Endowment misselling!

[Nemesis]

OK - like many others, we were the 'victims' etc etc. One in the midst of the complaints procedure, another to start, but one at a time!

We have today received an offer from Norwich Union (we took out the endowment from CU twenty years ago... now part of NU) of a sum of cash, over and above what we we were given as 'final settlement' (several thou short of what was the sum we thought we would get to pay the motgage debt). It's taken a great deal of work to actually get to this point, as clearly they throw every obstacle in the way, including telling porkies, but that complaint to the FSA is yet to come.

I suspect that the process and hoops you are supposed to go through have put many off from carrying on with their complaints, but we have gone ahead and are actually staggered we have had another offer!

Its just made me thankful however that I have hoarded all the paperwork from two decades of re-mortgaging etc, worked in a profession I could check my annual salary twenty years ago, and could fill in their forms, refute the claims from them that we bought under a 'special scheme' which rendered them not liable to give advice etc etc.

However - why I am posting - has anyone any experience of being offered more than the sum which paid off the mortgage debt - ie, all the 'extra' savings which were supposed to accrue on top of that? If we had those it would have been very good indeed!

Or have others simply retired to a dark corner, as we at first felt like doing, and sobbed???

 

[skier-hughes]

Well we were told the outcome may not meet the mortgage payable, so don't feel we could jump on the bandwagon of complaining.

Yes when we took out our first endowment, we were told we may well make thousands from it after paying off the mortgage, and when it does finally finish we will possibly break even.

I'm sure the thousands who are complaining can't all not have been told there was a risk.

Were you never told this?

 

[Nemesis]

No. Which is why we have been made an offer. And we have paperwork etc to back us up. The whole claims issue is actually quite complex.


But - I just wonder if anyone has got anything regarding the savings we were all supposed to accrue also?

 

[tony]

Hi,

My parents were given bad advise on their policy, mortgage finally payed 2 months ago, shortfall of £1200, luckily my brothers and I found this money and then started to complain, they were offered 3k, we made a few phone calls and 1 recorded delivery letter of complaint.

My parents were very upset about the policy, when it didnt have enough to cover the mortgage

Regards

Tony

 

[Nemesis]

That's interseting to know - so more than the shorfall. Hmmm...

If only dealing with the NU was so simple! I gather they are one of the worst.

 

[Pford75]

If you successfully demonstrate that you were misold, the FSA will calculate the maximum compensation payable.

Compensation will be equal to the difference between your current mortgage position and the position had you used the funds paid into the endowment to reduce the capital instead. This can still leave a shortfall or it can generate a surplus (it depends entirely on how much you paid into your endowment and the size of your mortgage).

However, you cannot expect to come out of your mis-selling complaint, better off than if you had not taken an endowment in the first place!

 

[Nemesis]

I appreciate all that - we've handled this ourselves and dealing with NU is a VERY interesting experience... I think we have grounds for complaint about part of the way they have dealt with us. I suspect that they have tried a similar tactic with others and maybe they have been put off from following it through. That we will be raising with the FSA - no help to us now but it may help others.


It's odd that suddenly (we have been as 'aggressive' as they have...) NU have magically come up with exactly the amount, down the the last penny, the sum which was originally the mortgage we took out.

I just would like to know if anyone has tried to seek the riches beyond the dreams of avarice we were all originally promised!

 

[Pford75]

I'm sure some have tried to seek it.....I doubt that you will get it.

I do however think it is a bit fishy that they have come up with exactly the mortgage amount (this would be an extreme fluke). I am sure if they were offerring more than the Ombudsman would grant, they would be sure to let you know....so there is a chance that the 'calculate settlement' ie. the difference between endowment and capital reduction, is more than the outstanding sum.....ie. they are hoping that you will accept as it pays the mortgage.

I agree that you need to be be agressive with them (said really, but true), would suggest that you give them a 'final opportunity' to increase their offer before you go to the ombudsman. You may find it works better if you can suggest a figure with some sums to support it. It's pretty simple to calculate the compound interest reduction of the money you've paid into the endowment (just use an average interest rate for simplicity sake)....if this is a long way from the figure offerred...you have the basis for a 'conversation'

 

[Nemesis]

I think that our forms were so complex they couldn't work it out! But I agree that they seem to have magically arrived at the exact figure, to the penny, which was at that time the mortgage sum. That's six grand more than we were originally offered. But - rather less than the glowing extra savings quoted!

They make it incredibly difficult, demanding figures which I suspect few can give and giving two weeks in which to fill in a very complicated form.

That's after they claimed we had got our endowment through a scheme via employers which let them off the hook. We hadn't. We complained ... very loudly ... we are still waiting for an explanation... I wonder how many others have been told this and just given up, or been unable to provide all the figures demanded? Given that most people are probably like us and have taken out other endowments, re-mortgaged etc (at a variety of fixed, capped and other interest rates, and possibly some threw out paperwork whereas I am basically a hoarder..) I think it is very difficult to calculate the sums accurately.

The difficulty at this moment is knowing if we are better accepting, as if we don't and go to the next stage we could be worse off!

 

[Pford75]

I do sympathise.....it seems daunting, but can assure you it's not as difficult as it first seems to calculate the compensation you are due....I have done it for two family members.

Have a look at http://www.fsa.gov.uk/consumer/01_WARNINGS/endowments/mn_compcalc.html

The example calculation is pretty self explanatory. I would emphasise as well that you don;t need to get your figures 100% correct (in terms of accurate interest rates etc.). At this stage you simply want to establish if the figure is close to the compensation offerred (if it is...I'd accept and do without the hassle)...If however there is a large disparity, you put forward your numbers and ask them to tell you why they think you are wrong.

Alternatively, write to NU and ask them to set out the calculations supporting the settlement offerred in detail.

 

[Nemesis]

Thanks for that.

I'm actually staggered that we got the offer we did, and it's either as you say in the hope we'll accept as it's less than they really should be paying us, or they realise we are not letting them get away with things ... and hope to shut us up...

Thankfully, the family mathematician filled in the forms, and neither of us was prepared to give an inch to NU, but I really think many must simply give up and not continue.

I think that asking for a breakdown of the figures is a sound plan which we will follow. good advice. Thanks.

We did get a letter last week (as a small excuse) saying that complaints were running at a high level, so poor things clearly are very busy... we said we were not at all surprised that they were receiving a high level of complaints...

We also seem to have had our complaint split into two and we get cross postings with different ref nos! It's chaotic!

So maybe next week we will get a second offer!

I wonder if that case if we accepted both they would even notice...

If only the other large) endowment was quite so simple... hmmm. I think that will be much more difficult.

 

[Pford75]

Note the time restrictions on misselling...so if you haven't already lodged a complaint about your other endowment, nothing to be lost from doing so now.

The hurdles which the like of NU have put in place have generated an entirely new industry of companies who will pursue your claim for you (and take a big cut of any compensation awarded). Luckily we avoided endowments and have always stuck with a boring old repayment mtge

 

[Nemesis]

Yes - hindsight is a wonderful thing! In fact with the NU one, although I am not sure I can believe anything they tell me, they do seem to suggest they've given more than they needed to - which I find rather strange... not noted for philanthropy, aren't financial institutions.

The other isn't simple as it was sold through an advisor linked to a solicitor, which is about the worst! I have read many a website forum which does suggest that these claims handling firms aren't all they are cracked up to be - we are I think more than capable, thankfully, of DIY-ing.

Also - it is actually difficult to make a complaint until you know what the final figure is, as promises of large 'terminal bonuses' have always been made, which lull people into a false sense that it may all come right in the end. For anyone not too far into an endowment it would have made sense to have changed to a repayment when all this began.

NU - the vast terminal bonus was - £150!

We aren't in the dreadful position I know many others have found themselves in, some even having to sell houses. it's just I do feel that those at the top of these industries never went short of their massive salaries, bonuses, etc, and I can't see why they should be allowed to get away with a shrug of the shoulders and claims regarding the market.

I'm also going to follow up the claim made that we bought through an employee scheme, so NU is not liable. I do feel that the FSA needs alerting to that, as I suspect it has been said to others who may have believed it and not gone ahead with a claim.

 

[Lime]

I make no comment on posters here.

However I know of several friends who took out endowment mortgages in the 80s.
They were encouraged to take them by the extra cash at the end of the term that promised a life of luxury.
They were all aware of the fact that they were taking a risk but were convinced the stock exchange and other investments would not fail.
For several years they were convinced they would do very well out of it and laughed at people who had a repayment mortgage.
I know, I was one of those people.
Then the light began to dawn that their nest egg/fortune wasn't going to be so big.
It got worse.
Then their memories began to fade and they were convinced that they knew nothing of the risk that they were taking.

I have watched it all.
I call it greed.

 

[Nemesis]

Well, I was NOT one of those I can assure you - and I have a great deal of paperwork to back me up, as do others. My memory hasn't failed me, not has that of my husband.

Yes we were all told we would be saving for old age along with getting our mortgage paid off. I'm not sure that is greed really, or simple prudence, like pension provision.

I suspect that the FSA wouldn't be doing all it can to get some compensation for people if they thought that greed was the only motive.

 

[geoff]

Some people did think they were 'clever' taking out an endowment mortgage, but most were convinced by salesmen - there was definite pressure selling of them. I worked in the Insurance area most of my working life designing computer systems for many companies as a consultant, dealing with managers and directors. As a result I have very little sympathy for the companies - they deliberately played down any risks and the ordinary sales people were definitely pressured into pushing them. Those companies that sold so-called 'low cost endowments' were the worst - they knew they were risky. One director shrugged when I said that and replied "That's what the policy review dates are for. If it goes wrong they have to pay more and if they don't like it tough - the penalties for early surrender means they don't have any choice". I'm glad I don't do that job anymore...

 

[Sal]

I make no comment on posters here.

However I know of several friends who took out endowment mortgages in the 80s.
They were encouraged to take them by the extra cash at the end of the term that promised a life of luxury.
They were all aware of the fact that they were taking a risk

yup same here - people laughed at me back in the 80s when i insisted on a repayment mortgage. i pointed out the small print about no guarantee - they still laughed and told me about their 'nest egg' they would have in 25 years time. and they went on to claim mis-selling when it became clear there would be a shortfall.

of course there are some genuine victims.

 

[Nemesis]

Yes there are.

There are also some unbearably smug buggers around aren't there?

 

[Sal]

Yes there are.

There are also some unbearably smug buggers around aren't there?

aren't there always.

personally I'm not being smug - there i was in the late 80s buying my first home. and in the 90s the property market crashed. I have probably just done the same thing agian... buying at the wrong time. but there you go.

 

[Lime]

I make no comment on posters here.

However I know of several friends who took out endowment mortgages in the 80s.
They were encouraged to take them by the extra cash at the end of the term that promised a life of luxury.
They were all aware of the fact that they were taking a risk

yup same here - people laughed at me back in the 80s when i insisted on a repayment mortgage. i pointed out the small print about no guarantee - they still laughed and told me about their 'nest egg' they would have in 25 years time. and they went on to claim mis-selling when it became clear there would be a shortfall.

of course there are some genuine victims.

When I took out a mortgage in the 80s there was certainly a lot of pressure to choose an endowment.
One manager of a BS told me that he had one and that it was the most popular choice of nearly everybody.
He pointed out that with an endowment you paid less premium than with a repayment and could receive several thousand pounds at the end of it.
It was made clear that it was a risk however.
What he didn't point out was that he would receive the first repayments himself in commission.
I accept that some might have taken an endowment mortgage out with little thought about the consequences if it went pear-shaped.
I know some borrowed as much as they could and an endowment allowed them to borrow more money for the same outgoings than a repayment.
However for many to claim mis-selling when it was clear at the time for anyone wishing to read the small print that it was a risk doesn't stand up to scrutiny in my view.