Endowment misselling!

[Sal]

the scruntiny comes in when the small print is there just by the signature. If someone can produce the paperwork that shows no mention of any shortfall, then they have a genuine case. There were alot of endowments sold without this mention before the rules changed.

Yeh back in the 80s endowments were really really pushed.

 

[Lime]

There were alot of endowments sold without this mention before the rules changed.

I count myself fortunate that I had read about it in the financial press and that the lenders were open with me.

 

[Nemesis]

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.

I disagree- you do need to get up to date with the legal cases, the whole basis on which people can claim misselling, etc. etc. however to be able to be fully informed. Clearly then the FSA and the ombudsman are simply pandering to public pressure, and not actually righting wrongs!

However, this wasn't the point of my original post.

Thanks to those who have provided useful information - it may help me to press home some of the points I feel I need to make to the FSA, which may help others.

 

[Lime]

Clearly then the FSA and the ombudsman are simply pandering to public pressure, and not actually righting wrongs!

I think there is some truth in that.

 

[Nemesis]

I'll point that out to them then.

I'm sure it will be a revelation.

 

[worms]

I am on an endowment. I accepted the risk. I probably could make a case that I was mis-sold - I had my doubts all along. But I made small extra payments, didn't reduce the payments when the interest rates dropped and now when the endowment pays out in five years time, it will almost exactly match the outstanding sum.

However, the value of the asset that I was borrowing against has risen by 300% so I am still winning substantially as are most other endowment policy holders.

Also, all the payments for mis-sold policies will be helping to reduce further my final payments. All part of the victim culture that we wallow in.

 

[Lime]

All part of the victim culture that we wallow in.

:lol: :lol: :lol:
How I agree with you!

 

[Nemesis]

No, I do think that, in the early days of these, many were very badly advised by those who were flogging them because they were receiving large commissions. I have all the paperwork and sales literature from ours, and I think really the companies do have a great deal to answer for.

I also am concerned at the way enquiries were handled over a period of time. There was, in my view, a large amount of covering up and evasion.

The financial services industry is just that - an industry, making money. Not sure that I feel too sorry for them.

The asset - it would have grown in value regardless of the type of mortgage. The problem with rising house prices of course is that in order to move and cash in you have to considerably downsize!

I don't consider myself a victim, nor am I wallowing! Just raising issues.

 

[Antwerpman]

I am sure that many people were genuinly mis-sold schemes, but my father took one out in teh 80`s when I was 15 and I remember well discussing it with him and understanding the concept and the risk, so I cant believe that ALL those claiming mis-selling were completely unaware of the risk

And to say that just because the FSA is taking action then all those people really must have been mis-sold is a bit like saying because action was succesful against Macdonalds all those people stuffing burgers in their faces and getting fat really didnt understand the consequences......

 

[Nemesis]

The FSA has, behind the scenes, been putting a great deal of pressure on certain financial institutions to look again at claims they first rejected, and some have been fined for the mishandling.

None of that is relevant really to the reason I asked what I did, but some responses have been rather revealing in other ways...

 

[Mark]

I am always surprised at the number of people who entered into significant financial agreements without reading the contracts and the small print.

I think the regulators have some of the blame. The rules that stated the expected final values given specific growth rates misled a lot of people. I remember seeing 7% and 12% being touted about as expected annual growth rates. I know that having everyone quote the same rates is better than letting people claim all sorts of rubbish - and does allow comparison of the impact of charges (to some extent), but really the numbers were silly.

 

[Nemesis]

They weren't so silly though in the financial climate of the time, I recall interest rates as being around 15%, remember for many this was a first toe in any water of the financial ocean, and you also have to recall that mortgage companies and insurance companies were not seen then as the dodgy dealers which many have come to realise they are these days! The Man from the Pru was seen as someone solid and reliable, ads were all about getting the strength of the insurance companies around you, etc.

I think many thought these were sound and a way also of saving for the future. I don't see that as greed really - it's what all were being told by the then government they should do.

Anyhow, I'm off to waste my ill-gotten gains riding the Nash at Blackpool! What the hell!

http://www.coastergrotto.com/coaster.jsp?argId=244

 

[thiambal]

I have some sympathy with those who suggest that those with endowment mortgages were simply foolish and did not read the small print. With todays climate of failed endowments, failed mortgates, failed ISAs etc we are all very wise to the vagrancies of the market (and of course companied now make it much clearer)

However, when I think back, my parents had endowment mortgages and were making plans based on the surplus. One of my parents was a bank manager and well aware of how the market worked, understood finance, read small print, and yet still plumped for the endowment - and yes, it has come up short.

A case of wisdom in hindsight I think.

 

[Nemesis]

I don't really think I'm foolish, I did read the small print - there wasn't much of it, and assurances were given etc. Few I think have the financial wisdom we all have now, with so many other cases coming to the front of the national conscience - pension misselling is another example. Faith in these companies isn't what it was.

My major concern is the way a great deal of this has been mishandled since.

Regulation - that wasn't in place either in the early days.

 

[Sal]

Also, all the payments for mis-sold policies will be helping to reduce further my final payments. All part of the victim culture that we wallow in.

exactly - for everyone that gains there is always someone that loses. Thats how the financial world works. Just as for all the people pleased with their house value rise, this is funded by people who lost out. Its not the 'financial industry' that will pay for it, it will be other investors.

 

[Nemesis]

I bet the insurance company sales people who gained commissions, the companies who charged high levels of other charges, and those who thought these up in the first place didn't lose out though.

Still, those who will lose out in future apparently went into this knowing exactly what the risks are, and so can't grumble really if it was all pointed out very, very clearly in advance. A gamble is a gamble. And that, apparently, is exactly what these were.

 

[Sal]

I bet the insurance company sales people who gained commissions, the companies who charged high levels of other charges, and those who thought these up in the first place didn't lose out though.

nope I'm sure they are/were laughing all the way to the bank - but you wont be getting your money back from them.

 

[dandrew]

My wife took out an endowment in the late 80's with Guardian. She kept the original documentation which actually promised " to pay off the sum outstanding as long as you keep up your payments". No mention was made of the policy failing to meet the expectations. The predictions of worth were based on growth rates were 10, 12 or 15%. The policy was also indexed, so the premiums rose year-on-year, then in about 2001 there was a sudden hike of about 25%. It occurred to us that this was probably not the last hike, and the premiums would continue to rise until we simply paid enough in the last 10 years of the policy to pay off the debt.

We were fortunate (?) in that the advisor that sold the policy had been stopped from offering financial advice by the regulator (mis-selling ?) and it later went bust. So we were able to go through the Financial Services Compensation Scheme, which although taking 9 months to complete, were successful in obtaining compensation.

In our case we were not simply greedy, but had an expectation that the policy would pay out the oustanding amount.

 

[geoff]

Lots of comments, all of which seem to end up with the same conclusion - the endowments were SALES driven, not NEEDS driven. When that happens, people are easily convinced by sales people under sales targets pressure to sell (or lose their jobs - I knew many people where that happened and you soon lose moral perspective if your livelihood and family are in jeopardy) and in a mortgage mass market with property seen as an almost guaranteed investment, people will convince themselves the companies are not being self serving and that what they are told about the 'obvious' benefits is true. Where is the blame then? Both sides were greedy, but the companies exploited that to the hilt.

 

[Lime]

Both sides were greedy, but the companies exploited that to the hilt.

I think that puts the point very well.
That is why it was so successful.
Even the bank/BS staff believed what they said and thought it almost impossible that the future would not be rosy in the financial market.
When I think of the enormous projections my wife was given for her pension expectations in the late 1980s I think it was about that time I became a financial cynic.