• New Patreon Tier and Early Access Content available. If you would like to support AVForums, we now have a new Patreon Tier which gives you access to selected news, reviews and articles before they are available to the public. Read more.

Endowment mortgages - the time bomb is about to go off.

  • Thread starter Deleted member 30535
  • Start date
D

Deleted member 30535

Guest
BBC News - Endowment mortgages: Legacy of a scandal

I too have an endowment policy which I took out nearly 25 years ago. In 2004 a claim I made through a solicitors firm dealing the the mis-selling (similar to the PPI debacle) was upheld and was awarded about £3k of which 50% went in fees to the solicitor. If the total award had been invested at that time in a "safe" deposit at the bank, it may be worth nearly £4k, but that's about it. That is still going to leave a £6k shortfall on my original policy cover.

According to the article in the above link, the ombudsmen put a time limit of 3 years on making any claim once the shortfall was announced. So many people are unable to claim.

TBH, I am thinking of "investing" £25 in making a claim through the small claims court. If the insurance company/bank want to contest my claim, then fine. It will cost them a lot more to prepare for the case than me. Probably a lot more than than the outstanding amount. Given the state of distrust there is with most financial services and banks, I fancy my odds in front of a court.
 

Phil57

Well-known Member
Worth a punt for £25, (I think it's a little bit more that that though!)
 

blue max

Distinguished Member
You do realise that any compensation is not required to make up the shortfall.

I forget how they work it out, but it is not intended to put you in the same position if you had taken out a repayment mortgage.

I got a payout of about 5.5k for a 70k endowment. Junked it in about 6 years ago to get some building work done. Got about 27k for the policy at the time.

Saved the monthly premium for the six years, but that shortfall is interest only and will have to switch to repayment this year. Back to square 1 sadly.

But I can't say i didn't know it was a gamble. I don't think many did really, but it taught the financial services industry a lesson.

I gambled virtually every other year over fixed rates or discounted rates, so gambling with your money is something virtually all of us have to do.

I'd say you got off lightly!
 
D

Deleted member 30535

Guest
You do realise that any compensation is not required to make up the shortfall.

I can say that when we were sold the policy it was clear the push was to having a surplus, not a shortfall. As far as we were concerned we were buying a policy that would pay off the mortgage and give a surplus. The only questions would be how much, not that there would be a deficit.

Totally oversold and irresponsible. We've lived in the same house all this time so no need to review any policy for a move. Parts of the the insurance and banking industry is legalised theft. Time for a little pay back IMHO.
 

blue max

Distinguished Member
I can say that when we were sold the policy it was clear the push was to having a surplus, not a shortfall. As far as we were concerned we were buying a policy that would pay off the mortgage and give a surplus. The only questions would be how much, not that there would be a deficit.

Totally oversold and irresponsible. We've lived in the same house all this time so no need to review any policy for a move. Parts of the the insurance and banking industry is legalised theft. Time for a little pay back IMHO.

Bob, you have always struck me as a level headed, articulate bloke. This all hit the headlines years ago. Did you miss it? Of course the focus was on the surplus, but that was based on historical performance of the stock market. That can never be assumed to continue. Where did you think it was coming from?
 

cram

Active Member
Don't fancy your chances at all. The matter has already been dealt with almost 10 years ago. It's a myth to think that banks rollover as soon as they are taken to court. BTW the amount it costs to pursue something through the small claims court varies according to the amount of the claim. Not sure if you are trying to claim for 2k or 6k either way it will cost you more than £25.
 
D

Deleted member 30535

Guest
Ah, OK, so it's £100 for up to £5,000 claim. I paid £25 last time around for a smaller one.

As the ombudsman have washed their hands of it, theirs no other recourse: it would still be worth a punt as a point of principle. That said, I haven't yet explored this with the bank yet. I think I'll wait until the final figure is calculated from the insurer then I'll make my case to them. I don't hold out much hope I'll get anywhere with them, but we'll see.
 
D

Deleted member 30535

Guest
Bob, you have always struck me as a level headed, articulate bloke. This all hit the headlines years ago. Did you miss it? Of course the focus was on the surplus, but that was based on historical performance of the stock market. That can never be assumed to continue. Where did you think it was coming from?

No idea. Special risk-free cash deposit? Me and Elastogirl did a joint mortgage and neither of us picked up on this when it was sold. A classic case of being economical with the truth and oversold. I made a claim in 2004 and HSBC could not furnish any evidence that this had been made clear at the time. I now think the compensation offered in 2004 was inadequate.
 

blue max

Distinguished Member
No idea. Special risk-free cash deposit? Me and Elastogirl did a joint mortgage and neither of us picked up on this when it was sold. A classic case of being economical with the truth and oversold. I made a claim in 2004 and HSBC could not furnish any evidence that this had been made clear at the time. I now think the compensation offered in 2004 was inadequate.

You will have signed something to the effect that the payment was in full and final settlement. I certainly had to. This applied to hundreds of thousands of people, if not millions. I wish you well if you do decide to pursue it, but check what you signed when you accepted their offer last time.
 
D

Deleted member 30535

Guest
I think the principle is of sufficient importance to challenge any "full and final offer" claim, even if signed. Given the bad press since 2004 for a raft of misdemeanours, suggesting they could short change their customers and absolve any future liability with a "full and final claim" contract could be seen to be an unfair contract.
 
Last edited by a moderator:

blue max

Distinguished Member
I think the principle is of sufficient importance to challenge any "full and final offer" claim, even if signed. Given the bad press since 2004 for a raft of misdemeanours, suggesting they could short change their customers and absolve any future liability with a "full and final claim" contract could be seen to be an unfair contract.

You may be up against the FSA who sanctioned them if that is the case (or whoever has taken over).
Like I say, maybe take some advise before spending good money after bad.
But let us know as I'm right behind you if you win :thumbsup:
 
D

Deleted member 30535

Guest
It's the principle. I'd be happy to spend £100 just to get my day in court and to be a thorn in their sides.
 

cram

Active Member
Ah, OK, so it's £100 for up to £5,000 claim. I paid £25 last time around for a smaller one.

As the ombudsman have washed their hands of it, theirs no other recourse: it would still be worth a punt as a point of principle. That said, I haven't yet explored this with the bank yet. I think I'll wait until the final figure is calculated from the insurer then I'll make my case to them. I don't hold out much hope I'll get anywhere with them, but we'll see.

If that's the case that they've washed their hands of it (and presumably you've been in correspondence with them) then you've got no chance. The small claims court is the wrong environment. That is for recovering money owed to you. ie I agreed to do x for you in return for £££s and you never paid me. What you are asking for is extra compensation for a poorly performing investment that you weren't properly made aware of the risks of.
 
D

Deleted member 30535

Guest
"We agreed that I would pay regular amounts into your account for 25 years in return for you giving me £40k on the expiry of the contract and which you're not not fulfilling." Sounds like a non-performance of contract to me! ;)
 

noiseboy72

Distinguished Member
The first thing we did when it became clear the endowment would not pay out enough was switch to a repayment mortgage. It only cost us about £25 a month extra, so was worth it.

The important part of your contract would have been the "Investments can go down as well as up" clause. Your "day" in court is likely to be 15 minutes as you get a quick lesson is investments before leaving £100 down.

We all knew these mortgages had gone bad 10 years ago, so you have had time to sort out an alternative. The only good news is that you won't be in any danger of losing your home, as you will own by far the lions share.
 
D

Deleted member 30535

Guest
Couldn't care less. It's the principle of them not honouring what we were sold. It's not fr me to "sort out" their mistakes. It'll be £100 well spent IMO. It'll cost them to defend their position. Fine.
 

HMHB

Distinguished Member
I originally had an endowment policy which I took out about 20 years ago. Fortunately I changed it to a replacement one about half way through due to the forecast that it wouldn't even pay half of the £40K it was supposed to pay. Because I changed to a normal repayment I was able to make massive overpayments and paid it off 7 years early and cashed in the endowment.

I did try to claim for being mis-sold but I was told that I had no valid claim, even though when I was sold it I'd asked for a "no risk" version.
 
bought my 1st house at 20, naive and young, was "persuaded" to take out an endowment policy, was ot informed that there could (and more than likely would) be a shortfall, luckily for me after about 7 years my father in law had a letter informing him, his was going to be circa 25k short, i quickly cashed mine in and went to a repayment mortgage..........
 

craig1912

Banned
Mr Incredible said:
Couldn't care less. It's the principle of them not honouring what we were sold. It's not fr me to "sort out" their mistakes. It'll be £100 well spent IMO. It'll cost them to defend their position. Fine.

It won't cost them anything as there is nothing to defend. Your case will be thrown out.
 

booyaka

Moderator
I would consider taking up issue with the solicitor that charged you 50% of your compensation as one call to the provider of your endowment and you could have done the same job without costing yourself 3k in fees.
 
Last edited:

The latest video from AVForums

JVC 4K projectors, Denon X3800 & Perlisten speaker reviews, adding a sub to 2-channel + AV/HiFi news
Subscribe to our YouTube channel

Full fat HDMI teeshirts

Support AVForums with Patreon

Top Bottom