URGENT Endowment shortfall companies? Advice needed

[SOULGIRL]

I took out an endowment in 1992 to pay of my first mortgage of £29,992 - the projected interest rates at the time were 7, 8 and 10.5%.

Now the projected rates im being given are 4, 6 & 8% and (of course) I have a shortfall. I have just realised I only have until 17th June this year to do something.

Im sure loads of you have been in the same position but has ANYONE used a no win no claim company to chase it. I must admit I no longer have that mortgage (new one is repayment)I figure if they are any good and take 25% of the winnings then thats better than the 0% I would get as so far have just taken an ostrich approach and just ignored it!! Im still throwing 39 quid a month at this policy!!!!

you should look at \link{http://www.which.net/endowmentaction\this site}

personally I wouldn't use a company but do it yourself .. why lose any money .. its just a complaint letter

I had a look at this but the fact that I only had until 17th June and the fact that the company was allowed 8 weeks to reply made me think I may need professional help (!!) Also the financial advisor worked for an estate agents who were taken over by someone else (so not straight forward)

well its up to you .. but I think (pretty sure but not for certain) you just have to raised a complaint within 3 years

I just wouldn't want to lost 25% when its a straightforward process

Would definately not use a Company,complain to financial ombudsman,you may be lucky,i was

Hmm I have done the letter thingy!! But what do you think I should do about this.

1992: Scottish Widows endowment bought from financial advisor working for Estate Agents.

1996: Letter received from Scottish Widows telling me that they have sold the Estate Agents to a building society.

So do I complain to Scottish Widows? Hell I see they are meant to reply within 14 days...14 months is closer to THEIR customer service!!

Also how would I know what consitutes an "acceptable" level of compensation (always assuming I was so lucky!)

Who provides the endowment .. I would assume its a Scottish Widows endowment .. simple to find out .. just check policies .. you complain to the people you are paying the money to I would think

i don't get it, though. how are they supposed to assess compensation for something that never happened? i mean, you had a projected shortfall, but there's no telling if that would have been true when the policy came to maturity. but you say you don't it anymore, so did you suffer actually financial loss?

i'm confused.

DON't use one of those companies, they take masses. Go to the Which site and use their instructions to DIY a claim - very simple. Link is \link{http://www.which.net/endowmentaction/complaint/step_by_step_guide.html\here}

they have to put you in a position you would have been in if you had taken out a repayment mortgage

Soulgirl if it is a Scottish Widows endowment they are the ones you complain to. However I am also a little confused here. You ttok this out to pay off a mortgage, which you no longer have. However you are saying there is going to be a shortfall, a shortfall of what?? Are you saying that you will not be getting £29,992 back, therefore you have a shortfall? Or are you saying you were mis-sold this endowment policy?

My understanding is that you can claim compensation IF you were mis-sold the policy, or not told of the risks involved. However in your situation my understanding is that you are going to recieve a nice windfall of cash at some point, but not as much as you assumed.

I doubt you have a leg to stand on as it is not affecting your current mortgage, and unless you can prove you were mis-sold the policy - which is another thing - you could choose to sell on the endowment now, or continue to pay £39 a month until it ends and get a husge luump sum when it does.

Anyway I wouldn't bother witha claims firm, I would write to SW direct to discuss it, or call them first and ask for their policy

You cannot claim for a shortfall, only that you had BAD advice in the first place over taking out an endowment, the WHICH site explains the valid reasons for a complaint.

We have had 3 successful endowment claims - and used the proforma letter on the Which website in each case.

Crunchie, one of the endowments was for DH's old house which was sold 10 years ago - we still got compensation for misselling.

Crunchie

I was projected a payout at the end of the policy of between £25800 and £43,500. When I queried the possibility of the interest rates being lower than projected the "advisor" LAUGHED and said "bearing in mind how high interest rates have been the chances are NEGLIGIBLE" also when I had an assessment with Nationwide a few years ago they tagged me a "low risk taker" my current projections are £18,500 - £26,600 whether its now paying off a mortgage or not this is a shortfall

I lose money if I cash in the policy but after paying in since 92 it only seems to have made £600 interest. DH has an ISA which made over £300 interest on £7000 investment THIS YEAR ALONE!!

The trouble is, soulgirl, they could have told you the policy could turn a penny into a million pounds, you received a written statement quoting returns at 3 different rates of interest. You've just acknowledged that in writing. More than likely, this same document probably also contained language to the effect that none of hte illustrated returns was guaranteed.

As you acknowledge you've received this document and still went and applied for the policy, which required your signature, it goes to follow you read and understood what you applied for.

The written evidence is what counts when trying to prove mis-sale, which is generally determined on balance of probabilities rather than beyond all reasonable doubt.

By all means write a letter, but if companies were foreced to start paying out to everyone who lost money in an investment, or, in your case, may have lost money, well, that'd just be daft.

Expat, we had no written evidence, and still made a sucessful claim.

Gingerbear: sounds like your situation was similar to mine so this gives me some hope!

I have done the letter & am going to fax it & send by recorded.

I really feel for people who still have mortgages tied to endowments they must be sick with worry.

Expatinscotland I guess you go through all the small print on everything!! When you are in your 20s, a first time buyer & in your home with an older dynamic "advisor" waving a contract under your nose its very easy to feel pressured & overwhelmed.

Seems unfair they are saying "oh you are not going to get as much money we projected ...so why dont you buy something else from us"

Gingerbear, sorry to hijack OP, but we're in the middle of claiming from the head office of an IFA who has since gone bust. Our IFA was a friend of a friend, and there's not much written down. It was arranged over a drink in the pub. Understandably, the parent company now want written evidence, but we have very little. But on the other hand, neither would the IFA. Just interested to know how you claimed with no written evidence. Although, having re-read this, I suppose the fact that you have no written evidence is in itself proof of misselling. But how do they know you haven't just binned it?

when i was a first-time buyer, i read EVERYTHING. b/c it's all too easy to get screwed by the fine print.

but i thought you said you didn't have the endowment anymore?

SOULGIRL: For the sake of safety I'd also complain to the estate agents and the building society. It's the advice you're complaining about, not the mortgage. 2 out of the 3 complaints won't be valid when push comes to shove but as long as you have complained to all three before June 17 you will be sure you've complained to the right one, whichever it turns out to be.

I have the endowment...last time I checked I was going to lose a hideous amount if I cashed it in.

I do not have THAT property and now have a repayment mortgage (yeah I learnt)

And YES I do now read ALL the small print in MY time and not theirs....one of the reasons I do NOT have a pension - have you read the small print...same old story!!

but there's nothing saying you have to cash it in. OR that you'll actually lose money by the time it matures.

see, this is what i don't get. and forgive me, i'm foreign and had never heard of using this kind of means to pay off a mortgage. how is it that companies are being made to pay out for something that may or may not happen in the future?

see what i mean? i don't get it. the loss hasn't actually happened yet. and may never do so.

i'm not having a go, i'm just honestly completely flummoxed by this.

Expat, I think what happened was that after about 1985, experts could foresee that stock market couldn't sustain the level of growth it had until then. But for the next 10 years or so, they were still selling endowments as a viable means to pay off a mortgage, using the previous levels of growth. EG, we were told, in 1990 that not only would our endowment pay off our mortgage in 2015, we would have LOADS left over because the value would have risen so much. To be honest, our first mortgage was so small anyway, the shortfall that's projected is, too, but it's still about 20% of the total. That was on a 30k flat. But if it was 20% shortfall on a 300k projection, that would be much more worrying. With hindsight, it seems a really odd way of doing things, but it was pretty standard in the late 80s/early 90s. Have I made it clearer or confused you more?

K, I get it now.

See, I can't believe they were even allowed to market such a product as means to pay off a mortgage!

All we have are C&I repayment ones in the States. The term and rate can vary, but it's still a C&I.

expat -- the problem was that at the time all these endowments were sold, stock market rates were waaaaaaay high. Huge.

Now, when your adviser was selling you an endowment mortgage they were supposed to point out seriously that there was a genuine risk that over the next 20 years (or whatever) the stock market could underperform the expectations by a lot, and that if that happened you would be left with a whoppinhg great bill to pay.

If, when you bought your endowment mortgage, your advisor did say this and you went ahead and bought it anyway then you can't claim for misselling.

However, in many many cases not only was the risk not mentioned, but if the person buying the mortgage thought to raise the issue (like SOULGIRL) the risk was poo-poohed and minimised -- even in some cases told there was no risk.

The important points for compensation are that

1. You were told there was no risk of shortfall, or the risk of shortfall was misrepresented
2. If you had been advised properly about the risk of shortfall you would not have bought an endowment policy.

If both of those apply then you can claim because your financial advisor was being paid to give you responsible and clear financial advice and didn't do it.

Also, it is pretty darn certain that money will be lost by the time it matures. The whole global economy has changed significantly and the silly money rates don't happen any more. The government's own rules about what figures companies are allowed to use to illustrate potential returns have changed, too -- it's officially recognised that the figures used in the original projections were hopelessly unrealistic. Also, they aren't technically compensating them for the shortfall but for having been sold a type of mortgage that wasn't appropriate for them. Whatever happens to market rates, the customer has still been sold a mortgage that wasn't appropriate for them and that they wouldn't have bought if the company had been honest. The compensation is to put the customer in the same position that they would have been in if they had bought the more appropriate type of mortgage in the first place, not to make up the projected shortfall (although obviously these are likely to be similar)

We face a shortfall on an endowment part of our mortgage but haven't claimed because, while DH doesn't specifically remember what the salesman said, he knows that he was perfectly well aware of the risk at the time and went into it with his eyes open. But then he works in a related field and understands all this stuff. Countless people didn't and made the mistake of trusting their financial advisors.