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How best to claim for mis sold endowment ?

Discussion in 'General Chat' started by DJW, Jun 27, 2005.

  1. DJW

    DJW
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    Hi

    Like many others thousands out there I have an Endowment that is probably only going to meet 50% of original value.

    Has anybody successfully claimed against their Endowment firm & advise what steps to take please ? Having just seen an advert for one of the numerous firms who claim to do it for you, it's spurred me on to find out how hard it is to do yourself. One company keypointclaims charge 23.5% of claim if successful. It seems a lot, but then again maybe they are able to gain a better claim amount that offsets costs ?

    BTW I'm with Eagle Star that then became Zurich.

    Any advice welcome, as I'm sure others would also benefit.
     
  2. Astaroth

    Astaroth
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    http://www.fsa.gov.uk/consumer/01_WARNINGS/endowments/mn_endowment.html

    the above would be the best place to start - with the FSA involved it is highly unlikely that a claims agency is required but it can take out some of the stress/ saves you having to do some of the dog work.

    Other than having experience of knowing when to accept and when to reject an agency doesnt really add much value in my opinion. Whilst it is obviously slightly different when I used to deal with personal injury claims we used to consider any agency fees when making offers. With PI claims the 'solicitor' (normally a fee earner rather than actual solicitor) claims their costs seperately so their claims of "you get 100% of the compensation" is correct BUT for theoretically we may offer £5000 to someone dealing with it themselves but only £4000 to someone going through a solicitor and then on top of that we have to pay £2000 to the sols as their fees.

    I dont know enough about the issues arround endowment mortgages but the likes of personal injury are the minority as fees can be claimed with or without litigation - certainly in the non-injury negligence claims the sols could only claim costs from us if they issued otherwise the person themselves would have to pay the sols fees (and I have known many cases where the sols fees were greater than the payout)
     
  3. Dr Diversity

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    We have a policy with one of the major suppliers. Every so often they write to us to say how poorly the policy is working out to be - even though they sold it to us! Then we get junk mail from them saying how well they are doing! None of this helps you....

    What we did was to write to them to say that we wished to claim for miselling. Keep it simple and to the point with as few facts as possible - then nothing can thrown back at you later. They will send you a form which you have to fill in. Make them look as bad as possible in the replies. Keep a copy and send the original back. Wait for them to make you an offer. It will be based on an FSA approved formula and then it is up to you what you do - accept, hold on or go to one of the claims firms. I don't know that they can improve on the FSA formula. They may get the same offer then rake off 20-30% for themselves.

    For our part we took the cheque, about 10% of the total mortgage then used that to reduce the capital borrowed. We are still paying the endowment and capital interest and know that there will be a shortfall. This is not great but it is all we can do :(. Hopefully it won't seem as big in 12 years time with wage inflation. They also offered us another endowment to bridge the gap. Logically, if they can't make an endowment work in 25 years what hope have they of doing it in 12 years!! Also offered to swap it to a repayment.

    Spend some time seeing what you can get out of them without getting an agency to help.
     
  4. mrmcdean

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    Im not too sure what I can and cant say on here. I work for a company that helps people sell second hand endowments they no longer want. From your brief description it sounds as though you wouldnt be able to sell the policy second hand unless its very old (20yr +) although I obviously cant be certain.

    There are firms out there who will deal with a case for as little as 10% but from what ive heard its not that difficult to persue on your own.

    Remember, you only get one go at it even if you go through a company. Id seriously consider giving it a go before you consider using a company (remember one try only). From my limited experince of the mis selling situation most life offices seem to be pretty reasonable with their findings although if they do make you an award then it may take some time to arrive. If youre complaint is unsuccesful you can always have the case referred to the financial ombudsman to have it reviewed.

    Other than the FSA link already posted by Astaroth another good source of information is http://www.which.net/endowmentaction/complaint/index.html which goes into detail about writing letters etc.

    If after all that you dont fancy tackling it yourself I could give you the details of the company we refer our clients to.

    Remember that if you go via a company they will cherrypick the best, most straight forward cases with the better potential payouts, it doesnt mean that those cases that are rejected dont have a chance.

    Did you take out the policy via an IFA / mortgage company or direct from the life office. Is it attached to a mortgage at present ? as all of these can have an affect on the chances of your case being taken on by a mis selling company.
     
  5. phillem

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    I sent a letter about being mis-sold 12 months ago which was turned down. I couldn't be bothered to pursue it any further. 4 weeks ago I got a letter saying they had reviewed my case and that I had cause for complaint. I had 10 years left to pay on my old mortgage with a shortfall of approx 40%. I have accepted their offer of compensation and cashed in my endowment. The money I received has paid off a lump sum on my house and the balance I have taken on a 10 year fixed mortgage. It is now costing me a little less a month and in ten years everything will be paid - no more worries.
     
  6. DJW

    DJW
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    Thanks guys, will look into this. Problem is I half forget who sold it to me (Mortgage company / direct sales etc ?) as it was 10 yrs ago :suicide: . Sure I will sort it
     
  7. Dr Diversity

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    We couldn't remember all the details of a policy sold to us 13/14 years ago. Just record what you remember. Do you remember being told that the policy might not pay enough to pay off the capital - I doubt that you were told that. That is the key to the claim. I would try the direct form filling route rather than using an agency. You will end up paying them 10% to fill out a form for you - and where will they get the info from? The form they send to you to fill out :)

    Go for it and good luck. DOn't expect the shortfall to be met, but make the most of what you do get. Be disciplined - pay the cheque off against the capital. Most lenders will allow you to pay off up to 10% a year without any charges.
     
  8. DJW

    DJW
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    Most definetely not told that....alrm bells woudl have gone off at the time ;) Thanks for advice
     
  9. mrmcdean

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    The most common reason for a mis selling complaint is that people were not told the true risks of taking out the policy but there are other reasons - eg. the company you got the mortgage through only did endowment mortgages, policies sold that mature after retirement age etc.

    The award that you would recieve if you are successful is usually the difference between what you have as a surrender value now and how much you would have paid off had you taken out a re payment mortgage from the start. Thats where it starts to get complicated, working out how much you would have paid off over the years using the interest rates at the time with the lender you were with. Thats where I think a lot of the mis selling companies get the business from, saying that they go through all the check to make sure the settlement figure is correct etc. As I said in my earlier post, most life offices seem to be pretty straight with their calculations.

    If the policy began about 10 years ago it could well be unit linked (mention of units allocations on a policy statement) in which case there are no guarantees as to the final payment when the policy matures, this is obviously a more risky method of paying back a mortgage.
     
  10. Mylo

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    useful thread this :thumbsup: just got my endownment statement and guess what, it isn't anywhere near what it should be.

    25% less cash than I will need to pay off my mortgage :mad:

    I will definitely be pursuing a claim as when I took out the policy I was told it would cover the mortgage easily and make me a tidy profit. I suppose it's lucky I have a very small amount to pay compared to the paper value of the property, but I'm still p***** off
     
  11. DJW

    DJW
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  12. Astaroth

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    No problem DJW - hope you manage to get a satisfactory resolution to the matter.
     
  13. Crocodile

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    A mate of mine's just been through this process with Abbey. It seems that their tactics are to weigh you down with endless forms, correspondence & more forms, all of which is extremely tedious & very time consuming. Presumably they hope you will just give up & go away. My mate didn't & has just received a cheque for £6K. :smashin:

    PM me if you want me to ask him any specific questions.

    Personally, I've always shunned endowments in favour of straight repayment for this very reason. Smug mode engaged.
     
  14. gringottsdirect

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    You may take the view - like many - that complaining to the company or the ombudsman is a waste of time - the best redress may well be through the courts.
    The onus is then on the seller of the policy to prove their position with detailed notes from time of sale - which they are unlikely to be able to produce in most cases.
    The whole situation is a disgrace - what should really happen is a Class Action Lawsuit on behalf of endowment policy holders - hello UK - that is what would happen in US. :us:

    Read this:

    http://observer.guardian.co.uk/cash/story/0,6903,1519770,00.html
     
  15. Astaroth

    Astaroth
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    But using the FOS does not prevent you from then taking court action - the decision of the FOS is only binding on the financial institute not the consumer.

    With any civil law in England & Walse judgement is given on the basis of "on the balance of probability" and it is therefore on the claimant & defendant to prove their possition - if the onus is purely on the defendant then we would be in a land of guilty until proven inocent.
     
  16. DJW

    DJW
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    One question I forgot to ask, was :-

    If performance of Endowments is so poor , would it not make sense to stop paying into Endowment (but leave to mature) & then use the monthly payment to invest elsewhere or simply use as repayment ?

    Any reasons why someone wouldn't do the above ?

    Thanks in advance.
     
  17. Astaroth

    Astaroth
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    Given the potential importance of your question I would advise to speak to an IFA - my knowledge of the FSA/law all comes from working in insurance/business rather than banking.
     
  18. Crocodile

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    From what I understand, as soon as you cease paying into an endowment the policy self cancels. I think the only options are to surrender it back to the insurer or try to sell it. Like I said before, I've never had one so don't take this a gospel. As you've been previously advised, you really do need independent advice on this.

    If you want to PM an e-mail address I'll let you have some guidelines.
     
  19. DJW

    DJW
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    Cheers guys.

    I've contacted Life Assurance company for a quote on final value of policy if left to run with no extra financial input. Will take 10-15 days for re-quote, which might come up with what you say Croc. If they would let it rn it would be pretty simple for me to judge best way forward.

    Will also look into IFA :rolleyes:

    Will post my findings , just in case it helps others.
     
  20. mrmcdean

    mrmcdean
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    Some Life companies will let you stop paying in (make the policy "paid up" sometimes referred to as "free policy value" on statements) although this varies from one company to the next. If you do sucessfully complain about mis selling then they may insist you surrender the policy back if you want the payout - ive come accross this with a couple of life companies.

    If you are allowed to stop payments there will probably be some kind of periodic charge as even though you're not giving them any more money they are still allegedly managing your money!!

    If you have a unit linked policy this may take the form of them cashing in a few units each month to cover management fees.

    Remember that their projections are pretty much guesswork. They tend to be given figures they have to work to (by the FSA i think) and so its just for illustration purposes. A financial adviser will be better placed to tell you if your money could be better spent elsewhere.

    Cant remember if its already been mentioned but you'll loose your life insurance if you cancel the policy.
     

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