Endownments

[hayley]

Hi

I was wondering if anybody could give me some advice please. I took an endownment policy out back in 1999 i paid £70 a month for approx 18 months with AXA. I then changed to a repayment mortage so stopped paying the endownment.

I was chatting to a friend today who told me that i was entitled to the money back, i was unaware of this as AXA had never sent me anything saying i could withdraw it. I telephoned AXA who told me that i could have £107 back and they would send the forms out in the post for us to claim it back.

I have been thinking about it all day and am quite angry that for almost 5 years they have had the interest on the money (probably not much i know but even so) and if i paid £70 a month in how am i only having £107 back. If i hadn't of talked to my friend i would never have known i could have the money back so when would someone have told me.

Can anybody tell me how they work this out or am i being really stupid?

Thanks in advance
Hayley

[workingmumof3]

Hi Hayley
Can you confirm if your policy was (as I suspect) originally sold in connection with a mortgage? If so your basic rights are
A) surrender the polciy and take the much reduced surrender value of your plan i.e. the £107 they have offerred you
Or
B) Consider if the policy was actually missold to you in the first place. Why did you take out an Endowment mortgage? was it becuase you were advised to do so? You may not have received best advice. Why did you subsequently change to a repayment mortgage?

It's very possible that if you complain to AXA that your policy was missold in the first place, you will obtain a full refund of all premiums plus interest. It is very unlikely that AXA will timebarr your complaint as you would not have received any letters from them.
I may be able to help you more if you can provide some more information.
Good luck.
WMof3

[hayley]

Originally Posted by workingmumof3

Hi Hayley
Can you confirm if your policy was (as I suspect) originally sold in connection with a mortgage? If so your basic rights are
A) surrender the polciy and take the much reduced surrender value of your plan i.e. the £107 they have offerred you
Or
B) Consider if the policy was actually missold to you in the first place. Why did you take out an Endowment mortgage? was it becuase you were advised to do so? You may not have received best advice. Why did you subsequently change to a repayment mortgage?

It's very possible that if you complain to AXA that your policy was missold in the first place, you will obtain a full refund of all premiums plus interest. It is very unlikely that AXA will timebarr your complaint as you would not have received any letters from them.
I may be able to help you more if you can provide some more information.
Good luck.
WMof3

Hi WMof3

I took the endownment out when i bought my house when i was 18 i took it out because the mortgage adviser we had at the time told us that if we had an endownment at the end of the 25 years we would still owe the mortgage amount so the endownment was there to pay it off plus he said we would have approx £15000.00 over for ourselves. We then heard stories of endownments not paying enough so we switched to a repayment mortgage and stopped paying the endownment, we thought it was like a life insurance policy where you paid money in but if you stopped payments you lost the money you had paid in.

My friend then told me i could claim it back so i rang AXA and asked them and they said they would send out the forms to claim the £107. AXA then sent me the forms this week but they wanted the original plan documents and i do not have anything relating to the policy as i threw it away years ago so i was just going to forget about it as i dont know what else to do but if you could advise me on what to do it would be much appreciated. The plan lapsed in April 2001 if that has any relevance.

Cheers Hayley

[workingmumof3]

Cool, that's all really good info. Basically you have a case to complain about it being missold. You will need to write to AXA and explain that the policy was missold and the reasons why.

I would say something like this (see below) and see where it gets you. They may send you a questionnaire to complete but we can cross that bridge when we come to it.
Dear AXA

RE: Complaint concerning advice received on endowment mortgage

Endowment policy number XXXXXXX Miss ABC123


I are writing to you to make a complaint about the way I was sold my mortgage endowment policy. I believe I was mis-sold this policy and I am requesting you to investigate the sale.

Back in April 1999, when I was 18 years of age and buying my first property I was advised by an AXA Mortgage advisor to take out the above policy.
At the age of 18 I was a first time buyer and believed the advisor when he told me that this was the only method of guaranteeing to pay off my mortgage and in addition I would get a lump sum pf £15,000. In addition;

• I was not advised that there was any possibility that the policy could have a shortfall.
• I was promised a lump sum in addition to the mortgage being paid off.
• I was not advised of any other method of repaying my mortgage.

I paid into the policy for 18 months and then started to worry, having read information in the newspapers that this mortgage was clearly not right for me. I would never have taken the policy out had I known that it may not provide enough money to clear my mortgage. I am not the sort of person who takes any risks with my finances and it is only now I realise how badly advised I was.
As a result I decided that I must switch to a mortgage that would guarantee to repay the debt and therefore I changed to a repayment mortgage. I believed that the money I had paid into the endowment plan would continue to grow and that one day there would be a small sum for me to withdraw.
It is only recently that I have enquired as to the value of the endowment policy that I realise that in fact most of the money paid into the endowment has been lost. Had I realised that this would be the case, I would have complained years ago.
I feel that I have been very badly advised and let down by AXA. I only took out this plan based on advice I was given by your representative and I had no idea that there were other options available at that time. This was my first mortgage after all.
Therefore I feel that you should investigate the circumstances of the sale of this plan as had I known then what I now know I would never have taken out a plan of this nature.
Yours sincerely

They will need to complete a fairly complex calcuation to compare what you would have paid off had you had a repayment mortgage from outset compared to what you have paid off, they will also limit compensation to the period that you switched mortgage types but this should still result in a better offer than £107. No guarantees tho but in my view worth a try.

Good luck
WMof3

[hayley]

Thanks a million wmof3, i will send that letter off and see what comes of it, i will let you know the outcome.
Thanks so much again
Hayley

[Drowningindebt]

I got an endowment policy as well to cover my mortgage and I stopped paying it as we were running into debt through Prudential. I orgionally paid an advisor about £800 to get me my mortgage.I then remortgaged about a year later.Do you think I could claim any of this back or is it a lost cause?

[Drowningindebt]

Anyone have any thoughts- I think its a lost cause, but I thought I would ask just in case someone has been in similiar circumstances.

[hayley]

Originally Posted by Drowningindebt

Anyone have any thoughts- I think its a lost cause, but I thought I would ask just in case someone has been in similiar circumstances.

Hi
I have no idea about these type of things, why dont you pm WMof3 to see if she can advise.
Hayley

[Drowningindebt]

Ok, I will do thanks.

[workingmumof3]

Apologies for the delay, been off work! Half Term!

The only chance you have of getting any of your money back would be if you think you were missold the policy in the first place. The questions to ask yourself would be;

1. Were you offered any alternatives to an endowment mortgage, such as capital & Interest (repayment)?
2. What promises were you given when you took the policy out? i.e were you told that it was guaranteed to pay off your mortagge plus give you a lump sum?
3. If you cancelled/stopped paying the policy due to affordability reasons the insurance company would NOT uphold your complaint as a repayment mortgage is marginally more expensive on a monthly basis than an endowment and the ins co would defend the sale on the basis that the adviser offered you the only method you could reasonably afford.
4. When did you take the policy out? this is quite important in working out how the company would deal with your complaint.
5. Was this your first mortgage? ins co's look more favourably on first time buyers as you would not be considered to be an experienced investor.
6. Did you have any stock market shares or other stocks and shares related investments such as a PEP or Unit Trust. If so, the ins co would reasonably expect you to understand how an endowment policy works and therefore would be unlikely to uphold your complaint.

Depending on how you answer these questions (and also depending on which company the policy is with) will indicate the possibility of your complaint being upheld. In my humble opinion you have nothing to lose.

Be warned however, it could take months, a lot of effort on your part and in all whilst they may uphold your complaint, the calculations may indicate that in fact you have lost very little.

I would complain that you feel it was missold and wait to see what response you get from the ins co. They will no doubt send you a questionnaire to complete and you need to be very careful how you answer the questions. Post back if you go ahead as I may be able to help you some more.
Good luck
WMof3

[Drowningindebt]

1. We were only offered this type of mortgage.
2.The advisor said that there was a slight risk that we could fall short, but this was very unlikely as some rate had never dipped under 6% for years and you may even have a small profit at the end.
3.Yes it was because we were in debt and we had other debts as well.
4. We bought the house in December 1999 so it started then.
5.Yes, we hadn't a clue about mortgages or that there was different types of one. We decided to go and pay about 1% of the house price fee (£960) to get advise from an advisor.To be very honest he was a very dodgy bloke and we shouldnt have got the mortgage as we were self employed and never had any accounts.He got a dodgy accountant to make up false accounts Yes we were stupid, but desperate to get the house of our dreams!
6.Nope nothing like that.

Do you think I should send them a letter to chance my luck? If so, is there a template for this. Maybe because of my answer to question 5 I shouldn't even think about this.

Anyway,many thanks for your advice- your a great person.

[workingmumof3]

Hi
To be honest, I think that you would be very lucky indeed if you could convince an Ins co that you had a case to complain. This is mainly because you were told at the beginning that the policy was not guaranteed to pay off your mortgage and therefore you knew there was a risk involved.

Also if I were you, I would probably not draw attention to myself and lodge a complaint as the whole mortgage situation with your accounts etc sounds really dodgy. I know a lot of people do this, but, if you were caught, technically you have committed mortgage fraud. Even if it was not you that suggested it. The worst penalty for this is a prison sentence for both the advisor and the applicant i.e you. Therefore I think it's best to let sleeping dogs lie.

Sorry I can't be of more help.
WMof3

[Drowningindebt]

Prison!! Jees O, I think I will let this one go. Many thanks for all your help and advice on this matter.

[hayley]

Hi WMof3

Just to keep you updated, i received a standard letter off AXA saying that AXA has a formal procedure for handling complaints and if the matter has not been resolved within 4 weeks of receipt of the complaint, they must notify me of the reasons why. If the matter remains unresolved 8 weeks after the receipt of the complaint , they must then again notify me of the reasons why and provide details of the options available to me.

Will keep you posted.

Thanks Again
Hayley

[jster$$$]

hi hayley

i was wondering how you were getting on with your complaint????

well i hope

i'm interested in this as my parents took out an endownment in the 80s and now find themselves looking at a shortfall of at least £7000. (so much for the lump sum to spend on yourselves) anyway about a year or so ago they took out a repayment mortgage so at least they knew the house would be paid for, but carried on with the endownment as there is only a few years left on it and they would have lost much more.

i am just looking into what they can do regarding misselling.

J

[hayley]

Hi J

I sent the letter and as you know they sent me a standard letter back. I then had to fill in a questionnaire type thing asking all sorts of questions about the time i took out the endownment etc. I then had an offer of £2300 which was the money that we had paid in plus the interest. I accepted the offer but i know a few people who haven't accepted the first offer and ended up with a higher 2nd offer. It is worth looking into it.

Good Luck

Hayley

[jster$$$]

fantastic news. well done

i will be looking into it. as they were told it would cover their mortgage and they would have thousands left over.

its outrageous what these financial companies have done and keep doing.

many thanks for the reply

J