The Endowment Diary

The Endowment Diary

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

Monday, May 11, 2020

20,000 Borrowers With Interest-only Mortgages Maturing This Year are Over 65

More than 40,000 borrowers with regulated interest-only mortgages will reach the end of their term this year, owing an average £104,000, according to trade body UK Finance.

But almost half of these homeowners are over 65 and have more than £100,000 remaining on their mortgage.

It is the first of three significant waves of the loans maturing, as estimated by the Financial Conduct Authority (FCA).

Borrowers in this first wave of maturities typically took out the loan in the late 1980s or early 1990s, backed by an endowment policy, ISA or pension.

In total, around 60,000 interest-only mortgages will mature this year, including the 41,000 regulated contracts and 19,000 non-regulated contracts (mortgages as a product only became regulated from 2004).

 
Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:
  • Deal with any correspondence from HMRC
  • Attend any meeting with HMRC
  • Appeal to the First-tier Tribunal or Upper Tribunal
  • Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly
  • Premiums are Annual Premiums.
  • Premiums are inclusive of 12% IPT. 
  • Premiums and IPT are due in full in advance / at commencement of scheme.
  • There is a NIL excess on all policies.
Please click here for details.

Monday, February 24, 2020

Endowment Advice Leads to Default

The FT reports that another advice firm has defaulted with the Financial Services Compensation Scheme, after receiving claims against failed endowment policies.

The lifeboat body has already paid a claim for more than £11,000 but the bill against Hector McLean Financial Consultants could potentially grow, with another two claims currently being considered by the compensation scheme.

The company was declared in default on February 17 with claims against it relating to endowment mortgages - the same policies which resulted in one of the most notorious mis-selling scandals of the 21st century.

Mortgage endowments were pushed in huge volumes in the 1970s through to the 1990s alongside interest-only mortgages.

The policy is a mixture of an investment and an insurance policy, providing both life assurance and savings, which is designed to repay a mortgage. The consumer only pays interest on the mortgage each month, and also pays monthly into the mortgage endowment, which is then used to pay off the mortgage.

If initial growth predictions were realised the mortgage should have been paid off by the term end, possibly with an additional lump sum for the individual. But projections were often too ambitious and regulators at the time set very guidelines for different yield assumptions on the mortgages than they did later on.

On its website the FSCS details certain criteria which could lead to a successful claim against a mis-sold mortgage endowment policy, including if an adviser did not fully explain the policy’s link to the stock market.

Because of this link there was a risk at the end of its term the policy could leave the client with a shortfall for paying their mortgage.

Time limits apply to mortgage endowment claims, with consumers expected to make a request for compensation six years after they were sold the policy or three years from the date it became apparent they had cause for complaint.

The main investment adviser at Hector McLean Financial Consultants was also a director at Hector McLean Mortgages Limited, which was de-authorised in 2008.

Tax Investigation Insurance
 
Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:
  • Deal with any correspondence from HMRC
  • Attend any meeting with HMRC
  • Appeal to the First-tier Tribunal or Upper Tribunal
  • Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly
  • Premiums are Annual Premiums.
  • Premiums are inclusive of 12% IPT. 
  • Premiums and IPT are due in full in advance / at commencement of scheme.
  • There is a NIL excess on all policies.

Please click here for details.