The Endowment Diary

The Endowment Diary


The Endowment Mis-selling Debacle - one of the UK's worst financial scandals

Wednesday, October 13, 2004

Diversionary Tactics

It is reported that Legal and General (L&G) brought in a "memory expert" yesterday, to support their case against the £1M fine imposed on them by the Financial Services Authority (FSA).

The expert noted that customers' memories were likely to be distorted over the passage of time.

L&G are trying to undermine the customer survey, that was used by the FSA in their case against L&G for endowment mis-selling.

L&G allege that the survey of 152 customers was not large enough, and that the recollections of those questioned must be called into question.

Let us not get sidetracked by these courtroom games.

The real issue here is that people bought these useless polices, in the expectation that they would pay off the mortgage.

These policies are not going to pay off the mortgages. As a result of a combination of:


-Passing the entire risk of holding the policy onto the customer, whilst taking a fat commission

-Excessive commission payments

-Diabolical mismanagement of the funds in which the policies are invested

endowment policies are going to dramatically undershoot their targets.

In other words, they are not fit for purpose.

The FSA and the life assurance companies should stop messing around with these diversionary tactics. The issue is simply this, the policies were not fit for purpose; as such the life assurance industry, which has made some very large profits out of creating, selling and "managing" these useless products, must agree to underwrite them.

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