The Endowment Diary

The Endowment Diary


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

Friday, September 29, 2006

Negligence Claims Rise

Negligence Claims Rise

A survey carried out by Alexander Forbes International, notes that claims and notifications against professionals rose sharply, climbing to 603 in 2005-06, from 452 a year earlier.

The largest factor in that rise can be accounted for by claims for incorrect endowment advice, which rose to 20% from 12%.

Executive director Mark Bracher said:

"An increasing number of home owners are finding that their endowment policies will fail to pay off their mortgages and they are seeking recompense from their accountants for negligent advice.

This has been compounded by a number of specialised claims farmers who have made a business of encouraging home owners to seek compensation from their advisers

This problem would be solved at the stroke of a pen, if the life assurance companies agreed to underwrite these useless underperforming products.

Thursday, September 14, 2006

Nationwide and Portman To Merge

Nationwide and Portman To Merge

Nationwide and Portman building societies announced on Tuesday that they plan to merge. They claim that they intend to provide a "compelling alternative to the big retail banks".

Portman members will receive a booklet explaining the planned merger, before the building society's Spring 2007 AGM. They will be asked to vote on the proposals. Nationwide members do not have anything to do.

If the vote goes in favour of the merger, it is planned to be finalised by September 2007.

Qualifying members of Portman will receive a pre-tax windfall worth a minimum £200, if the merger goes ahead. Only members who had a minimum of £100 in savings, or a balance of £100 on a mortgage, at the close of business on 11 September will qualify.

Nationwide members will not receive a windfall.

Tuesday, September 12, 2006

Gherkin To Gobble Up Pru

Gherkin To Gobble Up Pru

It is reported that Swiss Re, the Swiss financial group known for the Gherkin in London, is to buy a large part of the UK operations of Prudential for around £5BN.

Swiss Re is reported to have offered to buy the closed life fund business of Prudential. The closed funds contain existing insurance policies, but no longer have new policies added to them.

The approach was made last month on the heals of Mark Tucker's, the CEO of Prudential, plans to shake up the Pru's underperforming UK operations.

Prudential's UK closed life book includes with profits policies and endowment mortgages. The value is estimated to be around £5BN.

The approach has raised questions about the Pru's commitment to Britain. There are rumours that some investors are keen for Tucker to scale back in Britain and concentrate on the faster growing business in Asia and the US.

The sale would give the Prudential £1.5BN. The value of with profits policies is split between shareholders and policyholders. Under the sale of a with profits business, shareholders receive a lump sum to account for the future profits they would have received from the policies.

Swiss Re has bought a series of closed life funds in America, and in Britain it bought Life Assurance Holding Corporation.

Nice to see that someone can make money out of the useless and underperforming endowment policies that were foisted on the unwary British public in the 1980's.

Wednesday, September 06, 2006

Friends Provident In The Wrong

Friends Provident In The Wrong

In a rare piece of good news, it seems that the thousands of endowment policy holders who have been told that they have run out of time to complain about their useless and underperforming mortgage endowment policies have been offered some hope of compensation.

The Financial Ombudsman Service (FOS) has ruled that Friends Provident was wrong to impose a time limit on an endowment misselling complaint bought by a Mr and Mrs Smith, and has ordered the insurer to reopen their case.

The Smiths are physically disabled, and that has impacted the decisions of the FOS. However, endowment claims and legal specialists reportedly believe that this judgement could impact on all policyholders who have been time barred.

Tim Moore, of, said:

"This ruling suggests that if policyholders can prove that they were too confused, for whatever reason, to make accurate financial choices that the time bar may be invalid."

Under FSA rules, endowment policyholders who want to complain must do so within three years of receiving a "red" warning letter.

The FOS ruled that the Smiths were too confused to make an accurate decision about their mortgage options, as such the time bar was invalid.

The ombudsman is quoted as saying:

"I take the fact that Mr and Mrs Smith are unable to work as a good indication they may find coping with day to day normal life a challenge, and consider their circumstances are exceptional for the purposes of the mortgage endowment time bar rules."

A "coalition" of endowment claims experts including; Donns Solicitors,, CPH Financial Advisory Services, Whitehall Randall, and Michael Booth QC is reportedly ready to test whether it can be applied to all policyholders, not just the disabled.

Andrew Hummersone, from Whitehall Randall, said:

"In light of this ruling, our next step will be to send another 10 time barred cases to the FOS.

The minute a claim is rejected we will immediately seek a High Court review, with the aim of confirming once and for all whether time bars have any validity

As ever with the endowment scandal, the lawyers and claim firms will do very well out of it.

However, as I keep repeating, the best way for all of the parties involved in this disgrace would be for the life assurance companies to do the decent thing and bite the bullet of underwriting these useless underperforming policies.