tag:blogger.com,1999:blog-38961222024-02-18T22:47:55.662-08:00The Endowment DiaryKen Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.comBlogger465125tag:blogger.com,1999:blog-3896122.post-38249438861300686252021-03-10T04:08:00.003-08:002021-03-10T04:08:13.503-08:00Mortgage endowments & Mis-selling Advice Guides<p>If you believe you’ve
been mis-sold an endowment mortgage, you can make a complaint but there
are time limits for doing so. </p><p><a href="https://www.which.co.uk/reviews/mortgage-endowments-and-mis-selling/article/guides" target="_blank">Which?</a> has guides help you navigate the
complaints process, including when to refer a complaint to the
ombudsman. </p><p><a href="https://www.which.co.uk/consumer-rights/advice/is-there-a-deadline-for-making-a-mis-sold-endowment-complaint-ar6oj9C1rm3S" target="_blank">Is there a deadline for making a mis-sold endowment complaint?</a> </p><p>By Which? </p><p>There are strict time limits for complaining about mis-sold endowments.
Read the Which? guide to see if you're owed compensation, and how to claim it.</p><p><a href="https://www.which.co.uk/consumer-rights/advice/i-think-i-ve-been-mis-sold-my-mortgage-what-can-i-do-agoZa2H4E7R8" target="_blank">I think I've been mis-sold my mortgage, what can I do?</a> </p><p>By Which? </p><p>Do you have reason to believe you were mis-sold your mortgage? Read the Which?
guide to understand what constitutes mortgage mis-selling. </p><p><a href="https://www.which.co.uk/consumer-rights/advice/how-do-i-complain-about-a-mis-sold-endowment-aJBeC3q9YCcq" target="_blank">Is there a mis-sold endowment policy complaint deadline?</a> </p><p>By Which? </p><p>If you want to complain about a mis-sold endowment and you're within the
stated time limits for complaining, here's what you should do. </p><p><a href="https://www.which.co.uk/consumer-rights/letter/letter-to-complain-about-a-mis-sold-mortgage-aL1ab4v7c4xH" target="_blank">Letter to complain about a mis-sold mortgage </a></p><p>By Which? </p><p>There are many reasons why you may think you've been mis-sold your
mortgage. If you think you were mis-sold, use this Which? template
letter to complain. <br /> </p><p><a href="https://solarinsurance.co.uk/TaxInvestigationInsurance-30.htm?ReferID=447" target="_blank">Tax Investigation Insurance</a><br />
<br />
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.<br />
<br />
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.<br />
<br />
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.<br />
<br />
A Solar Protect policy will enable your Accountant (your tax return agent) to:
<br />
</p><ul>
<li>
Deal with any correspondence from HMRC</li>
<li>
Attend any meeting with HMRC</li>
<li>
Appeal to the First-tier Tribunal or Upper Tribunal</li>
<li>
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</li>
<li>
Premiums are Annual Premiums.</li>
<li>
Premiums are inclusive of 12% IPT. </li>
<li>
Premiums and IPT are due in full in advance / at commencement of scheme.</li>
<li>
There is a NIL excess on all policies.</li>
</ul>
<br />
<a href="https://solarinsurance.co.uk/TaxInvestigationInsurance-30.htm?ReferID=447" target="_blank">Please click here for details</a>. Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-9231682210172358492020-05-11T07:11:00.000-07:002020-05-11T07:11:01.789-07:0020,000 Borrowers With Interest-only Mortgages Maturing This Year are Over 65<div><p>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 <a href="https://www.yourmoney.com/mortgages/interest-only-mortgage-time-bomb-for-20000-over-65s/" target="_blank">UK Finance</a>.</p>
<p>But almost half of these homeowners are over 65 and have more than £100,000 remaining on their mortgage.</p>
It is the first of three significant waves of the loans maturing, as estimated by the Financial Conduct Authority (FCA).</div><div><p>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.</p>
<p>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).</p></div><div><a href="https://solarinsurance.co.uk/TaxInvestigationInsurance-30.htm?ReferID=447" target="_blank">Tax Investigation Insurance</a></div>
<br />
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.<br />
<br />
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.<br />
<br />
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.<br />
<br />
A Solar Protect policy will enable your Accountant (your tax return agent) to:
<br />
<ul>
<li>
Deal with any correspondence from HMRC</li>
<li>
Attend any meeting with HMRC</li>
<li>
Appeal to the First-tier Tribunal or Upper Tribunal</li>
<li>
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</li>
<li>
Premiums are Annual Premiums.</li>
<li>
Premiums are inclusive of 12% IPT. </li>
<li>
Premiums and IPT are due in full in advance / at commencement of scheme.</li>
<li>
There is a NIL excess on all policies.</li>
</ul>
<a href="https://solarinsurance.co.uk/TaxInvestigationInsurance-30.htm?ReferID=447" target="_blank">Please click here for details</a>. Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-12460476278690962372020-02-24T02:45:00.000-08:002020-05-11T07:04:46.696-07:00Endowment Advice Leads to DefaultThe <a href="https://www.ftadviser.com/regulation/2020/02/21/mortgage-endowment-lands-advice-firm-in-hot-water/" target="_blank">FT</a> reports that another advice firm
has defaulted with the Financial Services Compensation Scheme, after
receiving claims against failed endowment policies.<br />
<br />
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.<br />
<br />
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.<br />
<br />
Mortgage endowments were pushed in huge volumes in the 1970s through to the 1990s alongside interest-only mortgages.<br />
<br />
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.<br />
<br />
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.<br />
<br />
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.<br />
<br />
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.<br />
<br />
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.<br />
<br />
The main investment
adviser at Hector McLean Financial Consultants was also a director at
Hector McLean Mortgages Limited, which was de-authorised in 2008.<br />
<br />
<a href="https://solarinsurance.co.uk/TaxInvestigationInsurance-30.htm?ReferID=447" target="_blank">Tax Investigation Insurance</a><br />
<br />
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.<br />
<br />
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.<br />
<br />
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.<br />
<br />
A Solar Protect policy will enable your Accountant (your tax return agent) to:
<br />
<ul>
<li>
Deal with any correspondence from HMRC</li>
<li>
Attend any meeting with HMRC</li>
<li>
Appeal to the First-tier Tribunal or Upper Tribunal</li>
<li>
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</li>
<li>
Premiums are Annual Premiums.</li>
<li>
Premiums are inclusive of 12% IPT. </li>
<li>
Premiums and IPT are due in full in advance / at commencement of scheme.</li>
<li>
There is a NIL excess on all policies.</li>
</ul>
<br />
<a href="https://solarinsurance.co.uk/TaxInvestigationInsurance-30.htm?ReferID=447" target="_blank">Please click here for details</a>. Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-19614107785665323922018-08-20T03:12:00.007-07:002020-05-11T07:06:16.446-07:00Endowment Mis-selling Claim Dismissed<div class="pfont-lead">
<a href="http://www.iomtoday.co.im/article.cfm?id=42352&headline=Mis-selling%20claim%20is%20dismissed%20by%20court&sectionIs=news&searchyear=2018" target="_blank">IoM Today</a> reports that a couple have lost their claim of alleged mis-selling by an Isle of Man based insurance firm.</div>
<div class="pfont-lead">
<br /></div>
<div class="temp-fix-brad">
Keith and Nicola
McSween took out an endowment policy with Royal London in 1991 as an
investment vehicle to repay their mortgage.</div>
<div class="temp-fix-brad">
<br /></div>
They claim their
financial adviser told them that the policy would provide a guaranteed
£32,500 plus £40,000 substantial lump sum on maturity.<br />
<br />
The McSweens claim there was no mention of premium increases up to 10% each year and no mention there could be a shortfall.<br />
<br />
Their premiums were increased from £55.78 a month to
£67.48 to cover a shortfall and ultimately the policy paid out £32,500
but with a lump sum of only £7,622.<br />
<blockquote class="tr_bq">
’<i>We genuinely believe that we
were mis-sold our Royal London endowment policy like many other
thousands of people up and down the country</i>,’ </blockquote>
Royal London said that the policy was arranged through an independent financial adviser.<br />
<br />
It
denied that the policy guaranteed payment of a lump sum of £40,000 and
that periodic reviews of investment performance would be carried out to
see whether the policy would reach the target amount on maturity.<br />
<br />
If a shortfall was likely, the sum assured would be increased as would premiums.<br />
<br />
Royal
London said it wrote to the claimants at regular intervals from May
2005 to July 2009 to advise of a risk of shortfall on maturity due to
the performance of the underlying investments and assumptions as to
future investment growth.<br />
<br />
Deemster Andrew Corlett ruled the claim was made well out of time.<br />
<br />
<br />
Deemster Corlett said he had not been
satisfied that the financial adviser misrepresented the position with
the premiums by saying that they would not under any circumstances
increase.<br />
<blockquote class="tr_bq">
’<i>In making these findings, I do not consider that the claimants gave misleading evidence.</i><br />
<br />
<i>More
likely it is that Mr McSween in particular has over the years convinced
himself that certain things were said at that long-distant meeting,
which I have found to be improbable</i>.’</blockquote>
In his judgment, Deemster Corlett said:<br />
<blockquote class="tr_bq">
’<i>I conclude that the claimants’ claim must be dismissed.</i><br />
<br />
<i>As
I have explained, not only does the claimants’ case fail on the factual
allegations made, but in addition and as a matter of law, the claim has
been brought well out of the time permitted by Tynwald in which to
bring legal action, and furthermore the asserted claim for damages is
misconceived as a matter of law</i>.’</blockquote>
<br><a href="https://solarinsurance.co.uk/TaxInvestigationInsurance-30.htm?ReferID=447" target="_blank">Tax Investigation Insurance</a><br />
<br />
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.<br />
<br />
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.<br />
<br />
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.<br />
<br />
A Solar Protect policy will enable your Accountant (your tax return agent) to:
<br />
<ul>
<li>
Deal with any correspondence from HMRC</li>
<li>
Attend any meeting with HMRC</li>
<li>
Appeal to the First-tier Tribunal or Upper Tribunal</li>
<li>
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</li>
<li>
Premiums are Annual Premiums.</li>
<li>
Premiums are inclusive of 12% IPT. </li>
<li>
Premiums and IPT are due in full in advance / at commencement of scheme.</li>
<li>
There is a NIL excess on all policies.</li>
</ul>
<br />
<a href="https://solarinsurance.co.uk/TaxInvestigationInsurance-30.htm?ReferID=447" target="_blank">Please click here for details</a>.
Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-91801230344572352822012-11-26T02:55:00.001-08:002012-11-26T02:55:56.780-08:00Endowment Payment Release FormsAs many endowment policies, taken out in the 1980's, are maturing/due to mature in the coming year; I would be interested to hear from anyone who has received a payment release form that contains any onerous/unusual conditions that implies that the hapless policyholder would be bound by if he/she signs the form.<br />
<br />
<br />Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com1tag:blogger.com,1999:blog-3896122.post-26597442262267831312012-11-05T05:35:00.000-08:002012-11-05T05:38:36.320-08:00The Interest Only TimebombAs many interest only mortgages (which were meant to be covered by endowment policies) mature in the next few years, many people are facing significant debts that they cannot afford to repay because of the dismal performance of these endowment products.<br />
<br />
An <a href="http://kenfrostendowment.blogspot.co.uk/2012/04/endowment-shortfall-timebomb.html" target="_blank">analysis</a> of Financial Services Authority (FSA) figures shows that of
the 150,000 interest-only mortgages a year that are due to mature in the
next eight years, <b>60,000 are likely to be in shortfall</b>. Of these 42,000
will be in the names of people over the age of 60 either at or close to
retirement.<br />
<br />
When faced with a shortfall there are a number of options that may be available to the hapless debtor, including the following:<br />
<br />
- sell the home, use the proceeds to pay off the shortfall and downsize, or<br />
- negotiate an extended term for the shortfall portion of the mortgage with the lender, or<br />
- look into the possibility of a lifetime mortgage/equity release scheme.<br />
<br />
Richard Evans of the Telegraph has provided some helpful background on equity release schemes <a href="http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9655296/Is-equity-release-the-answer-to-your-interest-only-mortgage.html" target="_blank">here</a>.Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-57370927481952217122012-09-30T04:17:00.004-07:002012-09-30T04:17:52.546-07:00Endowment Policies FailAs per <a href="http://www.thisismoney.co.uk/money/news/article-2121250/Up-360-000-families-forced-sell-homes-year-endowment-policies-fail-deliver.html" target="_blank">This Is Money</a>:<br />
<blockquote class="tr_bq">
"<i>Up to 360,000 families may be forced to sell their home this year because record numbers of endowment policies have failed to deliver.
</i><br />
<i><br /></i>
<i>In many cases, these homeowners are seeing endowments fall £100,000 short of what they were promised</i>."</blockquote>
Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-63795911668028045682012-06-27T07:11:00.000-07:002012-06-27T07:11:09.368-07:00Barclays Variable Rate MortgagesAdvice from <a href="http://www.zerohedge.com/news/shocking-details-barclays-epic-lie-bor-fraud-duuuude%E2%80%A6whats-ur-guys-345-3m-fix%E2%80%A6tell-him-get-it" target="_blank">Zerohedge</a> to anyone with a Barclays variable rate mortgage between 2005 and now:<br />
<br />
<blockquote class="tr_bq">
"<i>Our advice to <span style="text-decoration: underline;"><strong>anyone </strong></span>who had an adjustable rate mortgage in the period between 2005 and today: sue the living feces out of Barclays, and all <strong>other </strong>banks
who crawl out of the woodwork with purported settlements. </i><br />
<br />
<i>Because due
to their undisputed mark manipulation, it is absolutely safe to say that
ARMs, which rely on Libor for interest rate formation, were <em><strong>grossly manipulated </strong></em>by the same idiot traders who left written evidence of their manipulation year after year. </i><br />
<br />
<i>Now it is their turn to pay</i>."</blockquote>Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-78448970821478576402012-05-24T07:19:00.001-07:002012-05-24T07:19:35.486-07:00L&G Talk Bollocks!Legal and General (L&G) have sent me a summary of the performance of my two "with profits" (a misnomer if ever there was one) polices that I have with them.<br />
<br />
They mature this year and, in theory, are meant to cover a £75K mortgage.<br />
<br />
Based on the less than stellar performance to date, as outlined in the bonus statement for 2011, I estimate that the shortfall will be around £30K; ie a percentage shortfall of 40%!<br />
<br />
This spectacularly poor performance is "odd" given what L&G say about themselves:<br />
<br />
"<em>You have one of the UK's leading fund management groups looking after your money.</em><br />
<br />
<em>The With Profits Fund aims to even out some of the short-term ups and downs of investing, helping you to plan for your future</em>."<br />
<br />
Complete and utter bollocks!<br />
<br />
Do these people really believe their own bullshit?Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-68425750871889895482012-04-23T04:30:00.000-07:002012-04-23T04:30:09.756-07:00The Endowment Shortfall TimebombAn analysis of Financial Services Authority (FSA) figures shows that of
the 150,000 interest-only mortgages a year that are due to mature in the
next eight years, <b>60,000 are likely to be in shortfall</b>. Of these 42,000
will be in the names of people over the age of 60 either at or close to
retirement.<br />
<br />
Source <a href="http://www.independent.co.uk/money/mortgages/thousands-face-retiring-with-unpaid-mortgage-7645620.html" target="_blank">The Independent </a>Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-16869932087927871002012-04-23T03:54:00.000-07:002012-04-23T03:59:34.286-07:00Endowment Shortfalls FAQ's<div class="Lead-text">
I am regularly asked by loyal readers about what can be done about endowment policies that are going miss their target (ie shortfall). This is therefore a good time to remind everyone as to what the <a href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs" target="_blank">Financial Services Authority</a> (FSA) recommends.<br />
<br />
Here is the relevant page from their website reproduced in full. Remember this is their advice (not mine):<br />
<br />
This page contains frequently asked questions about mortgage
endowments. These FAQs are correct as at date of publication. They are
not individual guidance and only summarise information from our rules.
Choose the topic area for the relevant questions and answers </div>
<ol>
<li><a href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#faq1">Claims Management Companies</a></li>
<li><a href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#faq2">Compensation</a></li>
<li><a href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#faq3">Complaints</a></li>
<li><a href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#faq4">Financial Ombudsman Service and the Financial Service Compensation Scheme</a></li>
<li><a href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#faq5">FSA's actions</a></li>
<li><a href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#faq6">Projections between 1988 and 1994 including the 'LAUTRO charges' issue</a></li>
<li><a href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#faq7">Projection rates</a></li>
<li><a href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#faq8">Scottish solicitors</a></li>
<li><a href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#faq9">Time-barring</a></li>
</ol>
<a href="http://www.blogger.com/blogger.g?blogID=3896122" id="faq1" name="faq1"></a><br />
<div class="multiitem promo-main style1 imgleft">
<h2>
Claims Management Companies<br /> </h2>
<div>
<h3>
Are claims management companies regulated by
the FSA? One company quotes 'Regulated by the Law Society and registered
with the FSA' on its letterheads.</h3>
</div>
<div class="light">
We do not regulate claims
management companies (CMCs) in respect of claims management activities.
However, some claims management companies are regulated by us for other
activities. These are often in the field of general insurance; for
instance, some sell 'after the event' insurance.<br />
We can exercise powers over CMCs in relation to certain aspects of
their claims management business, even if it is not a regulated
activity. We and others, including the Office of Fair Trading (OFT), can
take injunctive action under Part 8 of the Enterprise Act 2002 in
respect of misleading advertising. However, to date, we have agreed that
the Advertising Standards Agency (ASA) should take action in the first
instance.<br />
<br />
We also have an interest where CMC activities may have an impact on a
regulated firm, or consumer interests in relation to regulated
activities. Our rules in DISP provide that a complaint may be brought by
a third party on a consumer's behalf, and firms must have in place and
operate appropriate and effective procedures for handling expressions of
dissatisfaction from, or on behalf of a consumer about a firm's
provision of, or failure to provide a financial service.<br />
<br />
From April 2007 CMCs operating in England and Wales must be authorised by the Ministry of Justice.<br />
Related information:<br />
<a href="http://www.claimsregulation.gov.uk/" target="_blank">Ministry of Justice</a><br />
<a href="http://fsahandbook.info/FSA/html/handbook/DISP" target="_blank">DISP Handbook</a></div>
<div>
<h3>
What is the FSA's position on Claims Management Companies?</h3>
</div>
<div class="light">
Some consumers may choose to use
the service of a third party such as a claims management company (CMC).
We believe it is important that the consumer makes an informed choice in
these circumstances – i.e. understands that there are likely to be
costs involved in using a third party, and what those costs are. CMCs
generally charge a percentage of any compensation awarded; some also
charge an upfront fee.<br />
<br />
In our consumer information we emphasise that consumers can access
free complaints procedures through the firm, and then the Financial
Ombudsman Service (FOS) if necessary. We require firms to have robust
complaint handling procedures and firms are expected to treat their
customers fairly.</div>
</div>
<a class="back2top" href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#"></a><br />
<a href="http://www.blogger.com/blogger.g?blogID=3896122" id="faq2" name="faq2"></a><br />
<div class="multiitem promo-main style1 imgleft">
<h2>
Compensation<br /> </h2>
<div>
<h3>
Can you explain how compensation is calculated?</h3>
</div>
<div class="light">
We have issued guidance to firms
on how they should handle endowment complaints and calculate redress
where appropriate. This sets out a standard approach, but does not
remove the firm's obligation to consider calculating redress in the most
appropriate manner given the facts and circumstances of the case.<br />
<br />
Compensation is intended to put a consumer in the position they would
otherwise have been in, had the inappropriate advice not been given.
Generally speaking this is likely to mean that the consumer would have
taken out a repayment mortgage, possibly with associated life cover. No
compensation is due if the consumer is not worse off.<br />
<br />
The
calculation involves comparing the mortgage interest and endowment
premiums actually paid, and the surrender value of the policy, with what
would have been paid out under an equivalent repayment mortgage, and
how much capital would have been repaid. A range of other factors may
also need to be considered, such as the need for life assurance or
whether the policy runs into retirement. Firms may also, in some
circumstances, take into account 'savings' in assessing the amount of
redress paid. This occurs where the monthly cost of an endowment
mortgage was cheaper than the equivalent repayment mortgage. Firms that
take account of savings have to explain this to consumers in writing.<br />
<br />
If a consumer does not understand a compensation calculation, or they
think there is an error in the calculation, they should contact the firm
to ask for a breakdown of the figures. If they are still unhappy with
the firm's response they can refer their complaint to the FOS.<br />
<br />
The FOS has published information on its website about calculating redress in more complicated cases.<br />
<br />
We
are unable to investigate or review individual complaints. However, we
do produce a consumer factsheet on mortgage endowment complaints, which
includes more information on compensation.<br />
<br />
Related information:<br />
<a href="http://www.moneymadeclear.org.uk/pdfs/endowment_complaints.pdf" target="_blank">Complaints factsheet</a> <br />
<a href="http://www.financial-ombudsman.org.uk/publications/guidance/mtge_endowment_redress.htm" target="_blank">FOS</a></div>
<div>
<h3>
I have been offered compensation but it doesn't amount to my shortfall -why is that?</h3>
</div>
<div class="light">
The purpose of compensation is to
place the complainant, as far as possible, in the position they would
have been in today had the inappropriate advice not been given – usually
this means that the consumer would have taken out a repayment mortage
instead. Compensation is not based on what you expected the policy to be
worth.<br />
<br />
Our consumer factsheet on mortgage endowment
complaints, which covers compensation (and the FAQ above on how
compensation is calculated) may be useful.<br />
Related information:<br />
<a href="http://www.moneymadeclear.org.uk/pdfs/endowment_complaints.pdf" target="_blank">Complaints factsheet</a><br />
<br /></div>
<div>
<h3>
The company investigating my complaint about
mis-selling says it needs to take my current financial situation into
account to determine the compensation I get. Is that right?</h3>
</div>
<div class="light">
Redress for upheld mortgage
endowment complaints aims to put the complainant in the position they
would have been in had the inappropriate advice not been given. It does
not seek to penalise firms, or to award 'damages'. On this basis, our
rules and guidance (in the DISP Handbook) set out a standard approach to
calculating redress.<br />
<br />
So, when assessing if you have suffered a loss, the firm should not
only assess your relative capital shortfall or surplus, but also
calculate the relative expense of the two repayment methods. If the
monthly outgoings on your endowment mortgage are lower than an
equivalent repayment mortgage, the firm may take account of such
'savings' in calculating redress.<br />
<br />
The rules under which firms may be able to take account of 'savings' are detailed in <a href="http://fsahandbook.info/FSA/html/handbook/DISP/App/1/2" target="_blank">DISP App 1.2.7 to 1.2.15G</a>.
If the firm does so, it must first establish your financial resources
and assess if you are of 'sufficient means', and that it is reasonable
to assume that the savings have contributed to those means. To do this,
you must give the firm adequate information to evaluate your current
financial resources, including any savings/deposits accumulated. We
consider it fair for firms to request such information, including in the
form of a questionnaire, provided it is relevant and not onerous.<br />
If the firm establishes 'sufficient means' and deducts an amount for
savings, it must explain to you in writing how it arrived at such a
deduction, the information used and how the sufficient means test was
satisfied (<a href="http://fsahandbook.info/FSA/html/handbook/DISP/App/1/2" target="_blank">DISP App 1.2.12G</a> ). You have the right to object to firms deducting savings (<a href="http://fsahandbook.info/FSA/html/handbook/DISP/App/1/2" target="_blank">DISP App 1.2.13G</a>).<br />
<br />
Such assessments do not aim to penalise the complainant, but to
ensure that redress reflects the financial loss incurred. The guidance
is not intended to allow firms to unfairly reduce redress, and they must
show that in taking account of savings they have not placed the
complainant in a detrimental position. The circumstances in which firms
may not take 'savings' into account, or where they must limit applying
'savings', are illustrated in <a href="http://fsahandbook.info/FSA/html/handbook/DISP/App/1/2" target="_blank">DISP App 1.2.8 to 1.2.10G</a>.<br />
<br />
The guidance and rules issued in the DISP appendix do not relieve the
firm of the obligation to use an alternative basis for calculation
where the facts and circumstances of the case warrant it (<a href="http://fsahandbook.info/FSA/html/handbook/DISP/App/1/1" target="_blank">DISP App 1.1.8G</a>).
We recognise that the test for 'sufficient means' is likely to be
different depending on the circumstances and facts of the case, and
firms have to adopt a test that is appropriate for that individual (<a href="http://fsahandbook.info/FSA/html/handbook/DISP/App/1/2" target="_blank">DISP App 1.2.9G</a> ).</div>
<div>
<h3>
Why are policyholders receiving compensation
now rather than at the end of the policy term? If they are retaining
their policies are they able to benefit from any improvements in returns
over time?</h3>
</div>
<div class="light">
In most upheld cases the
complainant was recommended an endowment which carried greater risks
than they wanted to accept, or they were not made aware of the risks.
So, in most cases, complainants do not tend to keep the policy as a
repayment vehicle for a mortgage <a href="http://fsahandbook.info/FSA/html/handbook/DISP/App/1/3" target="_blank">DISP App 1.3.2G</a> and <a href="http://fsahandbook.info/FSA/html/handbook/DISP/App/1/2" target="_blank">DISP App 1.2.15G</a>
state it is not unreasonable for firms to assume that a complainant
will surrender their policy (without unreasonable cost) when calculating
compensation, but also assert a complainant's right to retain the
policy.<br />
<br />
Anyone making the decision to keep an endowment policy after their
complaint is upheld should be aware of the risks associated with the
product. However, even if the policyholder should benefit from a future
market upswing, this does not alter the history of the mis-sale, or the
logic of any redress already paid.<br />
<br />
Finally, our guidance (<a href="http://fsahandbook.info/FSA/html/handbook/DISP/App/1/5" target="_blank">DISP App1.5.10G</a>)
offers scope for firms to offer an alternative form of redress, such as
an agreement to guarantee, or 'underpin' the retained policy, rather
than offer cash redress. This would allow the complainant to potentially
benefit from an improvement in performance, while allowing them to keep
the policy.</div>
</div>
<br />
<a class="back2top" href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#"></a><br />
<a href="http://www.blogger.com/blogger.g?blogID=3896122" id="faq3" name="faq3"></a><br />
<div class="multiitem promo-main style1 imgleft">
<h2>
Complaints<br /> </h2>
<div>
<h3>
I was sold an endowment mortgage by an
independent financial adviser before April 1988. I have written to the
firm and the Financial Ombudsman Service (FOS), but neither can
investigate my complaint- why?</h3>
</div>
<div class="light">
The advice and sales of certain financial products including mortgage endowments, did not become regulated until 29 April 1988.<br />
<br />
The FOS may be able to adjudicate complaints about advice and sales
before 29 April 1988 against firms who have agreed on a voluntary basis
that they may do so. Most major firms (banks, building societies and
life insurance companies) entered into such a voluntary agreement with
the FOS.<br />
<br />
However most independent financial advisers (IFAs) did not, so
the FOS cannot consider a complaint against such a firm.<br />
<br />
Firms who advised investors before 29 April 1988 have certain legal
obligations to their clients. If the firm refuses to consider the
complaint, or refutes any liability, then you may still be able to
pursue a claim through the courts. You may wish to seek legal advice to
see what options you may have.<br />
<br />
If you were advised before 29 April 1988 but took out the policy
after that date you may still be able to refer your complaint to the
Ombudsman, even if the firm did not sign up to the voluntary agreements.
Check with the Ombudsman if you are unsure.<br />
<br />
Related links:<br />
<a href="http://www.moneymadeclear.org.uk/pdfs/endowment_complaints.pdf" target="_blank">Complaints factsheet</a><br />
<a href="http://www.fos.org.uk/" target="_blank">The Financial Ombudsman Service</a><br />
<a href="http://www.fscs.org.uk/" target="_blank">Financial Services Compensation Scheme (FSCS) </a><br />
<br /></div>
<div>
<h3>
I wish to make a complaint about investment
advice I received in 1991, but the firm later stopped selling
investments and did not become authorised by the FSA. Who should I
complain to?</h3>
</div>
<div class="light">
Firstly you should try to complain to the firm (or relevant contacts such as the adviser who sold you the product) in question.<br />
<br />
If you are unhappy with the outcome, you may still be able to refer
your complaint to the FOS. Secondary legislation under FSMA allows the
FOS to consider certain complaints about events before 1 December 2001
(that is before the FOS became the single ombudsman scheme). Whether the
complaint potentially falls within the FOS's jurisdiction will depend
primarily on:<br />
<ol>
<li>whether the firm was subject to a former scheme immediately before 1
December 2001. (broadly a former scheme is a complaints scheme of a
former regulator which is covered by the secondary legislation); and</li>
<li>whether the complaint was covered by that scheme; and</li>
<li>whether you would have been entitled to bring the complaint to the former scheme.</li>
</ol>
Below is a list of former regulators and whether their complaints
scheme is a former scheme. In some situations, a complaint that falls
within a complaints scheme which is not a former scheme may also be
subject to another complaints scheme that is a former scheme. This might
occur, for example, when a regulator ceased or merged with another
regulator. We have noted in the table some situations where this might
occur, but the table is not intended to be exhaustive.<br />
<br />
As you can see, the position is complicated. If you are unsure
whether the FOS can consider a complaint, you should contact the FOS to
check.<br />
<br />
<table border="2" cellpadding="0" cellspacing="0" style="text-align: center; width: 100%;">
<tbody>
<tr>
<td width="34%"><b>Former Regulator</b></td>
<td width="33%"><b>Did the regulator have a complaints scheme which is a 'former scheme'?</b></td>
<td width="33%"><b>Could the complaint fall under another 'former scheme'?</b></td>
</tr>
<tr>
<td width="34%">Personal Investment Authority</td>
<td width="33%">Yes - the PIA Ombudsman Bureau (PIAOB)</td>
<td width="33%">N/A</td>
</tr>
<tr>
<td width="34%">Financial Intermediaries, Managers and Brokers Regulatory Association (FIMBRA)</td>
<td width="33%">No</td>
<td width="33%">Certain complaints may have fallen within PIA's complaints scheme, PIAOB</td>
</tr>
<tr>
<td width="34%">Securities and Investments Board / Financial Services Authority (pre-1 December 2001) (FSA)</td>
<td width="33%">Yes - the FSA scheme</td>
<td width="33%">N/A</td>
</tr>
<tr>
<td width="34%">Investment Management Regulatory Organisation (IMRO)</td>
<td width="33%">Yes - the IMRO Ombudsman scheme</td>
<td width="33%">N/A</td>
</tr>
<tr>
<td width="34%">Insurance Brokers’ Registration Council (IBRC)</td>
<td width="33%">No</td>
<td width="33%">Certain complaints may have fallen within the FSA scheme</td>
</tr>
<tr>
<td width="34%">Securities and Futures Authority (SFA)</td>
<td width="33%">Yes – the SFA’s Complaints Bureau arrangements and Consumer Arbitration Scheme</td>
<td width="33%"></td>
</tr>
</tbody></table>
<br />
If the complaint is outside the FOS's jurisdiction, they cannot
consider it, but you may still attempt to seek redress through the
courts. If you are considering doing so, you may wish to seek legal
advice about what options might be available<i>.</i><br />
<br />
The FSCS may be able to consider a complaint where a firm is judged
to be in default that is unable, or likely to be unable, to meet a claim
against it. If the firm in question has not been, or cannot be, judged
to be in default then the FSCS will not be able to consider the
complaint. Contact the FSCS to see if the firm has been declared in
default</div>
</div>
<br />
<a class="back2top" href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#"></a><br />
<a href="http://www.blogger.com/blogger.g?blogID=3896122" id="faq4" name="faq4"></a><br />
<div class="multiitem promo-main style1 imgleft">
<h2>
Financial Ombudsman Service and the Financial Service Compensation Scheme<br /> </h2>
<div>
<h3>
The firm that sold me the endowment policy has stopped trading – who should I contact?</h3>
</div>
<div class="light">
You can contact the Financial
Services Compensation Scheme (FSCS). The FSCS is a 'fund of last resort'
for consumers who have a claim against a firm that we regulate, but is
unable (or likely to be unable) to pay claims against it, often because
it has stopped trading. <br />
The FSCS is unlikely to be able to help you if the advice was given before 28 August 1988. </div>
<div>
<h3>
What are the FSA/FOS/FSCS relationships and remit concerning mortgage endowment complaints?</h3>
</div>
<div class="light">
The FSA, FOS and the FSCS are separate organisations set up under the Financial Services and Markets Act 2000.<br />
<br />
<span class="bold">FSA:</span>
In terms of the FSA’s responsibilities and relationship with the
Financial Ombudsman Service (FOS), firstly we are responsible for
supervising how authorised firms handle mortgage endowment complaints.
We do this using the rules in our Dispute Resolution Sourcebook (DISP)
which the FOS and FSCS take into account when considering individual
cases. Secondly, we and the FOS (and where appropriate the Financial
Services Compensation Scheme (FSCS)) work closely on endowment-related
issues. Thirdly, we are responsible for ensuring the FOS has adequate
resources to carry out its work. We do this by setting the levy on firms
in respect of FOS activities.<br />
<br />
<span class="bold">FOS:</span>
The FOS deals with individual complaints from consumers against firms
that are regulated by the FSA (or by one of the previous regulators) and
it can require firms to pay compensation. It also offers a wide range
of publications for consumers and firms including technical briefings
which cover mortgage endowments.<br />
<br />
<span class="bold">FSCS:</span>
The FSCS can pay compensation to consumers with claims against
authorised firms that have been declared in default by FSCS – that is
they are financially unable (or likely to be unable) to pay the claim
themselves.<br />
The recently published tripartite guide provides useful information. <br />
Related information:<br />
<a href="http://www.fos.org.uk/" target="_blank">The Financial Ombudsman Service (FOS)</a><br />
<a href="http://www.fscs.org.uk/" target="_blank">Financial Services Compensation Scheme (FSCS) </a><br />
<a href="http://www.financial-ombudsman.org.uk/faq/fsa_fscs_fos_jointleaflet.pdf" target="_blank">Tripartite guide</a><br />
<br /></div>
<div>
<h3>
The FOS has told me my complaint falls outside its jurisdiction – can the FSA help?</h3>
</div>
<div class="light">
The FOS covers complaints about
financial products and services provided in (or from) the United Kingdom
– from insurance and pension plans to bank accounts and investments.
There are some complaints they do not normally deal with, for example
the way an investment has performed.<br />
As the FOS is operationally
independent of the FSA, we cannot intervene in any FOS decision-making
processes or the outcome of any decision made by an adjudicator or
ombudsman.<br />
Related information:<br />
<a href="http://www.fos.org.uk/" target="_blank">The Financial Ombudsman Service (FOS)</a><br />
<br />
<br /></div>
<div>
<h3>
I am not happy with the FOS's decision - what can I do?</h3>
</div>
<div class="light">
The FOS may take account of
requirements in our Dispute Resolution Complaints Handbook (DISP) when
considering individual cases, along with what was considered good
industry practice at the time, and any other relevant facts. In light of
this, we regularly meet the FOS to discuss common policy issues.
However it is operationally independent of the FSA so we cannot, and do
not, influence or intervene in FOS decisions on individual cases.<br />
<br />
If you are unhappy with an adjudicator's decision on a case, you can
refer it to the Ombudsman, whose decision is final. This does not stop
you then seeking redress through the courts, but if you are considering
this you may wish to take legal advice about what options may be
available.<br />
If you are unhappy with the way the FOS has handled
your case – for instance, about what you consider to be unnecessary
delays – you can ask the FOS's Service Review Team to review the case.
If the FOS is then unable to resolve the case, you can refer it to the
Independent Assessor, who considers complaints about the FOS's quality
of service, but not the decisions it makes.<br />
Related information:<br />
<a href="http://www.fos.org.uk/" target="_blank">The Financial Ombudsman Service (FOS)</a><br />
<br />
<br /></div>
<div>
<h3>
How long will the Financial Ombudsman Service (FOS) take to consider and resolve my mortgage endowment complaint?</h3>
</div>
<div class="light">
This may depend on whether you and
the firm both agree, at an early stage, to any recommendation or
informal settlement that FOS might suggest – or whether either you or
the firm request the next, more formal stage of the FOS's process.<br />
<br />
Disputes that involve a formal review and final decision by an ombudsman
– the last stage of the process – take longer than cases settled by
adjudicators making informal recommendations.<br />
The FOS will keep you informed about progress on your case, so you know what is happening with your complaint.<br />
<br />
At the FSA, we have taken several steps to ensure that firms consider
complaints from consumers properly and promptly. This has included us
monitoring firms' complaint-handling processes, and taking action where
standards fail to meet our expectations. This should reduce the extent
to which consumers then need to refer their complaint onto the FOS.<br />
Related information:<br />
<a href="http://www.fos.org.uk/" target="_blank">The Financial Ombudsman Service (FOS)</a><br />
<br /></div>
</div>
<br />
<a class="back2top" href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#"></a><br />
<a href="http://www.blogger.com/blogger.g?blogID=3896122" id="faq5" name="faq5"></a><br />
<div class="multiitem promo-main style1 imgleft">
<h2>
FSA's actions<br /> </h2>
<div>
<h3>
Is the FSA just focusing on certain sectors of the market which sold the product?</h3>
</div>
<div class="light">
We monitor all firms that sold
investment products, including life assurance companies, banks and
building societies, and IFAs; responsibility for any mis-selling lies
with the firm which gave the advice. We also review how firms treat
their customers after selling the policy; this includes ensuring that
firms provide sufficient post-sale information and they deal with any
customer complaints fairly and promptly.</div>
<div>
<h3>
What action is the FSA taking to ensure that
only those policyholders with genuine complaints about the level of
advice initially given are encouraged to pursue matters accordingly?</h3>
</div>
<div class="light">
We have always been careful to
maintain a distinction between mis-selling issues and an investment
simply producing lower returns than expected. We have made it clear in
our consumer publications that having a shortfall does not in itself
mean the firm mis-sold the investment.<br />
<br />
Indeed, the series of
consumer factsheets we have issued since 1999 have not focused solely on
making a complaint. In our consumer communications, such as the 'Act
Now' campaign (2003), we emphasised that consumers should address the
issue, equip themselves with the facts, and seek appropriate advice if
necessary. The 'Act Now' campaign encouraged investors to take
pro-active steps to review a potential shortfall. Over 1 million of the
2.2 million households with an endowment-linked mortgage and a potential
shortfall have now taken action to deal with the shortfall, such as
restructuring their mortgage, endowment policy or savings.<br />
<br />
We do
not presume that all the consumers who complain have grounds to prove
they have been mis-sold. However, it is important that consumers have
the right to complain and seek redress where appropriate. Further, we
believe the opportunity to use a dispute resolution mechanism that is
free to consumers mutually benefits firms and consumers by improving
confidence in financial services.<br />
<br />
Related links:<br />
<a href="http://www.fsa.gov.uk/pubs/other/me_progress_report.pdf" target="_blank">July 2005 Progress report</a> </div>
<div>
<h3>
Is the FSA looking at firms' investment strategies as well as mis-selling?</h3>
</div>
<div class="light">
Whether a policy is suitable
relates to the advice given and whether it was appropriate for that
individual. It might have been suitable but not have performed as well
as expected - poor investment performance is not in itself an indication
of mis-selling.<br />
<br />
Principles 2 and 9 of our Principles for Businesses set out that:<br />
<ul>
<li>A firm must conduct its business with due skill, care and diligence.</li>
<li>A firm must take reasonable care to ensure the suitability of its
advice and discretionary decisions for any customer who is entitled to
rely upon its judgement.</li>
</ul>
Though investment strategies are mainly a matter for firms'
commercial judgement, they are constrained by the capital and other
prudential requirements we impose on firms. In the last few years we
have strengthened the obligations and independence of actuaries within
insurance firms to test and challenge management's investment
strategies, and required insurance firms to set out the Principles and
Practices of Financial Management (PPFM) which their investment and
distribution strategies will follow.<br />
<br />
We also require insurance companies to provide extra information to
new clients so they can better understand how decisions will be taken on
distributing profits and declaring bonuses. Since the beginning of
2006, we have required firms to give all policyholders a 'consumer
friendly' version of their Principles and Practices of Financial
Management (PPFM). The PPFM should cover the significant aspects of the
firm's investment strategy. Its objective is to give consumers a better
understanding of the way firms manage their with-profits business. This
document particularly aims to improve the degree of understanding, and
transparency of the 'smoothing' of with-profits policies.<br />
<br />
We also have detailed point-of-sales rules which, among other things,
require advisers to explain the potential risk of the investment they
are recommending. We require firms to give Key Features documents to
investors buying life policies, such as an endowment. This document
explains in detail the aims of the policy, the sort of assets the
company would invest in, and the potential risks associated with that
investment, as well as other aspects such as costs and charges.<br />
<br />
We are also responsible for ensuring that consumers receive adequate
information on which to base financial decisions. A component of this is
ensuring that firms pay due regard to the information needs of their
customers and communicate with them in a way that is clear, fair and not
misleading. This extends to ensuring that investors are aware of the
risks of products, including how their money will be invested.<br />
<br />
Related information:<br />
<a href="http://fsahandbook.info/FSA/html/handbook/PRIN" target="_blank">Principles of Business</a><br />
<br /></div>
<div>
<h3>
Why didn't the FSA conduct an industry-wide review?</h3>
</div>
<div class="light">
We have the power – under the
Financial Services and Markets Act 2000 (FSMA), which sets our powers
and responsibilities – to undertake an industry-wide review in response
to a perceived risk. However, we are required to act proportionally and
appropriately when applying our regulatory tools, and to ensure that the
projected costs of any action do not outweigh the benefits.<br />
<br />
We decided not to undertake an industry-wide review of alleged
endowment mis-selling, as we thought such a review would be needlessly
expensive for firms and would deliver little additional benefit for
consumers. The detailed reasoning for the decision can be found in
chapter 4 of our progress report on mortgage endowments (October 2000).<br />
<br />
In line with our proportionate, risk-based approach, we have adopted a
targeted supervision policy. As we explained in our 2006 progress
report, since July 2005 we have required 52 of the largest firms in the
mortgage endowment market to provide us with greater levels of detail on
a more regular basis on specialised mortgage endowment complaints data.
From this we have required some firms to take remedial action to
improve the quality of their complaint handling, including reviewing
previously rejected complaints. We have also established that most firms
have adequate contingency plans in place to handle surges in complaints
volumes and required those that haven't to review and strengthen their
existing arrangements.<br />
<br />
Substantial progress has been made in terms of ensuring that firms
handle complaints properly. We are conscious that endowments will remain
a matter of real importance to consumers over the coming year as
policies mature and individuals deal with shortfalls, and we stress that
firms should not infer that we no longer see this subject as important.
We will continue to monitor the market to ensure that firms are
continuing to treat customers fairly. We will not hesitate to take
action if firms and their senior management fail to do so. Enforcement
action still remains an option for any firm that falls short of our
requirements.<br />
<br />
Related information:<br />
<a href="http://www.fsa.gov.uk/pubs/other/me_standards.pdf">Progress report December 2006</a> [PDF]<br />
<a href="http://www.fsa.gov.uk/pubs/other/ME_Progress_Report.pdf" target="_blank">Progress report July 2005</a> [PDF]<br />
<a href="http://www.fsa.gov.uk/pubs/policy/mortgage_endow.pdf">October 2000 progress report</a></div>
</div>
<br />
<a class="back2top" href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#"></a><br />
<a href="http://www.blogger.com/blogger.g?blogID=3896122" id="faq6" name="faq6"></a><br />
<div class="multiitem promo-main style1 imgleft">
<h2>
Projections between 1988 and 1994 including the 'LAUTRO charges' issue<br /> </h2>
<div>
<h3>
Between 1988 and 1994, quotations were based on
assumptions laid down by the regulator for both future rates of return
and the charges/expenses to be used in the projections.</h3>
</div>
<div class="light">
The premium charged was assessed
by the company using its own assumptions, including those for future
rates of return, charges and expenses.<br />
<br />
Before April 1988, the practice of firms offering mortgage endowments
and other 'with profits' policies was to assume a continuation of their
previous bonus rates. This approach was reviewed and considered
unsatisfactory, as it did not produce reasonable figures in times of
changing economic conditions. Further, companies tended to use
projections for competitive purposes.<br />
<br />
From July 1988, projections became subject to regulation, and
prescribed rates were outlined by LAUTRO. The regulator set standardised
rates for growth projection, and standardised charges / expenses to be
used in illustration of possible return. The main reason for this is
that most with profit policies did not have fully disclosed charges but
charged expenses against the with-profit funds. Projections had to state
that these were possible returns using standardised charges. Actual
charges would have been disclosed in the product particulars.<br />
<br />
The expenses assumptions that LAUTRO stipulated were often lower than
the firms' actual 'own charges' or expenses.. This had two effects:<br />
<ul>
<li>Where LAUTRO charges were lower than firms' actual charges, the
performance required to actually achieve the sum assured / target value
would need to be higher than that illustrated.</li>
<li>Some firms used LAUTRO charges to set premiums. Given that actual
deductions would have been far higher, this produced an artificially low
premium, and required investments to significantly outperform the
projections.</li>
</ul>
We identified the firms who had adopted the second effect and checked
if a contractual warranty had been established. Where firms recognised
such a warranty they took action on an individual basis to ensure they
offered appropriate redress.<br />
<br />
By 1995, a basis had been developed to assess the expenses of with
profits policies and from that time, it was a requirement for firms to
use 'own charges' in projections.<br />
<br /></div>
</div>
<a class="back2top" href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#"></a><br />
<a href="http://www.blogger.com/blogger.g?blogID=3896122" id="faq7" name="faq7"></a><br />
<div class="multiitem promo-main style1 imgleft">
<h2>
Projection rates<br /> </h2>
<div>
<h3>
Some companies are quoting rates considerably lower (or higher) than 4%, 6% and 8%. Why is this?</h3>
</div>
<div class="light">
Projections illustrating the
likely performance of investment policies have been subject to rules set
out by regulators since 1988. The purpose of projections is to inform
consumers of possible returns from the policies, given certain growth
assumptions, and taking into account eligible charges or expenses.<br />
<br />
These are kept under review and were reduced to the current levels in
2000. However, these rates assume material investment in equity type
assets. Where firms identify that their assets have a lower investment
potential, they should use lower rates of return. We reminded firms of
this in our Dear CEO letter of June 2003.</div>
</div>
<br />
<a class="back2top" href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#"></a><br />
<a href="http://www.blogger.com/blogger.g?blogID=3896122" id="faq8" name="faq8"></a><br />
<div class="multiitem promo-main style1 imgleft">
<h2>
Scottish solicitors<br /> </h2>
<div>
<h3>
I was sold an endowment mortgage by a firm of solicitors based in Scotland - who should I contact?</h3>
</div>
<div class="light">
Complaints about the sale of
mortgage endowment by a firm of solicitors in Scotland should be
directed to the firm involved in the first instance. If the complaint is
not resolved satisfactorily and advice was given between 1 August 1988
and 30 November 2001, you should refer your complaint to the Law Society
of Scotland. Complaints about advice given before 1 August 1988 do not
fall within the scope of the Law Society of Scotland, as the investment
business rules allowing the Society to investigate a complaint against a
member were not in force until then.<br />
<br />
The extent of the powers the Law Society of Scotland could exercise
over its members has varied over the period in question, so the date the
solicitor gave the advice is significant in establishing what the
Society can do about the complaint.<br />
<br />
Since 1 December 2001, solicitors offering financial advice have been
regulated by the FSA, and a complaint relating to a solicitor allegedly
mis-selling an endowment from this date can be referred to the FOS if
you are unhappy with the firm's decision.<br />
<br />
You should refer to the FSA Consumer website for more details
including information on solicitors in England, Wales and Northern
Ireland.<br />
Related information:<br />
<a href="http://www.fsa.gov.uk/pages/consumerinformation/index.shtml">FSA consumer information</a><br />
<br /></div>
</div>
<a class="back2top" href="http://www.fsa.gov.uk/consumerinformation/product_news/mortgages/mortgage_endowments/faqs#"></a><br />
<a href="http://www.blogger.com/blogger.g?blogID=3896122" id="faq9" name="faq9"></a><br />
<h2>
Time-barring<br /> </h2>
<div>
<h3>
I have been told my complaint has been time-barred. What does this mean and what can I do?</h3>
</div>
<div class="light">
You can only make a complaint
about the sale of your endowment policy within certain time limits. If
you complain after these time limits a firm can usually reject your
complaint as being out of time – known as ‘time-barring’. It can also
ask the Ombudsman to reject the complaint on similar grounds. For
example, your complaint can be rejected if: <br />
<ul type="disc">
<li>you
receive a letter warning of a high risk of a shortfall; then receive a
subsequent letter giving you at least six months’ notice of a ‘final
date’ by which you have to complain; and </li>
<li>that ‘final date’ is
at least three years after the date you received the first letter (and
at least six years since you bought the policy); but </li>
<li>you complain only after that ‘final date’. </li>
</ul>
Even if the firm rejects your complaint as being out of time, you can still refer your complaint to the Ombudsman if you think: <br />
<ul type="disc">
<li>there are exceptional circumstances; or </li>
<li>the time bar was wrongly applied; or </li>
<li>the time bar was unfair. </li>
</ul>
You should do this within six months of the firm sending you a ‘final response’ letter. <br />
Related information:<br />
<a href="http://www.moneymadeclear.org.uk/pdfs/endowment_complaints.pdf" target="_blank">Complaints factsheet</a><br />
<a href="http://www.fsa.gov.uk/pubs/other/time_barring.pdf" target="_blank">Timebarring review</a> <br />
<br /></div>
<div>
<h3>
I never got a warning of a 'final date' by which to complain, but have been time-barred by the firm anyway – is that right?</h3>
</div>
<div class="light">
It can be, because our rules changed. So, if:<br />
<ul>
<li>you received a letter warning of a high risk of a shortfall before 1 June 2001; and</li>
<li>you received a second or similar warning before 1 December 2003;</li>
</ul>
then the time limit for you to make a complaint ended at the latest of:<br />
<ul>
<li>six years from when you bought your policy; or</li>
<li>three years from the date you received the first warning of a high risk of shortfall; or</li>
<li>six months from the date you received the second or similar warning.</li>
</ul>
If
you made your complaint after the latest of these dates, your complaint
is likely to be time-barred, even if you got no warning of a 'final
date'. </div>
<div>
<h3>
Why does the FSA allow consumers to refer
complaints to the FOS, which would otherwise be time-barred by the 15
year 'Long Stop' provision in the Limitation Act (1980)?</h3>
</div>
The Limitation Act 1980 applies
to claims made through the courts. However, we were required by the
Financial Services and Markets Act 2000 (FSMA), to set time limits for
the referral of complaints to the FOS. The time limits we specified in
our rules were driven by policy concerns about the intended purpose and
operation of the FOS, and the needs of consumers and firms within
financial services markets, and did not include any 15 year long stop.
We consulted on these rules during 2000/01.<br />
<br />
We recently set out the position in a <a href="http://www.fsa.gov.uk/pubs/other/letter_ifadu.pdf" target="_blank">letter to the IFA Defence Union</a>. The relevant extract is as follows:<br />
<br />
"in
some quarters, there is surprise that the Ombudsman is not subject to
the 15 year long-stop limit that governs court claims in negligence. The
Policy Statement [PS 158] ……covered this ground, noting that there was
no requirement for the rules to follow the time limits for court claims
(although, as a matter of policy, they generally do). The Statement also
explained that, having regard to the long-term nature of retail
financial services products (such as pensions and endowments), "we do
not consider it is in the interests of consumers to rule out the
possibility of complaints being dealt with outside the 15 year period
that would apply to court cases. Nor do we consider this necessary to
prevent hardship to firms".Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-53280987672455925792012-04-11T07:52:00.002-07:002012-04-11T07:52:48.175-07:00The Endowment TimebombLegal & General (L&G) have warned that there will be a peak in with profits (a misnomer if ever there was one) mortgage endowment maturities in 2013, with most of them showing a shortfall.<br />
<br />
Legal & General state that (based on its figures) 86% of policyholders are in the red, and that 46,000 L&G policies will mature next year.<br />
<br />
Given that many people have not put aside enough money to meet these shortfalls, next year will pose the risk of a severe destabilisation of the housing market.Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com2tag:blogger.com,1999:blog-3896122.post-29654602114879781882012-02-24T04:49:00.002-08:002012-02-24T04:49:37.441-08:00Aviva Policy Holders Expect ShortfallAviva looks set to let down around 71,000 of their endowment policy holders this year, as it has cut its bonuses thus "gifting" 70,000 policy holders whose General Accident and Norwich Union policies (both part of Aviva) mature this year with a shortfall.<br />
<br />
<br />Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com10tag:blogger.com,1999:blog-3896122.post-5777938893239271022011-12-15T03:08:00.000-08:002011-12-15T03:08:11.755-08:00Irony<div class="article_summary">
<a href="http://www.ifaonline.co.uk/ifaonline/news/2132684/mas-exec-presided-gbp300m-lloyds-mis-selling-scandal" target="_blank">IFAonline</a> reports that John Spence, the newly-appointed non-executive director of the Money Advice Service (MAS), was in charge of managing risk at Lloyds TSB during the height of its endowment mis-selling scandal. </div>
<div class="article_summary">
<br />
This is somewhat ironic, as per the <a href="http://moneyadviceservice.org.uk/default.aspx" target="_blank">MAS site</a>:<br />
<br />
"<i><span class="carheader" id="ctl00_masBodyPlaceHolder_ucCarousel_defaultHeading">A wealth of information and advice</span>
If you’re looking for free, clear, unbiased money advice, you’re in the right place.</i><br />
<br />
<i><strong>The Money Advice Service is here to help</strong> everyone manage their money better. We do this by giving clear, unbiased money advice to help people make informed choices. </i><br />
<br />
<i>
</i><i><strong>We believe</strong> that the right money advice can
make a difference to people’s lives. And when people take steps to
manage their money better, they can live better too.</i><br />
<br />
<i>
</i><i><strong>The Money Advice Service is a free, independent service</strong>. We were set up by government and are funded by a levy on the financial services industry.</i><br />
<br />
<i>
</i><i>Because we’re not selling anything ourselves, or for anyone else, you can trust our advice</i>."<br />
<br />
</div>
Spence was head of risk at Lloyds when it was fined £300M for mis-selling endowment policies and precipice bonds in 2003.<br />
<br />
Lloyds was found to have sold the products inappropriately over the ten years preceding 2003.Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-66282418292722072202011-11-07T02:53:00.000-08:002011-11-07T02:53:56.405-08:00Delaying Tactics?My thanks to the loyal reader who dropped me a note (see below) about possible delaying tactics used by some endowment companies.<br />
<br />
Has anyone experienced delays in receiving payments from endowment companies for policies that have matured?<br />
<br />
I have redacted the names of the companies to which he has referred. <br />
<br />
"<i>I took out a £30K endowment with **** in 1987 and after 25 years it matured on August the 1st just under £32k not the promised - hinted at- confident 40-50k but at least its over 30k. </i><br />
<br />
<i>My issue is getting them to pay me - are you aware of a delaying tactic or policy on holding off on paying people? </i><br />
<br />
<i>They claim its the *** (another company) but I feel like I am just getting the run around?</i>"Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-20727670067417738732011-10-04T02:45:00.000-07:002011-10-04T02:45:48.835-07:00A Crock of ShiteHow "nice", Legal & General (L&G) wrote to me yesterday advising me that one of my "with profits" (a misnomer if ever there was one) endowment polices that I have with them will experience a shortfall.<br />
<br />
The policy, which was taken out in 1991, will mature next year.<br />
<br />
Its target was £39,700.<br />
<br />
The expected shortfall, depending on whether the investment return is between 4%-8% (fat chance in today's markets!), is expected to be between £13K and £14K.<br />
<br />
That's a shortfall of between 32%-35%!<br />
<br />
Given that the whole point of these rip off policies was to pay off a mortgage debt, I am less than "impressed" with the performance of this product.<br />
<br />
The good news is that L&G make a nice little earner from management charges for "manging" this crock of shite.<br />
<br />
They even suggest, as one possible solution for making up the shortfall, that I extend the term or top it up!!!!!!!!!!!!! <br />
<br />
Let us not forget that the purpose of these shite products was to pay
off mortgage debts, they have failed.<br />
<br />
<b>Therefore the products are faulty</b>.<br />
<br />
I am amazed that no one has yet brought a class action against the companies who "manage" these failed products.<br />
<br />
If there are any law companies out there who want to try a class action, feel free to contact me. <br />
<br />
<br />Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com1tag:blogger.com,1999:blog-3896122.post-38371233211931428042011-06-08T03:42:00.000-07:002011-06-08T03:50:22.739-07:00The £300BN With Profits ScandalThe <a href="http://www.telegraph.co.uk/finance/personalfinance/investing/8561515/The-billions-of-pounds-sitting-in-these-underperforming-dead-end-funds-is-the-next-mis-selling-scandal-the-FSA-should-tackle.html" target="_blank">Telegraph</a> reports that there is over £330BN sitting in the now discredited with profits (a misnomer if ever there was one) investment funds.<br /><br />Investors were duped into putting money into these funds on the false promise of high returns that would pay pensions, cover mortgages and provide a nest egg.<br /><br />Money Management claim that these useless funds have grown by an average of 1.7% per annum over the last 10 years. Higher returns would have been achievable simply by putting the money into a savings account.<br /><br />Those with money in these useless and underperforming funds are, in effect, trapped as the exit fees are extortionate.Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-3114176765541322372011-05-27T03:08:00.000-07:002011-05-27T03:09:59.183-07:00Off AirApologies for being off air for a couple of weeks. However, there were technical problems at Blogger which caused the temporary closure of this site.Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-2906799848232974482011-03-30T03:00:00.000-07:002011-03-30T03:07:35.090-07:00Shortfalls For Royal London and Scottish Life<a href="http://www.thisismoney.co.uk/mortgages-and-homes/endowments/article.html?in_article_id=526467&in_page_id=55&position=moretopstories" target="_blank">This Is Money</a> reports that with-profits (a misleading description if ever there was one) mortgage endowments with Royal London Mutual and Scottish Life will face a shortfall when their policies mature. <br /><br />Hapless holders of 25 year £50 per month with-profits policies from Royal London Mutual will face a fall on policies maturing this year of 3.3%, compared with the previous year.<br /><br />Scottish Life, which is part of Royal London Mutual, offers a worse return (4% down).<br /><br />95% of all mortgage endowment policyholders at Scottish Life will face a shortfall, 53% of those with Royal London. <br /><br />Lousy results from a lousy product.Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-64700862549872766602011-03-17T04:22:00.000-07:002011-03-17T04:27:33.870-07:00Legal and General Increase DividendThe <a href="http://www.ft.com/cms/s/0/0f208482-5074-11e0-9e89-00144feab49a,s01=1.html#axzz1Gr4AoL4g" target="_blank">FT</a> reports that L&G are rewarding its shareholders:<br /><br />"<em>Legal and General has increased its full-year dividend by almost a quarter in spite of the life and pensions group missing profit estimates.<br /><br />The UK’s fourth-biggest insurer by market value blamed the 9.6 per cent decline in IFRS operating profit to £1bn – worse than the 5 per cent fall expected by the City – on December’s cold weather, poor trading in the Netherlands and rising annuity reserves.<br /><br />But Tim Breedon, chief executive, said the figures released on Thursday “demonstrate that we’ve been able to grow the business in 2010 and at the same time generate more cash with which to pay increasing dividends”.<br /><br />He added: “All L&G’s businesses – risk, savings, LGIM and international – have contributed to today’s strong numbers by writing more new business at lower cost, growing assets under management and expanding distribution.”<br /><br />L&G increased its dividend by 24 per cent to 4.75p a share, beating analyst estimates of 4.5p, and following the example set by Prudential last week when it boosted its pay-out by 20 per cent.</em>"<br /><br />That's nice for the shareholders, let us trust that L&G's largess is also reflected in its with profits bonuses this year on its endowment policies.Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-65116759111132063242011-03-07T03:13:00.000-08:002011-03-07T03:26:26.303-08:00L&G Endowments Above Target?Legal & General recently announced that mortgage endowment policies maturing this year will pay out more than was originally predicted when the policies were taken out 25 years ago.<br /><br />Seemingly, if L&G's projections are correct, someone who paid £50 a month into one of the policies for 25 years will receive £34,750 (£372 above the target amount).<br /><br />This optimistic announcement contrasts somewhat sharply with the September client mailing carried out by L&G, in which 81% of its mortgage endowment customers received red letters.<br /><br />Don't crack open the champagne, until you receive your payout.Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com1tag:blogger.com,1999:blog-3896122.post-19707278949136927832011-02-25T08:44:00.000-08:002011-02-25T08:49:15.811-08:00FSA Finally Acts - MaybeThe Financial Services Authority (FSA) has finally published its review into rules on with-profits investments, and announced its intention to toughen up its rules. <br /><br />The FSA has finally admitted that with-profits policyholders "<em>are not always getting the fair treatment they deserve</em>".<br /><br /><strong>Really?!</strong><br /><br />The FSA has warned insurers that they "<em>will continue to supervise the sector in an intensive way</em>".<br /><br />The new proposals, which will now be consulted on, cover: <br /><br /><strong>MVRs</strong>: Firms will be restricted in their ability to impose "market value reductions"<br />(MVRs) - the exit penalties you face when you cash in your policy early or move your money to a different company. Companies will not be able to arbitrarily impose penalties because they want to stop policyholders leaving, and will only be allowed to impose penalties to ensure policyholders receive a fair reflection of the value of their policy.<br /><br /><strong>New business</strong>: The company will need to demonstrate that writing new business into the fund does not have an adverse effect on existing policyholders. This will tighten up the rules so firms will not be able to offer 'loss leaders' which erode the amount in the with-profits fund for existing policyholders. <br /><br /><strong>Charges</strong>: Firms will not be allowed to use servicing companies to extract extra money in charges from with-profits policyholders by including a profit margin on top of the actual cost. <br /><br /><strong>Excess surplus</strong>: Firms will be required to have a plan to distribute any excess surplus cash fairly to policyholders, particularly if a company suffers a big fall in the amount of new business it is doing.<br /><br /><strong>With-profits Committees</strong>: Firms must provide a clear distinction between the recommendations of the with-profits committee and what action the firm intends to take in response, and will be required to notify the regulator when it overrules the advice of the with-profits committee.<br /><br />All very nice, but too little too late for those hapless house owners ripped off by the endowment mortgage scandal of the 80's and 90's.Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com1tag:blogger.com,1999:blog-3896122.post-72698783836127698732011-01-31T02:47:00.000-08:002011-01-31T02:48:01.116-08:00Advert<strong>UK EXPATS</strong>: Reduce tax on UK Pensions<br /><strong>HMRC QROPS provider</strong>. Unlock your UK pension and access a 25% lump sum today.<br /><br />Quote ID code "ABC" when <a href="http://bangkoktimesonline.com/en/articles/qrops-guide" target="_blank">contacting a QROPS specialist</a>.Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-62518404319093824262011-01-27T04:14:00.001-08:002012-11-26T02:56:25.736-08:00A Surplus!<strong>A Surplus!</strong><br /><br />Ian Cowie, of the <a href="http://www.telegraph.co.uk/finance/personalfinance/8274690/60000-reasons-why-I-love-my-endowment.html" target="_blank">Telegraph</a>, writes about his Legal and General endowment policy:<br /><br />"<em>..my 25-year with-profits endowment matured last month and paid out 33pc more than the target value. <br /><br />Since you ask, the maturity forecast was £45,000 but the actual payout was a bit above £60,000...</em>"<br /><br />How nice for him!<br /><br />My L&G policies both mature next year, and are forecast to make large losses.<br /><br />How can there be such a difference between his L&G policy and mine, given that the maturity date is less than two years apart?Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0tag:blogger.com,1999:blog-3896122.post-40597357599062519632009-11-27T04:49:00.000-08:002009-11-27T04:49:10.949-08:00ABI Displays Empathy<b>ABI Displays Empathy</b><br />
<br />
In a rare display of public empathy, the Association of British Insurers (ABI) says that life companies must do more to design products with consumer needs in mind.<br />
<br />
ABI head of distribution policy, Peter Jolly, said that life companies have failed to properly engage with consumers.<br />
<br />
"<i>I guess the evidence of that is we need to sell them. If we had products that people really wanted they would come and buy them and most of the products in our industry are designed to be sold, rather than bought. <br />
<br />
And the industry's failure to develop a new regular premium savings product is probably evidence of that. As the endowment market tailed off we don't really have a replacement</i>."<br />
<br />
LOL!<br />
<br />
The endowment market "tailed off" because it was a lousy product, not fit for purpose and badly managed.Ken Frosthttp://www.blogger.com/profile/13568488818950912374noreply@blogger.com0