Mr & Mrs took out two endowment policies with insurance company C which were originally assigned to their building society. After a house move and change of building society the policies were no longer assigned although the intention was always that they should be used to help pay off the substantial mortgage. This is clear from the type of policies taken out and the intention is clearly stated on the policies.

Each policy was for £30K and in joint names.

After a few short years Mr needed some professional indemnity and using the two policies as security and through the agency of a financial advisor, A, had the policies assigned to bank B for the full amount of £60K without the knowledge or signature of Mrs. It is not clear whether A was acting for Mr or for B in this case, ie. was he an agent for B or not.

A, B and C knew that the policies were in joint names and paid jointly yet allowed the assignment to go ahead.

After a very short time A was in trouble financially through his business dealings and went into IVA. He stopped paying the premiums on the policies without the knowledge of Mrs. C informed Mr & Mrs by joint letter (which Mrs never saw) and B. 3 years later Mr was declared bankrupt. B for some time declared within the IVA and bankruptcy that the policies were theirs in their entirety and they relied on this security to cover their debt. The supervisor of the IVA, later the Trustee in bankruptcy T, did nothing to ascertain the true nature of the policies with either B or Mrs, although it is clear that investigation would have shown there to be an equitable charge on the policies for the repayment of the mortgage and outside of the bankruptcy. All this time Mrs believed that the premiums wee being paid and that the policies were still available to be used to pay off the mortgage. Although she knew of the IVA and bankruptcy, she didn’t know the details.

Mr was eventually excluded from the marital home for domestic violence and a divorce quickly followed. During the course of ancillary relief proceedings Mrs discovered what had happened to the policies. These were eventually passed to her in the consent order (although their value was unknown as B was still asserting its ownership).

After pressure from Mrs, B initially stated that after legal advice they were entitled to Mr’s half share of the policies, even thought they had been assigned to secure the full amount. Eventually they conceded the case and passed over the whole of the policies back to Mrs.

Mrs then cashed in the endowments with C, rather than selling them on. She did not receive any independent advice and was not advised to seek it by C. Mr died within months of the consent order.

Is there a case for some fraud or malfeasance here?

B accepted the whole of the value of the policies (not just Mr’s half) for the full £60K security as is very clear from the Deed of Assignment, which is arranged, witnessed and countersigned by A.

It is clear that the policies were in joint names, and A and B had the documents.

A acted as agent or broker for the assignment and knew that the policies were being assigned for their whole value with the signature of only one of the policy holders.

So:

Mr was possibly being fraudulent in signing away Mrs’ share, but he is now dead.

Was A acting fraudulently in arranging for and approving the assignment of the policies?

Was B acting fraudulently in accepting a defective assignment for the policies?

Did C not have some duty to check the validity of the assignment?

Did T not have some responsibility in the IVA and the bankruptcy to check the policies?

I hope that this is not too complex and would appreciate any comments.

It is probably too late to receive any compensation and of couse Mrs has got the value of the policies, but is there a basis for a complaint here and if so against who?

Perhaps a complaint to the FSA would be in order.