DAVE O Posted October 21, 2003 Posted October 21, 2003 No not a topic for those looking for plastic surgery for their manhood... Have a look at this from blatchat if your endowment policy is not performing - may be of some use. http://www.blatchat.com/t.asp?Id=40032 Dave O. Quote
S8ight Posted October 21, 2003 Posted October 21, 2003 if your endowment policy is not performing serves you wright for not getting a straight repayement mortgage Quote
Karl Woolf Posted October 21, 2003 Posted October 21, 2003 Recently moved house and (after speaking to my financial adviser) put in an official complaint, sent me a form. Question box reason for complaint " I was not informed of the potential risk involved" No further questions paid out current value of policy and another 65% of the policy as compensation They calculated this as how much the policy would have been worth if I`d paid into a repayment mortgage Apparently the banks are keen to see as many of these policies to be paid off and closed before end of the term so as not to be a ticking time bomb of bad publicity for them. Mines going to fund my new double garage Quote
Paul Hurdsfield - Joint Manchester AO Posted October 22, 2003 Posted October 22, 2003 Nice one Karl Quote
david.c Posted October 22, 2003 Posted October 22, 2003 I have 4 endowments spread over a few years (house moves and upgrades) and have gradually seen each of them change from showing a surplus, to just about being OK, to being well short. Just over 2 years ago we moved house and this time took a split flexible mortgage. Part endowment (value of current endowment plans) and the rest repayment to run over 25 years. As the various endowments mature over the next 8 - 10 years I can pay off the endowment side of the mortgage. Then once they have all matured I can switch what is left in that side over to the repayment side. Helps to cushion the blow, and stops me having to fret with finding extra chunks of money in a few years time. Have been looking into claiming under the mis-selling of the policies, but havn't got my in gear yet. Have looked through the small print in all my policies and only one of them mentions that the policy does not gaurantee to pay off your mortgage. The website to go to is www.fsa.gov.uk/consumer Cheers David Quote
DAVE O Posted October 22, 2003 Author Posted October 22, 2003 Karl, Who did you address your initial complaint to - was it the bank/building society that sold you the endowment? My mortgage is 30% endow/70% repayment its not too much of a problem but I was given bum information when I took the policy out! Dave O. Quote
Karl Woolf Posted October 22, 2003 Posted October 22, 2003 When I used to recieve my annual statement saying there was a shortfall they always had a contact No on the paperwork for complaints (you had to contact this number rather than going to the omnisbusman) they had a well setup system for dealing with these complaints and if not satisfied you could then go to the omnisbusman direct. It was the company that underwrote the policy as opposed to the people that sold it to me (although RBS and Royal Assurance are linked I think) Another thing my Financial adviser suggested to me was even if the paperwork (ie smallprint, interview documentation) was in order if you stated "you weren`t made aware of the risk" they would be inclined to just settle and get rid of the case The payment on my 2nd house move/mortgage was a pension mortgage you win some etc....... Quote
Turbo Tommo Posted October 23, 2003 Posted October 23, 2003 A subtle irony has evolved, as the endowment "scandal" has only raised it's ugly head since the FSA's directive to companies to produce a re-projection of potential benefits to their customers in order to try and protect their interests. They feel that with the current level of interest rates and inflation, stock market returns that have been enjoyed in the past will not be repeated to the same level in the future. This feeling may or may not be true. The "re-projections" that customers have recieved, and been frightened into surrendering policies, are simply illustrations, similar to the ones issued when they first bought the product. An endowment policy needs to assume a rate of return in order to calculate the premium to acheive a maturity value over a given term. If you bought the product assuming a rate of return of say 7% to acheive your target maturity value, then a reprojection at 6% is naturally going to illustrate a lower figure. The FSA are enforcing new illustrative rates of return at 4, 6, & 8% now instead of 5, 7 & 9% historically. In reality nothing has actually changed, other than the current bear market. The FSA are simply trying to tell you that if your fund only does 6%, you will have a shortfall at maturity, if your assumed growth rate was higher. The paperwork to explain this could have been an awful lot simpler, as many folk have misunderstood the significance of the communication, and naturally assumed their endowment is definately not going to make it! However, still better to be told now than later if it were the case!! If you took a low cost or unit liked endowment and were advised that it would guarantee to repay your mortgage, then you definately have the basis for a complaint, however, if you were advised that the value could go down as well as up, and you made the decision based on an assumed growth rate, the onus remains with customer. (assuming no other bad advice issues) Would anyone be complaining if there was a considerable surplus at maturity, I think not! And who's to say that will still not be the case! No-one knows!! Don't use the bad advice / mis-selling excuse for a poor performing stock market that is hitting us all. On a posative note, even though the fund has probobly been eroded by the markets, the units you are buying now are dirt cheap. The figure the companies give you as a surrender value is only on the day, you still have the same number of units that you always had. Cashing your endowment just christalises that loss.......would you sell your house if it halved in value, or woud you look at buying the one next door aswell as a cheap investment? If it worries you that you will have a shortfall, keep the endowment and look to switching to a safer fund within it (if possible) and convert all or part of your mortgage to repayment. Finally, if they are so bad, why are companies offering to buy with profits endowments at a price in excess of the surrender value. Be a Bull, not a Sheep Quote
david.c Posted October 23, 2003 Posted October 23, 2003 Would anyone be complaining if there was a considerable surplus at maturity, I think not! I take your point..........but if I was told that the reason to go for endowment was that 'Not only would I have enough money to pay off my mortgage, but I would have the same again as a lump sum'. You can probably see why I shall be complaining David Quote
Nick A Posted October 23, 2003 Posted October 23, 2003 Would anyone be complaining if there was a considerable surplus at maturity, I think not! i agree Quote
Turbo Tommo Posted October 23, 2003 Posted October 23, 2003 Absolutely David. If you were told that you would be guaranteed an additional lump sum. Make that claim, because that is not true and scandalous. JT Quote
DAVE O Posted October 23, 2003 Author Posted October 23, 2003 When I bought my first place in 1994 I initially wanted the whole lot on repayment. After speaking to the mortgage bod he convinced me to go with the endowment saying that it would pay off the mortgage and give me a lump sum that would easily buy a new car/holiday etc. He was obviously on a large commision and got his new car/holiday in 1994!! I'm just gald that when we moved I took the rest on re-payment. Dave O. Complaint pending!! Quote
steppenwolf Posted October 23, 2003 Posted October 23, 2003 What is the situation with 'Pension Linked' Mortgages? I suspect that there is no one to complain to if the 'lump sum' at retirement does not cover the original loan as the reality is that there is no official link as such - just an agreement with the lender to pay the interest monthly and the capital at some time in the future ( i.e. when one retires ). It all seemed like a good idea at the time and part of some careful planning for the future but I am not so sure now! It is not for nothing that I hate 'credit' of any kind but how else can you buy a house ? ...... Quote
Turbo Tommo Posted October 23, 2003 Posted October 23, 2003 Same thing applies Stepps. You will have used a calculation on an assumed growth rate over a period of time to utilise the commutable element (lump sum) of your pension. If this advice was incorrect, i.e. the assumptions were incorrect or unrealistic, or you had access to an employers scheme, or the adviser took little regard to the possible changes in future circumstances that left you unable to conrtribute to a personal pension etc etc, then you may have a case. Pension linked mortgages are great as the investment you make is tax deductable and has tax free growth. However, you can only use 25% of the fund as cash, plus, if you want to fully fund your pension for retirement purposes alone, then you need to find an additional way to repay your mortgage. Until the recent addition of stakeholder pensions it was impossible to fund a pension if you were not working, so where does your mortgage repayment vehicle end up if you lose your job! Dave, if you can prove a commission led sale, then the same applies. However in both cases, if the adviser has indeed acted in both your interests and has recorded the discussions undertaken at the point of sale, and the documentaion is there to support it, then you will struggle, whatever your recollection of the events are now! Quote
Turbo Tommo Posted October 23, 2003 Posted October 23, 2003 Dave, I would console yourself in the purchase of a 30K sprint car for 1/2 price, and I'm looking forward to keeping you behind me next year aswell (If it doesn't keep breaking down) JT Quote
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