The Endowment Diary

The Endowment Diary


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

Monday, February 06, 2006

Standard Life Fails To Deliver

Standard Life Fails To Deliver

More bad news for people holding useless and underperforming endowment mortages.

Standard Life have warned their 2 million with-profits customers that policies maturing this month will pay out on average 5% less than before, on comparable policies; this is despite the fact that share prices are booming.

The annual bonus rates on conventional with-profits policies are unchanged, but terminal bonuses are down.

The maturity value of a Standard Life 50 a month, 25 year mortgage endowment policy is now £40,459 this month, that is a massive fall of 18% when compared to the same policy of £49,511 in February last year.

John Gill, Standard's UK life and pensions managing director finance, is quoted as saying:

"By smoothing returns, we have protected policyholders from the full drop in asset values between 2000 and 2002."

Others are not taken in by this pr hype.

Clive Scott-Hopkins, from independent financial advisers Towry Law, is quoted as saying:

"Standard Life is obviously losing its competitive edge with this very poor result. The Norwich Union typical endowment payout last month at £50,295 was 25% higher than these results."

Standard Life sold £7BN of equities in 2004 after guidance from the Financial Services Authority on "strengthening" its financial reserves.

The result being that it now unable to take advantage, or rather its hapless endowment policy holders are unable to take advantage, of the booming stock market.

Given the fact that other insurers have performed better than this (even if their endowment policy holders are also out of pocket), I would suggest that the holders of Standard Life policies should be considering asking some very hard questions indeed about the quality of management of their funds.

Indeed they may laso like to consider aksing some hard questions of the FSA, as to why it gave such absurd advice.

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