Trouble Ahead

It is reported that the Financial Ombudsman Service (FOS) has warned that it won't be unable to cope with the mortgage endowment complaints, next year; as there is expected to be steep rise in these complaints.

The rise in endowment complaints is expected, because the large life assurance companies will be sending out letters in the New Year to their policyholders; these will warn them about the 3 year time-bar rule.

Policyholders have 3 years from receipt of the first warning letter to complain.

The FOS is now getting fed up with endowment providers, who are disregarding complaint handling guidelines.

"..Some firms are systematically rejecting swathes of complaints with little or no investigation..."

It is reported that Halifax and Abbey National are among the names passed on to the FSA, by the FOS, in respect of shortcomings on complaint handling.

The FOS wants steps taken to force providers to settle cases themselves.

The Costs Begin to Mount

The costs of compensating people for being mis-sold underperforming, and useless, endowment polices is beginning to bite into life assurance companies profits.

Lloyds TSB yesterday announced that it has had to set aside a further £110M to compensate customers, who were mis-sold endowment mortgages.

This brings their total provision for mis-selling endowments to £360M.

Endowment Claims Cost HBOS £40M

HBOS bank has earmarked approximately £40M, in compensation for customers who may have been mis-sold underperforming performing endowment mortgages.

HBOS has reportedly admitted to an increase in the number of endowment cases being compensated, and said the precise figure will emerge in an exceptional provision in the 2004 results.

A Slight Untruth

My dear friends at my life assurance company wrote to me today, in connection with my ongoing enquiries into how much commission they are charging on my two endowment policies.

Here is an extract of the letter, signed by their Customer Service Agent:

"Thank you for your telephone call on 30 November 2004. I apologise for the delay in my reply.

Unfortunately, due to systems limitations I am unable to advise you of the commission charges that have been paid on your policy...

I am sorry I can be of no further assistance..."

I would make a simple observation here.

The company is one of Britain's largest, and best known, life assurance company. They handle billions of pounds of investments, and have very sophisticated management information systems monitoring returns, payments, income etc.

Do they seriously expect me to believe that they do not keep records of commission payments?

Formal Complaint

I have made a formal complaint to the Financial Ombudsman Service, about the obstructive and unhelpful attitude of my life assurance company; in respect of my enquiry about commission payments made on my endowment policies.

I have also copied all correspondence on this matter to the Treasury Select Committee.

I rang my life assurance company today, asking them for the address of the part of their organisation where I should send my queries concerning commission payments made on my endowment policy.

You will recall that, despite the fact that I have already raised these queries with their central "help" centre, their "help" centre was unable to answer them.

One reason being that another branch deals with these queries.

Oddly enough the "help" centre did not forward my queries; nor indeed did it provide me with an address, of this branch, in their letter.

I asked why they did not forward the queries, my "help" centre operative did not know; and said it would have been more "helpful".

I asked why they couldn't just forward my queries, now that I have raised the matter again; he answered that he couldn't, as my original letter was "in another department".

Notwithstanding their obstructive attitude, I have now acquired the "correct" address; and have resent my original letter of the 12th November to this address.

We shall see what happens!

Obstructive Unhelpful Delaying Tactics

You will recall that, on the 12th of November, I sent my life assurance company a letter asking about commission payments made from my two endowment policies.

Here is the letter that I sent:

"Dear Sir/Madam,

Endowment Policies (numbers **** and ****)

I have a number of queries concerning my two endowment policies (numbers **** and ***), which you manage on my behalf.

Please can you answer the following queries in respect of the above policies:

1. Please can you advise me as to how much commission has been paid to any third party, or connected party, at the time the policies were taken out?

2. Please can you advise me of the names of the companies to which commission payments have been made, in respect of these policies?

3. Please can you advise me if commission payments have been made, at dates other than at the commencement of the policies?

4. If so please can you quantify the amounts, the frequency and the organisations to which these additional commission payments have been/are being made?

5. Please can you advise me if the commission payments referred to in questions 1- 4 above were deducted directly from my policy payments, or have been charged indirectly?

6. If commission payments are still being made on my policies, please can you advise me as to why?

7. Do I have the right to stop these ongoing commission payments?

8. If I have the right to stop these ongoing commission payments, please can you explain as to why you have not drawn this to my attention before?

9. Please can you provide me with an estimate as to negative impact, on the final expected maturity value of my policies, which these payments have had?

Please feel free to contact me if you need clarification of the above.

Thank you in advance for your prompt co-operation.


Yours faithfully..."

Today I received their response; which, not to put too fine a point on it, I regard as obstructive and unhelpful.

Here is their response:

"Thanks you for your letter of 11 November, asking how much commission is being paid monthly to the adviser.

The policy *** was sold by **, direct sales office, South London branch. If you have any queries concerning the sale of these policies please contact us at the above address (note they do not supply the address in the letter, they are the same company why not just pass my letter on?).

You took out plan (**) before 1 January 1995, when the current commission disclosure rules came into force. I cannot give you details of the commission paid to the selling agent without the agent's permission in writing. In order to obtain the commission information therefore, we suggest that you contact your adviser direct (it is my money, yet they will not tell me how much they are taking!).

...."

I will follow this up.

I do not consider that their response has been at all helpful; it leaves me to wonder precisely what they are hiding.

Ambulance Chasers?

It seems that some of the companies that handle endowment complaints, have incurred the ire of the life assurance companies.

Norwich Union is reportedly asking for endowment complaint handlers to be regulated by the FSA, to protect consumers.

It seems that some complaints firms target people living on estates built in the late 1980s and early 1990s. This was the time when many endowment policies were sold.

Norwich Union believes that these companies should operate under the same rules, and regulations, as the life assurance companies; thus levelling the playing field.

One particular reason that the life assurance companies are irked by complaint handlers, is the fact that nearly one fifth of the complaints that they (the life assurance companies) have to deal with emanate from professional complaint handlers.

The cost to the consumer of using these firms can be 25%, or more, of any compensation won. The cost of using the Financial Ombudsman is zero.

Too Lazy To Claim

It seems that, according to Mori, millions of people that may have been mis-sold an endowment mortgage have not lodged a claim for compensation; and have no intention of doing so.

When it comes to matters of finance, it seems that the British people are "asleep at the wheel".

Wake Up!!

Digging for Dirt

I have finally drafted a letter, to my endowment policy company, which outlines my queries in respect of commission payments that may have been deducted from my two endowment policies.

I will post their response, as and when I receive one.

Here is an extract:

"..Dear Sir/Madam,

Endowment Policies (numbers **** and ****)

I have a number of queries concerning my two endowment policies (numbers **** and ***), which you manage on my behalf.

Please can you answer the following queries in respect of the above policies:

1. Please can you advise me as to how much commission has been paid to any third party, or connected party, at the time the policies were taken out?

2. Please can you advise me of the names of the companies to which commission payments have been made, in respect of these policies?

3. Please can you advise me if commission payments have been made, at dates other than at the commencement of the policies?

4. If so please can you quantify the amounts, the frequency and the organisations to which these additional commission payments have been/are being made?

5. Please can you advise me if the commission payments referred to in questions 1- 4 above were deducted directly from my policy payments, or have been charged indirectly?

6. If commission payments are still being made on my policies, please can you advise me as to why?

7. Do I have the right to stop these ongoing commission payments?

8. If I have the right to stop these ongoing commission payments, please can you explain as to why you have not drawn this to my attention before?

9. Please can you provide me with an estimate as to negative impact, on the final expected maturity value of my policies, which these payments have had?

Please feel free to contact me if you need clarification of the above.

Thank you in advance for your prompt co-operation.


Yours faithfully..."