The Endowment Diary

The Endowment Diary


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

Wednesday, December 14, 2005

The Pain of Mis-selling

The Pain of Mis-selling

It seems that it is not just the hapless owners of underperforming and useless endowment polices that are suffering, sometimes a little of the pain and misery caused by these useless products is spread around.

Mis-selling endowment policies has cost Lloyds TSB has £150M this year, that is in addition to the £360M already paid out in recent years for compensation claims over a variety of financial products.

Lloyds TSB is still reviewing the total cost of compensating its customers, but admitted that this could lead to an increased provision in the accounts.

In a trading update before its 2005 figures, Lloyds TSB revealed that it would also need to set aside another £150M to cover the cost on insurance policies of people living longer.

Lloyds TSB is not the only bank facing claims for mis-selling of endowment policies. HBOS has had to put aside £260M over the last two years.

Lloyds TSB warned that customers were continuing to have difficulty repaying their debts.

How can people be expected to repay their mortgage, if the policy that they bought to repay the mortgage doesn't work?

Analysts at Dresdner Kleinwort Wasserstein have described Lloyds as "strategically challenged". There is now speculation that it may be a takeover target.

What goes around, comes around!

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