Endowment complaints procedure - worthwhile


L

Lucy Collins

Hello,

I've had a 25 year endowment running for 16 years now, and of course it is
not expected to pay off the mortgage. Until recently, I've adopted the
approach of 'taking it on the chin' and switched to a repayment mortgage a
few years ago, keeping up the endowment payments as a savings policy.
However, having had another look through the initial and interim policy
projections and combine it with the way in which it was sold to me I am now
feeling more and more annoyed with it. Initial projections were that it
would return circa 74K, in 1997 this had fallen to 48K, by late 2000 to 43K,
and most recently to 32K (which if I were relying on it to pay my mortgage
would leave me 16K to find). At this rate I will be expected to pay them
when it matures! When it was sold to me I do remember being told that the
final amount could vary depending on the financial conditions over the term,
however the general impression given was that the Earth was more likely to
be obliterated by an asteroid than fail to at least pay the mortgage.
Obviously the exact words used by the sales person have faded from memory
(back then I didn't realise that this is what they were) but one concrete
statement I remember being made was something close to "... of course it
could be that the policy won't cover the mortgage, but it has never happened
this century and I can't see it happening now".

I am now thinking about trying to make a claim for some sort of
compensation. Having spent a few hours digging around on various sites on
how to do this it looks that the process has been designed to discourage
such claims being made. One extra complication I have is that it looks like
the original seller of the policy is no longer trading, so it isn't clear if
it's worth me starting the process, and if so whether I should be
complaining to the actual assurance company itself.

I was wondering how many subscribers to this newsgroup have tried getting
compensation, and if so if they found the process as onerous as it appears.
Any advice/experiences shared most welcome.

Cheers,
Lucy.
 
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R

Robin Graham

One extra complication I have is that it looks like
the original seller of the policy is no longer trading, so it isn't clear if
it's worth me starting the process, and if so whether I should be
complaining to the actual assurance company itself.
The insurance company is not liable to you. It just provides a product which
someone else has sold to you and it won't know the details of the sale, so
it's not its fault. If the original seller is no longer trading then contact
the Financial Services Compensation Scheme on 020 7892 7300 and discuss it
with them.

Rob Graham
 
L

Lucy Collins

Robin Graham said:
One extra complication I have is that it looks like clear

The insurance company is not liable to you. It just provides a product which
someone else has sold to you and it won't know the details of the sale, so
it's not its fault.
Maybe not originally, but during the mid 90's there was a lot of publicity
with regards endowment policies and the possibility of them not covering the
mortgage at the end. One of the aspects about this that is most annoying is
that in '97 (a decade after the I started paying) the insurance company
issued a review of the policy that included in it the statement "We are sure
you will be pleased to hear that the policy proceeds currently remain on
track to achieve or exceed the .....". This statement to swayed me towards
not addressing the shortfall issue for another 4 years.
the Financial Services Compensation Scheme on 020 7892 7300 and discuss it
with them.

Rob Graham
Just had a look at their web site (the FSCS). It seems that if you were
sold the policy prior to August '88 (which I was) then you've had it.
 
J

Jonathan Bryce

Lucy said:
Hello,

I've had a 25 year endowment running for 16 years now, and of course it is
not expected to pay off the mortgage. Until recently, I've adopted the
approach of 'taking it on the chin' and switched to a repayment mortgage a
few years ago, keeping up the endowment payments as a savings policy.
However, having had another look through the initial and interim policy
projections and combine it with the way in which it was sold to me I am
now
feeling more and more annoyed with it. Initial projections were that it
would return circa 74K, in 1997 this had fallen to 48K, by late 2000 to
43K, and most recently to 32K (which if I were relying on it to pay my
mortgage
would leave me 16K to find). At this rate I will be expected to pay them
when it matures!
How is the interest bit of the loan doing compared with the projection?

In the event that this is a lot lower than what you expected to pay, are you
putting the savings you are making towards the capital contributions, and
if so, how does that affect your projections?
 
L

Lucy Collins

Jonathan Bryce said:
How is the interest bit of the loan doing compared with the projection?

In the event that this is a lot lower than what you expected to pay, are you
putting the savings you are making towards the capital contributions, and
if so, how does that affect your projections?
If I'm understanding correctly, what you're infering is that whilst returns
on the policy are low, but so is the interest payments, and that the 2 are
linked (low investment returns associated with low interest rates). I would
guess that this is a valid point, and one that I've not considered before.
Of course, as I've not considered this before then neither have I been using
the reduced interest payments to help make-up the short-fall. At least not
directly - I did switch to a repayment policy circa 2001, so I guess I'm
implicitly doing this. However, what annoys me is that it took the
insurance company 16 years into the policy to admit that there wasn't a cat
in hell's chance of it paying off the mortgage (all reviews up to this point
indicating that all was fine and dandy), so I delayed doing this rather
longer than I would otherwise have done so if they had been (as I see it)
more honest and up front about this.

LC
 
R

Robin Graham

.. However, what annoys me is that it took the
insurance company 16 years into the policy to admit that there wasn't a cat
in hell's chance of it paying off the mortgage (all reviews up to this point
indicating that all was fine and dandy), so I delayed doing this rather
longer than I would otherwise have done so if they had been (as I see it)
more honest and up front about this.
Everything *was* fine and dandy until the stockmarket took a plunge. If
you'd known this was coming maybe you should have switched to a less risky
fund. But I doubt if you knew to do this. The point really is, did the
advisor who sold it to you tell you about the risks. If not it's not the
insurance company's fault. If you knew the risks and were happy about it
then you don't have a case.

Rob
 
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P

Peter Taylor

Lucy

You are of course upset that your policy is not likely to give you the
returns that you expected. But by your own admission you were aware that
there was a risk.

To make a successful claim you would need to declare that you were not aware
that there was a risk. This would mean that you would have to compromise
your obvious integrity.

Clearly, if an individual has a genuine cause for complaint this should be
investigated and proper compensation paid.

The compensation payments being made to people who may have few scruples do
not appear from thin air. Ultimately they come from policyholders or
shareholders funds, or in the case of a firm no longer trading, from the
pockets of other IFA firms via the FSCS.

Peter Taylor
 
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T

Thom

Peter said:
You are of course upset that your policy is not likely to give you the
returns that you expected. But by your own admission you were aware that
there was a risk.

To make a successful claim you would need to declare that you were not aware
that there was a risk. This would mean that you would have to compromise
your obvious integrity.
Not at all. The issue is whether the salesman made her aware of the
_degree_ of risk not the mere presence of risk (there are no risk free
investments). In particular the salesman needed to make her aware that
the risk was linked to stockmarket performance. It is not clear that
this is the case.

Thom
 

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