decision.

[Zod]

I've never taken out an endowment, but twice had the bank trying to sell me one and both times they have tried the "We plan growth rates very conservatively, but even with these modest assumptions, the endowment would pay off your mortgage and leave you with a large lump sum".