Standard Life Faces £50M Compensation Claims
Standard Life is facing calls to compensate up to 100,000 mortgage endowment customers, whose charges are much higher than those they were quoted at the time and who are likely to face shortfalls when their policies mature.
The shortfall, for those who took out Homeplan endowments between 1991 and 1994, could be £50M.
Which? made the call for compensation. It seems that up to 11 other companies, which sold policies with similar charging structures to that of Standard Life have been topping up their own clients' investments.
The Financial Services Authority (FSA) is reported to have carried out a review in 2001, that found that a number of companies had been engaged in "pre-contractual mis representation and in some a breach of contractual warranty".
The companies that have admitted they have paid redress to tens of thousands of their customers include Norwich Union and Legal & General.
Which? contend that Standard Life were doing the same thing, and as such should compensate their customers.
Standard Life, which intends to float on the FTSE in 2006/7, has 2.6M with-profits policyholders.
During 1988 and 1994 Lautro, the insurers' watchdog, required its members to give "standard charge projections" in their product literature; based on an industry-wide "average" of how much a product might cost and how much it might pay out, based on presumed level of growth.
The figures turned out to be garbage, in fact they were misleading, like everything else concerned with these endowment products.
The charges levied were higher than those set out, ie the customer was not being given the facts.
The insurers, like the Nazis, argue that they were simply following the regulator's orders!
Standard Life claim that the figures "in no way formed a part of the contract [and] charges could change over the term of the policy".
So what on earth was the point of them then?
Insruance companies used the misleading figures to charge customers. Hence they could pretend to be more competitve than others.
Following talks with the FSA, L&G agreed to top up its policies. Norwich Union says it did the same with 10,000 policies it inherited, when it took over Provident Mutual.
Am I the only person to think that endowment policies were the biggest con trick perpetrated on the British public in the 20th cetury?
To my view, people should be going to jail over this scandal.