Legal & General Offer Good News
In a rarity for this site, I am again pleased to be able to write that a life assurance company is offering their long suffering endowment policy holders some good news.
Legal & General announced last week that their with profits fund experienced a 19% investment return during 2005. This meant that L&G could increase terminal bonuses for the majority of its 900,000 with-profits savers.
Additionally, L&G said that it had reduced the penalties policyholders had to pay if they cashed in their policy early.
The bonuses would vary from policy to policy, but people with a conventional endowment policy would receive 0.75% on their sum assured and 1.25% on bonuses they had previously been paid.
Someone with a 25-year low-cost mortgage endowment policy into which they have paid £50 a month will receive a final payout of £45,769, compared with £42,743 if the policy had matured a year earlier.
L&G claim that the strong investment returns seen during the year, were likely to reduce the number of people with endowment mortgage shortfalls.
In 2004, 55% of their policyholders were warned that their policy would not be large enough to repay their mortgage.
This "good" news from L&G, I would remind you that these policies were designed to pay off the mortgage, again calls into question the skills of some of the other life assurance companies who have announced cuts this year.
Tuesday, February 28, 2006
Wednesday, February 22, 2006
Good News From The Pru
Good News From The Pru
Those of you with endowment policies, managed by the Prudential, have something to celebrate.
They have announced a 20% return on their with-profits fund, after increasing the equity backing of the £83BN fund from 64% to 74%.
The rise of 17%, after tax, has been passed on to their customers.
Endowment policies rose by over 16%, and maturing policy pay-outs were higher than a year ago.
Ned Cazalet, an industry commentator, said that the performance was "head and shoulders above everybody else a 45% cumulative return over the last six years compared to an average of 20% for the rest".
During 2005, whilst the Pru was adding to its equity backing (equities plus property), Standard Life (for example) was reducing the equity backing of its fund from 50% to 45%.
Standard Life then went on to whine and bleat earlier this month that the reason for their dismal performance was because the FTSE-100 had fallen from 6930 six years ago. Had they been more flexible and better organised they could have taken advantage of the rising market, just as the Pru did.
Almost all of the Prudential's maturing endowments paid off their mortgages last year, and the number of "red" policies off track has dropped from 65% to 16%.
How many other endowments can claim that?
This good performance by the Pru raises some very uncomfortable issues for many of the other life assurance companies, that have been performing dismally:
Those of you with endowment policies, managed by the Prudential, have something to celebrate.
They have announced a 20% return on their with-profits fund, after increasing the equity backing of the £83BN fund from 64% to 74%.
The rise of 17%, after tax, has been passed on to their customers.
Endowment policies rose by over 16%, and maturing policy pay-outs were higher than a year ago.
Ned Cazalet, an industry commentator, said that the performance was "head and shoulders above everybody else a 45% cumulative return over the last six years compared to an average of 20% for the rest".
During 2005, whilst the Pru was adding to its equity backing (equities plus property), Standard Life (for example) was reducing the equity backing of its fund from 50% to 45%.
Standard Life then went on to whine and bleat earlier this month that the reason for their dismal performance was because the FTSE-100 had fallen from 6930 six years ago. Had they been more flexible and better organised they could have taken advantage of the rising market, just as the Pru did.
Almost all of the Prudential's maturing endowments paid off their mortgages last year, and the number of "red" policies off track has dropped from 65% to 16%.
How many other endowments can claim that?
This good performance by the Pru raises some very uncomfortable issues for many of the other life assurance companies, that have been performing dismally:
- Why have many of the others performed so badly?
- Why do they continue to blame the markets, when it is clear that it is the management of these funds that is to blame?
- Why do they continue to pay their senior staff bonuses, when their policies are failing their customers?
- Why do they make "management" charges on these failing and useless endowment policies, when they are clearly not capable of running them effectively?
Monday, February 06, 2006
Standard Life Fails To Deliver
Standard Life Fails To Deliver
More bad news for people holding useless and underperforming endowment mortages.
Standard Life have warned their 2 million with-profits customers that policies maturing this month will pay out on average 5% less than before, on comparable policies; this is despite the fact that share prices are booming.
The annual bonus rates on conventional with-profits policies are unchanged, but terminal bonuses are down.
The maturity value of a Standard Life 50 a month, 25 year mortgage endowment policy is now £40,459 this month, that is a massive fall of 18% when compared to the same policy of £49,511 in February last year.
John Gill, Standard's UK life and pensions managing director finance, is quoted as saying:
"By smoothing returns, we have protected policyholders from the full drop in asset values between 2000 and 2002."
Others are not taken in by this pr hype.
Clive Scott-Hopkins, from independent financial advisers Towry Law, is quoted as saying:
"Standard Life is obviously losing its competitive edge with this very poor result. The Norwich Union typical endowment payout last month at £50,295 was 25% higher than these results."
Standard Life sold £7BN of equities in 2004 after guidance from the Financial Services Authority on "strengthening" its financial reserves.
The result being that it now unable to take advantage, or rather its hapless endowment policy holders are unable to take advantage, of the booming stock market.
Given the fact that other insurers have performed better than this (even if their endowment policy holders are also out of pocket), I would suggest that the holders of Standard Life policies should be considering asking some very hard questions indeed about the quality of management of their funds.
Indeed they may laso like to consider aksing some hard questions of the FSA, as to why it gave such absurd advice.
More bad news for people holding useless and underperforming endowment mortages.
Standard Life have warned their 2 million with-profits customers that policies maturing this month will pay out on average 5% less than before, on comparable policies; this is despite the fact that share prices are booming.
The annual bonus rates on conventional with-profits policies are unchanged, but terminal bonuses are down.
The maturity value of a Standard Life 50 a month, 25 year mortgage endowment policy is now £40,459 this month, that is a massive fall of 18% when compared to the same policy of £49,511 in February last year.
John Gill, Standard's UK life and pensions managing director finance, is quoted as saying:
"By smoothing returns, we have protected policyholders from the full drop in asset values between 2000 and 2002."
Others are not taken in by this pr hype.
Clive Scott-Hopkins, from independent financial advisers Towry Law, is quoted as saying:
"Standard Life is obviously losing its competitive edge with this very poor result. The Norwich Union typical endowment payout last month at £50,295 was 25% higher than these results."
Standard Life sold £7BN of equities in 2004 after guidance from the Financial Services Authority on "strengthening" its financial reserves.
The result being that it now unable to take advantage, or rather its hapless endowment policy holders are unable to take advantage, of the booming stock market.
Given the fact that other insurers have performed better than this (even if their endowment policy holders are also out of pocket), I would suggest that the holders of Standard Life policies should be considering asking some very hard questions indeed about the quality of management of their funds.
Indeed they may laso like to consider aksing some hard questions of the FSA, as to why it gave such absurd advice.
Wednesday, February 01, 2006
The Financial Services Compensation Scheme Online Claim
The Financial Services Compensation Scheme Online Claim
The Financial Services Compensation Scheme (FSCS) has launched an online service today, to help people who think they may have been mis-sold an endowment policy decide whether they have a claim that FSCS may be able to help with.
FSCS is the UK's statutory fund of last resort for customers of financial services firms.
The FSCS can pay compensation to consumers if a financial services firm is unable, or likely to be unable, to pay claims against it.
The service is free to consumers.
The new online questionnaire is available on the FSCS website, www.fscs.org.uk.
It is designed to help speed up response times for consumers. It will help people determine whether FSCS may be able to help with their endowment complaint, and will automatically generate an application form for those who may have a claim.
Loretta Minghella, FSCS chief executive says:
"FSCS plays a vital role in protecting consumers and maintaining confidence in the industry.
Without our help thousands of consumers would have nowhere to turn. Since we became operational on 1 December 2001, FSCS has paid consumers over £650M in compensation.
Over the past couple of years endowment claims have been received at unprecedented levels, way beyond our expectations.
The processes we are putting in place should ensure a faster response for consumers and help us to deal with their enquiries more quickly."
The majority of new investment claims received by FSCS over the past couple of years relate to mortgage endowment claims.
It is expecting to receive 22,000 new endowment claims in the financial year 2005/06, and a further 26,000 in 2006/07.
This compares to just under 9,000 new endowment claims received in 2004/05.
Whether the FSCS will be able to handle this extra workload remains to be seen.
The solution, as I keep reminding you all, is for the life assurance industry to underwrite these useless underperforming products.
The Financial Services Compensation Scheme (FSCS) has launched an online service today, to help people who think they may have been mis-sold an endowment policy decide whether they have a claim that FSCS may be able to help with.
FSCS is the UK's statutory fund of last resort for customers of financial services firms.
The FSCS can pay compensation to consumers if a financial services firm is unable, or likely to be unable, to pay claims against it.
The service is free to consumers.
The new online questionnaire is available on the FSCS website, www.fscs.org.uk.
It is designed to help speed up response times for consumers. It will help people determine whether FSCS may be able to help with their endowment complaint, and will automatically generate an application form for those who may have a claim.
Loretta Minghella, FSCS chief executive says:
"FSCS plays a vital role in protecting consumers and maintaining confidence in the industry.
Without our help thousands of consumers would have nowhere to turn. Since we became operational on 1 December 2001, FSCS has paid consumers over £650M in compensation.
Over the past couple of years endowment claims have been received at unprecedented levels, way beyond our expectations.
The processes we are putting in place should ensure a faster response for consumers and help us to deal with their enquiries more quickly."
The majority of new investment claims received by FSCS over the past couple of years relate to mortgage endowment claims.
It is expecting to receive 22,000 new endowment claims in the financial year 2005/06, and a further 26,000 in 2006/07.
This compares to just under 9,000 new endowment claims received in 2004/05.
Whether the FSCS will be able to handle this extra workload remains to be seen.
The solution, as I keep reminding you all, is for the life assurance industry to underwrite these useless underperforming products.
Monday, January 30, 2006
Guardian Assurance Fined
Guardian Assurance Fined
Guardian Assurance was fined £750K last week by the Financial Services Authority (FSA), for its poor complaints handling procedures over this period.
The FSA said that the numbers of complaints made to Guardian about failed endowment policies, which were being rejected, rose from 29% to 77% after the company introduced new complaints handling procedures.
Guardian will now contact the 5,600 customers whose complaints were rejected during this period.
The company has also set up a helpline for customers with concerns, and said it welcomes their questions.
Ring 0845 701 0210 to speak to them.
Those of you who have managed to extract compensation from Guardian should revisit that comepnesation, and see if the amount is actually enough.
All of this extra expense, damage to reputation and hassle could be avoided if the life assurance firms finally bit the bullet and agreed to underwrite these useless and failing policies.
Guardian Assurance was fined £750K last week by the Financial Services Authority (FSA), for its poor complaints handling procedures over this period.
The FSA said that the numbers of complaints made to Guardian about failed endowment policies, which were being rejected, rose from 29% to 77% after the company introduced new complaints handling procedures.
Guardian will now contact the 5,600 customers whose complaints were rejected during this period.
The company has also set up a helpline for customers with concerns, and said it welcomes their questions.
Ring 0845 701 0210 to speak to them.
Those of you who have managed to extract compensation from Guardian should revisit that comepnesation, and see if the amount is actually enough.
All of this extra expense, damage to reputation and hassle could be avoided if the life assurance firms finally bit the bullet and agreed to underwrite these useless and failing policies.
Thursday, January 26, 2006
Legal and General's Record Year
Legal and General's Record Year
Congratulations to Legal and General (L&G), the life assurance firm, who have announced record results today.
L&G new business has risen 29% compared with the previous year, to £1.3BN, as a result of strong demand for savings products and growth in personal pensions.
The 29% increase in new business was at the top end of analysts' expectations.
Sales also rose by 27%, in the final quarter of the year.
Tim Breedon, chief executive, said:
"This has been a year of remarkable growth for Legal & General. Our UK new business grew by almost a third in 2005 and our investment management business won a record £17.1BN."
Now if they could address the concerns of those of us with failing endowment policies, by underwriting these useless products, we would all be able to open the champagne bottles and toast their success.
Congratulations to Legal and General (L&G), the life assurance firm, who have announced record results today.
L&G new business has risen 29% compared with the previous year, to £1.3BN, as a result of strong demand for savings products and growth in personal pensions.
The 29% increase in new business was at the top end of analysts' expectations.
Sales also rose by 27%, in the final quarter of the year.
Tim Breedon, chief executive, said:
"This has been a year of remarkable growth for Legal & General. Our UK new business grew by almost a third in 2005 and our investment management business won a record £17.1BN."
Now if they could address the concerns of those of us with failing endowment policies, by underwriting these useless products, we would all be able to open the champagne bottles and toast their success.
Friday, January 20, 2006
Norwich Reduces Payouts
Norwich Reduces Payouts
Norwich Union have dealt a body blow to their long suffering endowment mortgage policyholders, who have been warned to expect a low payout this year.
This is despite the fact that Norwich's main profits fund achieved an overall return of 17.7% before tax.
A policyholder with a 25-year, £50 a month Norwich Union endowment mortgage maturing this month will receive 4% less than he would have done if the policy were to have matured in 2005.
Norwich stated:
"In general, shorter-term policies show increases or small decreases compared to equivalent policies maturing a year ago, while those with a term of 20 and 25 years will generally be lower."
However, Norwich Union went on to say that in many cases an increase is seen when the surrender value of the policy a year ago is compared to the maturity value now.
Well of course it would, surrender values are normally lower than maturity values!
Please don't treat your policyholders in such a patronising manner.
Norwich Union have dealt a body blow to their long suffering endowment mortgage policyholders, who have been warned to expect a low payout this year.
This is despite the fact that Norwich's main profits fund achieved an overall return of 17.7% before tax.
A policyholder with a 25-year, £50 a month Norwich Union endowment mortgage maturing this month will receive 4% less than he would have done if the policy were to have matured in 2005.
Norwich stated:
"In general, shorter-term policies show increases or small decreases compared to equivalent policies maturing a year ago, while those with a term of 20 and 25 years will generally be lower."
However, Norwich Union went on to say that in many cases an increase is seen when the surrender value of the policy a year ago is compared to the maturity value now.
Well of course it would, surrender values are normally lower than maturity values!
Please don't treat your policyholders in such a patronising manner.
Monday, January 16, 2006
Time Barring Petition
Time Barring Petition
Merryn Matt has set up an online petition calling for the practice of time barring to be ended.
Extract from the site, www.timebar.org:
"Did you know that the Financial Services Authority (FSA) has slapped time limits - known as 'Time Barring' - for compensation claims against Life Companies for endowment policies which may have been mis-sold?
Time Barring is unfair, unclear and misleading. Approximately 1 million of the UK's 7.5 million endowment policyholders may already be Time Barred from claiming according to the FSA.
These rules operate in favour of the companies that sold the policies - saving them and costing you millions of pounds.
How can this be right?
This petition calls on the Government and the Financial Services Authority to put an end to the confusion and dishonesty surrounding mis-sold endowment policies, once and for all."
I wish her well.
Don't forget to sign my petition though:)
Merryn Matt has set up an online petition calling for the practice of time barring to be ended.
Extract from the site, www.timebar.org:
"Did you know that the Financial Services Authority (FSA) has slapped time limits - known as 'Time Barring' - for compensation claims against Life Companies for endowment policies which may have been mis-sold?
Time Barring is unfair, unclear and misleading. Approximately 1 million of the UK's 7.5 million endowment policyholders may already be Time Barred from claiming according to the FSA.
These rules operate in favour of the companies that sold the policies - saving them and costing you millions of pounds.
How can this be right?
This petition calls on the Government and the Financial Services Authority to put an end to the confusion and dishonesty surrounding mis-sold endowment policies, once and for all."
I wish her well.
Don't forget to sign my petition though:)
Friday, January 13, 2006
Guardian Assurance Fined
Guardian Assurance Fined
Guardian Assurance and its associated company Guardian Linked Life have been fined £750K by the Financail Services Authority (FSA) for mishandling endowment complaints.
This is the fourth time that the FSA has fined an insurance company for mishandling complaints.
The FSA said that Guardian's complaints procedure had "serious systemic flaws".
As a result, 5,600 customers had their complaints wrongly rejected, and thus could have lost out on compensation.
Margaret Cole, the FSA's Director of Enforcement, said:
"Guardian failed to treat its customers fairly by exposing those with a valid complaint to the risk that their complaint could be rejected inappropriately.
Consequently, they may not have received the compensation to which they were entitled.
These failings exposed a high number of consumers to potential financial loss."
The FSA role of shame:
-Friends Provident, December 2003, fined £675K
-Dunbar Assurance, March 2004, fined £725K
-Abbey National, May 2005, fined £800K
Between 1988 and 1995 Guardian sold 233,000 endowment policies, before it stopped marketing them.
It received nearly 20,000 complaints from April 2000 to the end of 2004.
At one stage it was rejecting more than three quarters of all its complaints.
I wonder how many other insurance companies are mishandling complaints?
Guardian Assurance and its associated company Guardian Linked Life have been fined £750K by the Financail Services Authority (FSA) for mishandling endowment complaints.
This is the fourth time that the FSA has fined an insurance company for mishandling complaints.
The FSA said that Guardian's complaints procedure had "serious systemic flaws".
As a result, 5,600 customers had their complaints wrongly rejected, and thus could have lost out on compensation.
Margaret Cole, the FSA's Director of Enforcement, said:
"Guardian failed to treat its customers fairly by exposing those with a valid complaint to the risk that their complaint could be rejected inappropriately.
Consequently, they may not have received the compensation to which they were entitled.
These failings exposed a high number of consumers to potential financial loss."
The FSA role of shame:
-Friends Provident, December 2003, fined £675K
-Dunbar Assurance, March 2004, fined £725K
-Abbey National, May 2005, fined £800K
Between 1988 and 1995 Guardian sold 233,000 endowment policies, before it stopped marketing them.
It received nearly 20,000 complaints from April 2000 to the end of 2004.
At one stage it was rejecting more than three quarters of all its complaints.
I wonder how many other insurance companies are mishandling complaints?
Tuesday, January 10, 2006
FSA Tries To Clean Up Its Act
FSA Tries To Clean Up Its Act
The Financial Services Authority (FSA), stung by recent criticism of its poor litigation record, is now trying to clean up its act.
The FSA has created a new unit to 'stress test' enforcement cases, before they are taken to formal disciplinary review.
The new litigation and legal review unit aims to review the evidence and recommendations that the FSA's enforcement division puts before the Regulatory Decisions Committee (RDC), which makes the FSA's disciplinary decisions.
The change is not receiving unanimous support. One City lawyer warned that the unit could potentially "result in a bottleneck", and drastically slow down the disciplinary process.
The FSA's came under strong criticism during 2005, most notably after the rejection of its endowment misselling case against Legal & General by the Financial Services and Markets Tribunal.
FSA director of enforcement Margaret Cole said it was hoped that the new unit would result in more successful rulings before the RDC, by ensuring that cases were "effectively stress-tested before going before the RDC".
We shall see.
The most effective change that the FSA should make, would be to compel the life assurance companies to underwrite their useless and underperforming endowment policies.
The Financial Services Authority (FSA), stung by recent criticism of its poor litigation record, is now trying to clean up its act.
The FSA has created a new unit to 'stress test' enforcement cases, before they are taken to formal disciplinary review.
The new litigation and legal review unit aims to review the evidence and recommendations that the FSA's enforcement division puts before the Regulatory Decisions Committee (RDC), which makes the FSA's disciplinary decisions.
The change is not receiving unanimous support. One City lawyer warned that the unit could potentially "result in a bottleneck", and drastically slow down the disciplinary process.
The FSA's came under strong criticism during 2005, most notably after the rejection of its endowment misselling case against Legal & General by the Financial Services and Markets Tribunal.
FSA director of enforcement Margaret Cole said it was hoped that the new unit would result in more successful rulings before the RDC, by ensuring that cases were "effectively stress-tested before going before the RDC".
We shall see.
The most effective change that the FSA should make, would be to compel the life assurance companies to underwrite their useless and underperforming endowment policies.
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