Endowment Compensation

[alfaman]

I am currently in the process of writing to my IFA - seeking compensation for a mis-sold endowment in 1989 (an N.U one) - now projected with a massive shortfall.

I am keen to avoid using a firm which charges commission ( often up to 30 % ).

Have any PH'ers had any recent experience , Do's / Dont's / lessons they would like to share ?

The "Which" website seems useful for info. - does anyone know other sites which give helpful advice regarding process and "criteria" by which claims are agreed.

many thanks.

[simpo two]

The place to complain is at the top - the Financial Sevices Authority, FSA.

[Incorrigible]

I recently but a bet on "cheery lad" in the 15:00 at Ascot and it didn't come in despite me being given "solid" information by a bloke down the pub

Can I complain too

[Scoobz]

If you contact the people who you payyour endowment to, they will quite happily refund your contributions and work out the difference if you'd have had a repayment mortgage.

Most even have the form ready and will post it straight out.

[chrisgr31]

I am in the process of complaining and there have been a number of very helpful threads on here.

All I did was wrote to my Endowment company with a letter amended from the Which one and I gave the information which I felt was valid in my case. My endlowment company responded to say they were investigating. Later they reported that they felt I had been mis-sold and have asked for information on my policy and circumstances. They will now use that information to decide whether I am rentitled to compensation and if so how much. Been waiting a few weeks for that decision!

Following this experience did a similar exercise for my wifes endwment and got a reply virtually by return rejecting the complaint, and saying if she didn't agree we needed to complain to the FSA. Will be doing so shortly.

So in my case it was easy, and in my wifes not so easy! However no idea if compensation will be offered.

Those who question need to ask how these policies were sold. At the time promises were made about how much they would deliver, and no mention was made of the fact they might fail to hit the amount necessary to pay off the mortgage! Not only that put in many cases endowments are so far off target as the endowment companies have paid out too much money in the past. So current policyholders are being penalised for this as well.

[seb400]

Scoobz said:

If you contact the people who you payyour endowment to, they will quite happily refund your contributions and work out the difference if you'd have had a repayment mortgage. Most even have the form ready and will post it straight out.

Not exactly true. The life office that collects your premiums is not necessarily the same as who was responsible for the sale. The complaint has to be made against whoever was responsible for the sale.

I would hardly say that any firm is 'quite happy' to pay compensation. The complaint will be investigated, and if upheld, then compensation will be paid. This is usually in the form of a comparison of the capital that would have been paid off a repayment mortgage, versus the surrender value of the policy. You will not receive both a refund and a comparison. Obviously this is a straightforward scenario, and compensation calculations can be quite complicated depending on individual circumstances.

Best places to look for information about endowment mis-selling is Which?, the FSA and FOS websites.

I make decisions and perform calculations on complaints of endowment mis-selling for a living. Feel free to email me via Mr Seb's profile of you would like any more information. Absolutely no need to go via a 3rd party complaint handling company and lose up to 40% of any compensation that you may be due.

Mrs Seb

[alfaman]

Thanks for the info guys - and for the offer of help/ advice Mrs Seb - I may well drop you a line,one potential issues is ... if either selling my house or paying off some of my mortgage may prejudice compensation (?)

[55jnj]

"Which" Magazine along with the vast majority of daily newspapers were recommending endowment mortgages in the 80s. Endowments have a shortfall for several reasons, including the fact that interest rates and investment returns collapsed over the last few years. Interest rates falling was good for the borrowing side i.e. the interest repayments then became much less, but bad for the investment side i.e. the value of the associated endowment. They were not "mis-sold" as such (which implies deliberate intention to withold or give misleading information etc) but are a victim of changing economic conditions. Many Bank & Building Society managers, IFAs etc, themselves had endowment mortgages.

When you bear in mind that many people have had significant windfalls on flotation of some of these companies, which they wouldn't have had if they hadn't been recommended an endowment in the first place, then I can't have much sympathy.

It's just a reflection of the "something for nothing" compensation culture that pervades. Guess some of you guys complain to the travel agent when you go on holiday & the weather's bad.



>> Edited by 55jnj on Thursday 13th October 00:15

[alfaman]

55jnj said:

"Which" Magazine along with the vast majority of daily newspapers were recommending endowment mortgages in the 80s. Endowments have a shortfall for several reasons, including the fact that interest rates and investment returns collapsed over the last few years. Interest rates falling was good for the borrowing side i.e. the interest repayments then became much less, but bad for the investment side i.e. the value of the associated endowment. They were not "mis-sold" as such (which implies deliberate intention to withold or give misleading information etc) but are a victim of changing economic conditions. Many Bank & Building Society managers, IFAs etc, themselves had endowment mortgages. When you bear in mind that many people have had significant windfalls on flotation of some of these companies, which they wouldn't have had if they hadn't been recommended an endowment in the first place, then I can't have much sympathy. It's just a reflection of the "something for nothing" compensation culture that pervades. Guess some of you guys complain to the travel agent when you go on holiday & the weather's bad. >> Edited by 55jnj on Thursday 13th October 00:15

cant say I agree with you - a lot of policies WERE missold because the risks were not explained (at all ) / information withheld / or and "endowment" was not the most suitable repayment vehicle for the customer.

The "misselling" is a separate issue to "performance" - e.g : you could "properly" sell something which is high risk and performs badly (by clearly explaining the risks upfront to the customer)

Sure - I've invested in some things such have BES which were risky (and I KNEW that ) - some did well , others didnt - but I wasnt sold them as being "risk free "

You mentioned "windfalls " - not really that relevant as a typical windafall of £1k or £2k is rather a different order of magnitude to a £40k projected shortfall.

Your holiday analogy is interesting ( and laughable )- if you are sold a skiing holiday with "guaranteed" snow - then you can get compensation. Not many agents guarantee the weather though

[scoobz]

seb400 said:

Scoobz said: If you contact the people who you payyour endowment to, they will quite happily refund your contributions and work out the difference if you'd have had a repayment mortgage. Most even have the form ready and will post it straight out. Not exactly true. The life office that collects your premiums is not necessarily the same as who was responsible for the sale. The complaint has to be made against whoever was responsible for the sale. I would hardly say that any firm is 'quite happy' to pay compensation. The complaint will be investigated, and if upheld, then compensation will be paid. This is usually in the form of a comparison of the capital that would have been paid off a repayment mortgage, versus the surrender value of the policy. You will not receive both a refund and a comparison. Obviously this is a straightforward scenario, and compensation calculations can be quite complicated depending on individual circumstances. Best places to look for information about endowment mis-selling is Which?, the FSA and FOS websites. I make decisions and perform calculations on complaints of endowment mis-selling for a living. Feel free to email me via Mr Seb's profile of you would like any more information. Absolutely no need to go via a 3rd party complaint handling company and lose up to 40% of any compensation that you may be due. Mrs Seb

Thats all I did. Just called them up and they sent me the relevant form.

Easy peasy japanesey

[matchless]

but imagine thinking you have Endowments paying the Mortgage for 14 Years then you enquire and find you have been paying interest only for the past 14 years without knowing it as you were ripped off by your Mortgage Broker as he misled you into thinking your Mortgage payment covered the Policies as well as the interest, he only filled in the Endowment forms to get his commision! not only that but you saw him on TV being banged up for Fraud, get in touch with the FSA, the Ombudsman even your local MP and Zilch!, not a bean old chap!, hows that then for compensation?, (God I want to top myself!)

matchless

[LongQ]

chrisgr31 said:

Those who question need to ask how these policies were sold. At the time promises were made about how much they would deliver, and no mention was made of the fact they might fail to hit the amount necessary to pay off the mortgage! Not only that put in many cases endowments are so far off target as the endowment companies have paid out too much money in the past. So current policyholders are being penalised for this as well.

I was talking to an estate agent once when he told be his director had a letter that should allow him to make a claim and asked ME where the money came from for compensation. Made me think! Why was an Estate Agent asking me that question?

Anyway, I explained to him that any payment he might recieve for his very recent Endowment would, in effect, cost people like myself. Why? Well anyone who took a pooicing in the early to mid 70's will have benefited from tremendous inflationary growth at the time compared with the 80's and in particular the 90's. So their property value will have gained significantly and the endowment would have got off to a flying start which stood it in good stead for the less good years to follow.

My policy, from '83, is still being predicted to cover the outstanding amount with a small additional amount - well short of the several tens of thousands which was suggested by the more conservative of the figures originally presented in the illustration. (On the other hand recent years have seen much lower interest rates than I started out with.)

Those with already matured policies will have done rather well (as a couple of friends did). People like me will have done much less well and, to cap the investment problems, the compensation claims will, one way or another, have eaten into the bonuses added for the last few years.

That the management of a large chain of Estate Agents can successfully claim for compensation, on what sounded rather spurious grounds in terms of the way it was decribed to me does not fill me with delight either.

And they were pretty useless at valuing and selling the house I put on the market. Had to put it with someone else in the end.

[chrisgr31]

55jnj said:

They were not "mis-sold" as such (which implies deliberate intention to withold or give misleading information etc) but are a victim of changing economic conditions.....................It's just a reflection of the "something for nothing" compensation culture that pervades. Guess some of you guys complain to the travel agent when you go on holiday & the weather's bad.

Well I didn't notice many endowment companies saying there was a good chance of endowments failing to pay off a mortgage particularly if interest rates fell. Instead of which they were virtually guaranteeing the mortgage would be paid off, with a substantial windfall as well.

Yes those who took out endowments in the early seventies did very well, and part of the problem now is that the endowment companies made out to much to them. They should have kept more in reserve for the current times and then maybe this issue wouldn't have reared its head.

Be interesting to know how the careers of those in charge at the endowment companies have fared.

[elderly]

I felt I was mis-sold on a few grounds including
not being made aware of the risk of a shortfall.

My case was looked at carefully and they found against me on all the points I had made.

But they awarded me compensation on two grounds
that I never mentioned because they never ever even occurred to me.

I've taken the compensation and I am investing
it for the day I have to repay my capital sum.

I'm also keeping my endowment going until maturity.

If I still have a shortfall at the time of my maturity
then it's down to me. This time I am aware of the
risks and there can be nobody else to blame but me.

Although this whole business took forever -
I have no complaints about how my endowment
provider handled my case without having to go to the FSA.



>> Edited by elderly on Thursday 13th October 10:07

[srebbe64]

Incorrigible said:

I recently but a bet on "cheery lad" in the 15:00 at Ascot and it didn't come in despite me being given "solid" information by a bloke down the pub Can I complain too

Yes, if you paid for professional advice, but the tipster recommended a slower horse because he got a higher commission from that particular horse owner.

[minimax]

Incorrigible said:

I recently but a bet on "cheery lad" in the 15:00 at Ascot and it didn't come in despite me being given "solid" information by a bloke down the pub Can I complain too

absolutely spot bloody on, I'd better not comment any further lest my blood pressure rises!

and I have nothing to do with endowments, before anyone second guesses!

[minimax]

chrisgr31 said:

no mention was made of the fact they might fail to hit the amount necessary to pay off the mortgage!

oh hell, can't resist...it's an investment! stocks go up as well as down but generally up...I can't believe people get in to things they know nothing about! and if you did know the risk then to complain now is immoral IMHO

chrisgr31 said:

Not only that put in many cases endowments are so far off target as the endowment companies have paid out too much money in the past. So current policyholders are being penalised for this as well.

not so, it depends on how the fund is managed and the performance of the stocks held within it as to what it pays out, the amount endowment companies may have paid out in the past has no bearing on other policy payouts except the reversionary bonuses and they are usually fund driven too

>> Edited by minimax on Thursday 13th October 11:27

[muley]

We were offered an endowment mortgage back in 1984 - it sounded too good to be true so we didn't take it. Even though the adviser at the xyz bank had just bought a new 911 out of the 'profits' on his!

AFAIK the 'compensation' just takes you to where you would have been had you had a normal repayment mortgage. Is this true?

[minimax]

matchless said:

but imagine thinking you have Endowments paying the Mortgage for 14 Years then you enquire and find you have been paying interest only for the past 14 years without knowing it as you were ripped off by your Mortgage Broker as he misled you into thinking your Mortgage payment covered the Policies as well as the interest, he only filled in the Endowment forms to get his commision! not only that but you saw him on TV being banged up for Fraud, get in touch with the FSA, the Ombudsman even your local MP and Zilch!, not a bean old chap!, hows that then for compensation?, (God I want to top myself!) matchless

hold on a second, did you not read the offer of mortgage form which will have said 'method of repayment: interest only' or similar?

I don't follow. because if you didn't read the form I have little sympathy i'm afraid, it's quite obvious in my view that an artificially low capital & interest mortgage payment would arouse the suspicion that it must be interest only! It takes only a letter (and sometimes a small fee)tochange to repayment..and surely you noticed from your very first annual statement that the balance was not reducing? again, IMHO if you didn't read your statement then I find it difficult to have sympathy for you...

[alfaman]

minimax said:

chrisgr31 said: no mention was made of the fact they might fail to hit the amount necessary to pay off the mortgage! oh hell, can't resist...it's an investment! stocks go up as well as down but generally up...I can't believe people get in to things they know nothing about! and if you did know the risk then to complain now is immoral IMHO >> Edited by minimax on Thursday 13th October 11:27

But endowments were NOT sold as pure stock market related investments ..... but as a mix of Property backed assets / deposits / and some stocks.

This asset mix plus the "with profit" smoothing feature was touted as "No risk / low risk " - e.g : "any ups and downs are smoothed out by paying out "regular" bonuses etc. etc. ....... VERY different from a pure equity or Unit Trust type investment.

What was quite insidious was that the upfront and annual charges were not transparent to the customer - and ironically if I ( any many others ) - had just put my £xx permonth into the FTSE (or cash deposits ) each month instead of an endowment - I'd be better off either way ....... just goes to show how badly the funds have been managed and how much ££ has been skimmed off in charges ...... IMHO