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endowment misselling

(22 Posts)
bobs Tue 14-Sep-04 23:39:53

After complaining we got a letter today with a paltry sum offered.
It was based on if we had taken out a repayment mortgage instead of an endowment and the difference plus interest worked out, and only done using the 5 yrs I actually had the mortgage even though I am still paying the endowment premiums as an investment.
As I was told the full amount plus probably a bonus would be forthcoming, this would leave me thousands out.
Has anyone any experience of this, or taking their case to the ombudsman?

jampot Wed 15-Sep-04 00:26:35

we complained about this too bob and were offered a pretty good figure plus we are now in the process of cashing in the endowment as the projection is still crap and they want us to increase payments by about 70% to just make the grade - and we're only talking about £53,000.

luckymum Wed 15-Sep-04 09:42:01

bobs - we got similar. They re-hashed our mortgage so that we were in the position we would have been in had we taken a repayment mortgage originally. We cashed in the endowment as it was worse than useless. It was my understanding that the company didn't have to 'compensate' us as such but just return us to the position we would have been in had we not taken the advice IYSWIM. This was 4 years ago now though so things may have changed.

Portree Wed 15-Sep-04 10:19:30

Bobs, it was a while ago when I did mine but I think the way the compensation is calculated is as you describe and that's pretty standard. What they don't do is pay the difference between what the snakeoil salesman told you you'd get and what is now being forecast. The compensation will only be for the period you had the mortgage as it was your choice to continue to use the endowment as an investment vehicle after you surrendered your mortgage.

Try the Ombudsman as you have nothing to lose. I have cashed mine in as it's just not a good way to investment that money plus part of the premium is for life assurance and this is not the most efficient way to get that level of cover. In my case anyway, it would have been good money after bad.

bobs Wed 15-Sep-04 22:17:51

Thanks guys.

bobs Sun 26-Sep-04 23:41:10

Anyone out there been to the ombudsman?
Although I've been offered compensation, I never had anything explained to me verbally or in writing about the risks and am considering taking things furhter.

bobs Mon 27-Sep-04 21:23:17

bumpety bump

emsiewill Mon 27-Sep-04 22:30:45

bobs, I work for a company who investigates claims of misselling on behalf of a number of the big life offices, and if the complaint is upheld, we do the redress calculations. I don't actually work on the cases myself; my understanding of the whole process is a bit hazy, so bear with me.

It is correct that the redress (not compensation - that is something different) is supposed to put you back in the position you would be in now if you had taken out a repayment mortgage. Everything Portree says is correct.

What you say about not having the risks explained to you in the first place is the reason that you have been offered compensation - when assessing a case, all available information is looked at, such as the "fact find" that would (should) have been completed at the time, your job, income etc at the time, the suitability of the policy for your needs. As I say, the company have obviously decided that your complaint was valid, and that is why they have offered redress. What they will not do is compensate for the fact that the financial markets have not performed as well as the salesmen were so confident it would. And that, of course is the galling thing.

We also worked on pensions misselling cases, again, people were badly advised, and their losses were then compounded by the poor performance of the financial markets. (And I often wonder if they would have been so quick to complain that they had left their company scheme if the markets had performed better)

I don't think that the Ombudsman will be able to do anything, but if you've got the energy, why not give it a try. Some firms offer compensation for distress and/or inconvenience - can you make a further claim on this basis? Although I don't think they offer much - you're talking £50 - £500 max, I would think.

Hope some of this has been helpful.

bobs Mon 27-Sep-04 22:47:34

Thanks emsiewill - was beginning to think there was no-one out there to help!
My problem is, I only paid the mortgage for 5 yrs, but have been paying endowment premiums for 17 yrs. the calculation has only been done on the 5 yrs I had my mortgage, so isn't much.
Been paying premiums all these yrs thinking that what the bank manager told me was true - ie full amount plus bonus paid at term

1. It was the manager of a well-known bank who sold me the policy

2. I think he was tied to a certain well-known life office.

3. Nothing was put in writing warning me that the endowment would't pay off the mortgage, or stated verbally.

4. No choice was given - the repayment mortgage was glossed over verbally, no forecasts etc put in writing.

5. Taken out 1987 ( but the bank agreed to voluntary jurisdiction I believe)

I have been through the financial ombudsman site with a fine toothcomb - esp the decision tree.
It appears that I could have a conractual complaint from what I was told, and the fact that no paperwork was forthcoming other that the endowment document which makes no mention a possible shortfall. however it seems that something would have to have been put in writing from the bank for me to have a complaint,,,grrrrr

dolally Mon 27-Sep-04 23:13:56

Bobs, I thought I was the only fool who had paid off the mortage and kept on her endowment as an investment? I also started in 1987!! I have known for a few years that the projected maturity values are bad but they seem to be getting worse. I can't help wondering whether to cash it in (or resell it) and invest it and the monthly payment into something else, surely I can't do any worse! On the other hand would it be out of the fire and into the frying pan? I don't think I'll get anywhere going to the ombudsman.

emsiewill Mon 27-Sep-04 23:14:58

Sorry bobs, I don't understand what you're saying. (It actually sounds like you understand the whole process better than me, so ignore me if I'm being thick). If they have offered you redress, then they have acknowledged that you have a valid complaint, and have therefore calculated how much you have lost out on based on the fact that you were only using the policy to support the mortgage for 5 years. As you presumably switched to repayment after that, the calculation will only be done over that period. (stating the obvious here, I think)

Or are you saying you were badly advised when you stopped using it to support the mortgage and switched to using it as an investment product? In that case, then I am out of my depth. Not sure what the procedure is to complain about it when used as a savings / investment policy - it's separate from the "to pay off my mortgage" issue. Again, the Ombudsman is probably a good place to start.

I have to go to bed now, but will return to this thread tomorrow - and will ask my more experienced colleagues for advice if necessary.

bobs Mon 27-Sep-04 23:22:02

Sorry - what I'm trying to say is that I was assured I would get X amount plus a bonus, and assumed that when I paid off the mortgage, that as long as I continued paying the premiums I would still get that amount. After all, it was still an investment, whether linked to a mortgage or not.

It's not so much the fact that I was sold the wrong mortgage (though that's still part of it), as the fact I was told that I would get the full amount+ at term, and was given no paperwork saying this might not happen - and this from a reputable bank manager!

emsiewill Mon 27-Sep-04 23:27:55

Well, as far as I can see, they have addressed that in relation to the mortgage - remember the redress is to put you back in the position you would have been in in relation to your mortgage. And as that was only linked to your mortgage for 5 years, then that is all they've looked at. The endowment misselling review is specifically for mortgage complaints as far as I'm aware. They definately should have explained that investment returns are not guaranteed etc etc. and also should have checked that your attitude to risk at the time was compatible with this type of investment.

Still think there may be something to complain about re using it as an investment vehicle when the mortgage was no longer relevant - as I said I *need* to drag myself away from MN and to bed.

Will try and find out more at work tomorrow.

Lol, this is one of those "a friend was asking..." situations, rather than "some woman I've never met was asking people on the internet about....."

bobs Mon 27-Sep-04 23:30:28

Thanks Goodnight

fred2 Tue 12-Oct-04 10:10:07


My situation is almost exactly the same. I took out an endowment for £36,500 in 1991. I complained to the company that I had been mis-sold the endowment, which they agreed. The redress that they offered me was £0! Yes absolutely nothing. Why? Because in Dec 2000 we moved house, paid off the original mortgage, took a repayment mortgage for the full sum and are using the endowment as a savings vehicle. Hence Dec 2000 was the point at which the calculation was made.

The endowment was always intended to be used to pay off part of the new mortgage, but that doesn't seem to matter.

The Financial Service Authority said that the company had followed their rules, so it was unlikely that I could do anything.

I was advised (nothing in writing of course) to keep the endowment to get the terminal bonuses (that's a joke) and to avoid the cashing-in costs, also it still provides life cover.

Looking at the figures over the 14 years of my endowment if you subtract my payments (and a windfall) from the current cashed in value it has made a £1000 LOSS !!! The money would have done better if it had been under my mattress all that time. (I know we cannot get compensation for underperformance but it is sickening)

Has anyone any idea as to what we can do ?

bobs Tue 12-Oct-04 23:26:26

Hi fred2.
Was hoping emsiewill would write back at some stage but must have slipped her mind .
Did you get a price comparison - ie endowment vs repayment from your company? Mine was done for the 5 yrs I had the mortgage, regardless what I did afterwards. If you didn't, I should request one considering they agreed you had been mis-sold. Otherwise its the ombudsman next. I have filled in all the forms - takes a while and seems a bit daunting but not impossible by any means. I haven't sent them off yet and don't know if I will as the company DID offer me compensation (£1,600 on £30,000 endowment, plus I can get the tax back I think), and I have nothing to show I was never given any warning the payment would be any less, only said verbally.
Anyone out there gone through this??
The website is good - you have to trawl it a bit though.

fred2 Wed 13-Oct-04 08:59:53


I did get a price comparison by the company involved and they reckoned that my endowment actually out performed the equivalent repayment option at the time I redeemed my mortgage (December 2000). Hence they aren’t going to give me any redress.

After talking to the Financial Services Authority and the Ombudsman it looks like I wont be getting anything, but that doesn’t mean to say that I’m not going to try.

I know the endowment was designed to pay off a mortgage, but they have admitted that I was mis-sold the endowment, thus since the endowment is the problem they morally they should give me some redress.

Also I was advised by and IFA to keep the endowment going in December 2000 as I would loose out in penalties and fees while also missing the terminal bonuses and any windfall if the company demutualised. But of course I have nothing in writing!

At the moment I am waiting for the Ombudsman to send me the relevant forms to fill out so that I can get them to work out a full calculation to see if the company’s figures add up correctly. Also I’ll tell them of the advice I was given above and that the intention was always to pay off my next mortgage with the proceeds from the endowment. It’s a bit of a long shot, but at least I’m giving it a go.

As for you, send those papers in, you should still get the compensation that you’ve been offered.

bobs Wed 13-Oct-04 22:21:25

If you go into you can download the forms - you need to fill in 2 different ones. You can then save to view offline, fill them in (easier to type as can change any mistakes)print them and post them off.
If you've got adobe acrobat 5 (I downloaded it especially for this) find the decision tree and have a look at No 21. I have no evidence to show anything was not guaranteed. It looks like something needs to be in writing. For you, it's certainly worth a shot. You obviously had your mortgage when bonuses were high - ie in the good stock market years. From what I can gather, Legal & General who I'm with, is one of the better performing ones, and is probabl;y worth continuing to the bitter end

AuntyQuated Tue 25-Jan-05 17:32:22

has anyone used a comapny to fight their corner?

tomorrrow a man is coming to see me, we have 3 endowmwnt policies, fairly small (largest is for £30K)

was just seeing if anyone has any experience

AuntyQuated Tue 25-Jan-05 17:33:47

\link{ is who are coming to see us}

do they look dodgy?

Starsky Tue 25-Jan-05 18:04:10

I work for a large company managing a team who look at cases to see whether endowment misselling has occurred.
One thing that really frustrates us is customers who complain through 3rd parties. We investigate the complaint in exactly the same way and wouldn't make our decision any differently, despite a 'professional' being involved. The customer ends up paying 15% of their compensation to these companies for doing nothing at all to influence whether money will be paid. You are in effect losing out twice - once when you were mis-sold and again when you pay some of your compensation which is meant to offset the money you have lost for nothing. If I was in your shoes I would complain directly and not let any one else get any of the money you might receive.

AuntyQuated Wed 26-Jan-05 09:25:37


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