The Endowment Diary

The Endowment Diary


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

Tuesday, May 29, 2007

Standard Life Ignore Policy Holders

Standard Life Ignore Policy Holders

Standard Life treated their endowment policy holders with contempt today, at its first annual general meeting.

Standard Life faced repeated calls to specify the aggregate level of the shortfall on endowment policies, which they refused to reveal.

Sandy Crombie, the Group CEO, admitted that shortfalls on endowments exceeded the staggering figure of £1.3BN that the insurer had identified in its now-closed Heritage with profits fund.

However, the company didn't make any firm pledge to calculate the overall shortfalls faced by policyholders.

Seemingly the expectations of policy holders are, in the words of outgoing chairman Brian Stewart "unreasonable".

Crombie added:

"We cannot generate money that is not there. We are trying exceptionally hard to make sure the fund continues to perform for those who are invested in it."

Hardly much comfort for the hapless policy holders.

Why not come clean with them?

Thursday, May 24, 2007

Endowment Complaints Tailing Off

Endowment Complaints Tailing Off

In its annual review, the Financial Ombudsman Service (FOS) said that endowment complaints are tailing off.

Last year's review reported 69,149 endowment problems, while this year the figure had fallen to 46,134.

Chief ombudsman, Walter Merricks, said:

"This year marked the completion of over 500,000 financial disputes by the FOS since we were set up in 2001. Half of these complaints have involved mortgage endowments, although the record numbers of these cases is now at last decreasing, as we had predicted was likely to happen."

That does not of course mean that the problem is resolved, or indeed has gone away.

Many endowments were a "crock" form start to finish!

Monday, May 14, 2007

The List of Shame

The List of Shame

Those of us who are unfortunate enough to have bought an endowment policy in the late 1980's and early 1990's may find an analysis produced by Money Management to be of interest.

It shows that, despite rising stock markets, payouts to policy holder continue to fall in most cases.

They compared policies maturing in 2007 with those maturing in 2006, for a male non smoker investing £50 from the outset over 25 years. The variation in returns was staggering. The average growth rate was 8.5%.

The top performer was Reliance Mutual with a return of 13.6%. However, the laggards showing below average returns were as follows (%):

Norwich Union - 8.3
Canada Life - 8.3
CGU - 8.2
General Accident - 8.2
Brittanic Assurance - 8.2
Clerical Medical - 7.9
Legal&General - 7.7
Scottish Widows - 7.3
Scottish Life - 7.2
Standard Mutual - 6.8
Scottish Mutual - 6.8
Friends Provident - 6.7
Equitable Life - 6.5
Eagle Star - 5.7

Well done!

The key question that policy holders should be asking of their endowment company, if they are in one of the under performing ones, is why are your returns worse than others?

Does that not reflect badly on the quality of management, and on the charges levied against the fund?

Wednesday, May 09, 2007

Standard Life

Standard Life

Congratulations to Standard Life on their bumper first quarter results, worldwide sales rose by 40% to £3.92BN.

The question that the endowment policy holders are asking is, whether these bumper results will be reflected in bumper returns on their flagging endowment policies.

Highly unlikely I would say, as since July 2006 the masters of Standard Life are the shareholders not the policy holders.