HELP! with Endowment Shortfall please!??

[workingmumof3]

Hi I felt compelled to join in this thread as I currently work in the Financial Services industry, have been previously qualified to give financial advice, sold some endowment policies in a past life and now assist all of my friends, neighbours, colleagues etc in submitting Endowment Complaints.

 

"We" have sucessfully claimed money back from most of the big lenders and some of the little ones. The best offer was over £30k from L&G and was for a friends mum who was sold a 25yr endowment policy when she was 50 and working part time in a supermarket!

 

It helps to know which companies apply which rules and I have worked for many of them. DO not be put off if your policy was sold prior to April 1988 (the date the FS Act came into force) Lots of companies still uphold complaints from pre April '88.

 

Post any specific questions here as I may be able to help.

 

Dawn:oops:

[workingmumof3]

Unfortunately it's not quite as simple as that because fairly complex calculations software is used and it depends on the interest rates you have paid on your mortgage. On a £35k mortgage over 25 years at 5% (assuming the 5% is fixed which is V unlikely) you would have paid off circa,

 

£3,997 after 5 years

£9,122 after 10 years

£15,710 after 15 years

£24,159 after 20 years

 

The amount you would have paid off is then compared to the current Surrender Value (SV) of your policy and if the amount you would have paid off is more than the SV you would be offered the difference.

 

Here's one I did recently as an example.

Mortgage taken out in August 1988 for £45,000 over 25 years.

Current SV of policy £17,500

Amount that would have been paid had it been a C&I mortgage £23,700

 

SV minus capital that would have been repaid = £17,500 - £ £23,700 = A LOSS OF £6,200.

 

My friends were offered this £6,200 (which we managed to get increased to £7,500 as we asked for actual rates to be taken into account rather than the building society using their standard rates).

 

The idea then is that they would surrender the endowment policy to get the £17,500 they would add this to the £7,500 offerred which totals £25,000 and they then pay this amount off their mortgage.

 

This would technically leave them in the same position they would have been in (i.e. they would be left with a £20K mortgage) had they taken a repayment (C&I) mortgage from that start. They now need to switch to a repayment mortgage over the remaining 7 years and are free to negotiate a new rate with which ever lender they choose.

 

It's worth noting the following points.

The ins co MUST offer to pay reasonable costs of switching, i.e if the building society impose a charge for changing you can claim it back.

 

Also...very important. The Ins Co must offer you repalcement life assurance for the remaining balance at the rates you would have been given at that start. The concern here is supposing you had an incurable illness or poor health that had developed since the original endowment was started, on surrendering your Endowment policy and switching to a repayment mortgage to finish your mortgage off you would technically be without Life Assurance as the policy would have been surrendered.

 

If you were in ill health you would find it virtually impossible to get replacment cover from another provider as you would be classed as a bad risk. As a result the Insurer MUST offer you replacment cover for the balance at the original rates. NO underwriting would be required and No health checks would be needed.

 

Also if at any point since starting your endowment policy you have reduced the balance of your mortagage, the ins co would base all thir figures on how much you actually owe now not how much you originally borrowed. This is a bit unfair as technically you are being penalised for paying some of your mortgage off.

 

Also if you have already converted to a C&I mortgage, your Ins Co will only pay compensation up to the point that you switched as they assume that you would have switched when you realsied there was a problem with the policy and therfore you should have complained at that time.

 

Cant obviously advise anyone but if you failed to mention in your complaint correspondence that you have converted to C&I the ins co would not be able to find this out, you can draw your own conclusion from that!.

 

One other point.....Never own up to having any stockmarket related investments, PEPS or shares as this would indicate that you are financially aware and would therefore give the INS Co a reason not to pay out. On the whole most do pay out in the end.

 

Hope all this rambling has helped a bit.

 

Dawn

[workingmumof3]

Try this link to put your amount and your interest rates in. It will give you approximate figures for repayment amounts.

 

Mortgage repayment | Calculators | Guardian Unlimited Money

 

Dawn

[workingmumof3]

Hi Maria

 

It really depends on what you said in your complaint the first time round.

 

If you raise new issues on a 2nd complaint then they would have to start again from scratch and treat the new issues raised as a totally separate new complaint.

 

If you can tell me a brief summary of the points you made in your complaint, I may be able to suggest a different line of complaint that you may not have thought of.

 

I don't think that Barclays are time barring (this means you have to complain within 3 years of the shortfall being brought to your attention by way of a letter) If they are timebarring, you may now be caught out by the timebarr rules and therefore too late to complain.

 

Do not give up yet.

 

WMof3

[workingmumof3]

I think it's definitely worth another letter. What I actually meant was, why do you think you have grounds for a complaint? i.e what reasons did you give in your original letter for it being a mis-sold policy?

 

A death in the family and illness ARE exceptional circumstances. By telling you to exacerbate the illness they are basically telling you to lay it on thick about how ill you were and about how affected you were by the family death etc.

 

The can consider the complaint 6 months later if you raise separate points and they have to. As they have mentioned timebarring you, when did you receive a letter from Barclays telling you that you had a problem? you basically have 3 years plus 6 months grace to raise your concerns.

WMof3

[workingmumof3]

Maria, PS, on a totally separate note, I noticed you have also complained to LTSB re bank charges. Be warned that LTSB are known to reject everything and hope that you don't follow it up. All you need to do is mention the Ombudsman in your follow up letter and that you are seeking legal advice and they will pay out in full.

 

Good luck with that:p

WMof3

[workingmumof3]

That all depends on if you are thinking of switching to a repayment mortgage now or not. If you are, then as they have upheld your complaint they should have offerred to pay the fees for switching. This can be as much as £300 as solicitors are needed etc. So it's worth checking if you are thinking of switching.

 

Shame about the compensation.

WMof3

[workingmumof3]

Phew what a lot of issues!

 

I have attached a link to a great document produced by the FSA which answers a lot of your questions.

http://www.moneymadeclear.fsa.gov.uk/pdfs/endowment_complaints.pdf

 

In short, how your complaint is treated depends on the FC. Was he an independent financial adviser (IFA) i.e he worked for himself and sold a range of different policies from different companies or, was he an appointed rep for one company in particular?. If he was an IFA and has since gone out of business (you can do a search on the FSA website to check if they are still trading by following the attached link)

FSA Register__

 

You can't actually complain to the ombudsman unless your complaint has already been declined by the firm or person responsible for giving you advice. as the role of the Ombudsman is to adjudicate on decisions already made, not to make decisions in the first instance.

 

If your provider has timebarred your complaint, (and these rules came into force in June 2004) it means that they must have warned you of the date by which you must complain, the first link at the top of this post includes details of the rules.

 

Timebarring has been challenged in some local courts and cases have been upheld locally on the basis that the policyholder did not know that their policy was at risk, i.e. they had not received the timebarr letters as they had moved house etc and the Ins Co could not prove that the letters had been sent to the correct addresses. If this has happened to you, you may have a case. As far as I know, no one has sucessfully challenged the legality of timebarring itself. The FSA has recently reviewed how companies are treating timebarred policyholders and their report stated that in most cases the policyholders were being treated fairly and correct procedures were being followed.

 

RE - your final point, as stated earlier the person who sold you the policy must be either an appointed rep for one company in particular a good example would be The Prudential, their agents were called FCs and worked from home visiting clients in their own homes and selling only Pru policies. In this case the Pru would be wholly responsible for the advice given irrespective of where the FC is now.

 

OR a Tied agent the person would be an IFA who may have worked from an estate agent or building society and may have been tied to a particular company or been able to sell policies offerred by any company. If your Fc was an IFA and is no longer trading you can complaint to the FSCS (link in top document as before) They will make a decision on your complaint but will only consider it if you were advised after August 1988. The Financial Services act came into force in April 1988 and affords a lot more protection to you if your policy was sold after this date.

 

Hope this has helped.

WMof3