The Endowment Diary

The Endowment Diary

Text

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

Monday, March 24, 2008

Fingers in The Pie

Fingers in The Pie

The trouble with some of the life assurance companies that are "managing" this country's useless and underperforming endowment policies, is that they can't seem to distinguish between assets that belong to their hapless and much put upon policy holders and the company's assets.

Normally, this "confusion" over ownership is demonstrated by the excessive and unjustified management charges levied by life assurers against the minuscule returns of the endowment policies that they fail to manage.

However, Norwich Union have found another way to tap the assets of their hapless endowment policy holders. The Times reports that Norwich Union has helped itself to £300M of policyholders' funds, in order to plug a hole in its own pension fund and to pay for its own mis-selling costs.

Some would argue that it is pretty rich of Norwich Union to help themselves in this manner, in fact most people with any concept of ownership and property would argue this. However, Norwich Union is unabashed; safe in the knowledge that it can do this, because it can do this.

If only life were that simple and profitable for its policy holders!

Needless to say this raid on the policyholders' funds will mean lower payouts for 1.1 million policyholders.

Norwich Union has helped itself to £83M of its surplus assets to cover a deficit in its staff pension scheme, with £182M being set aside to pay for endowment and pension mis-selling.

To run that by you again, it is making its policy holders pay for its pension failings and for its mistakes wrt selling endowment policies.

Happy with that?

Vince Cable, the Liberal Democrats’ Treasury spokesman, is quoted in The Times:

"The Financial Services Authority perpetuates rules which give preference to shareholders over policyholders and allow such appalling abuses as penalties for pensions mis-selling to be taken from policyholders' inherited estates. Companies like Norwich Union and Prudential are managing, under the cloak of complexity, to deprive their policyholders of large sums."

Norwich Union is currently involved in "testy" and "bad tempered" negotiations as to how it will split up £5BN of orphan assets (inherited estate). Needless to say, Norwich Union wants to take as much of that money for themselves as they can, they believe that their shareholders outrank their policyholders.

The fact that these orphan assets arise as a direct results of the policyholders' contributions, and not from anything that the shareholders have done, is irrelevant to Norwich Union.

Why are they treating their policyholders with such contempt?

Simple, because they can!

They know that their policyholders lack the legal and vocal clout of their shareholders.

It is high time that the policyholders gave companies such as Norwich Union a very bloody nose, a class action should be initiated by the policyholders of Norwich Union and the life assurance companies given a lesson not to treat their policyholders with such contempt.

No comments:

Post a Comment