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..."

Renewal Commissions

I received an interesting email from the Consumers' Association, in respect of my earlier post on "Secret Commission Payments".

It seems that these payments, also called renewal commissions, are quite common. The Consumers' Association believe that they should be stopped.

Indeed the Treasury Select Committee are also of the same mind.

Their cross examination of some of the representatives of the endowment industry, in January 2004, makes amusing reading; as they make the endowment people squirm, as they try to justify these payments.

You can read the minutes here.

The New FSA Regime

The Financial Services Authority (FSA) now regulates the mortgage market.

The theory being that the scandals of the past, ie the endowment mis-selling scandal, will be avoided in the future.

However, regulation comes at a price; especially when the FSA is involved.

It is reported that there have been quite a few teething troubles with the new regime.

It seems that many mortgage brokers have not received their firm's mortgage authorisation number, which is provided by the FSA.

Some lenders have experienced problems with their IT systems, and consequently have not produced documents on line.

Others have refused to provide certain documents, as they believe that this will breach the Data Protection Act.

It is estimated that the cost of the new regime, £100 per application, will be placed fairly and squarely on the shoulders of the consumer.

That's you and me folks!

The Devious Tricks of Life Assurance Companies and Banks

It seems that the life assurance companies and banks that sold us our useless and underperforming endowment policies, are doing their very best to avoid paying compensation.

That is at least the view of the Financial Ombudsman Service (FOS).

It seems that our "professional friends" in the life assurance companies and banks are ignoring guidelines, set down 3 years ago, as to how to handle endowment complaints.

The FOS will receive 70000 complaints this year, relating to endowment policies; in 2003 the FOS received 50000, and in 2002 they received 15000.

Needless to say, as I warned on this site over a year ago, the sheer volume of the complaints means that the FOS is having trouble processing them.

Delays of over a year are now standard, and indeed the FOS is having to "farm out" the processing to third parties.

One of the little "tricks" employed by the banks and life assurance companies, according to the FOS, is to make the complainant wait for 8 weeks before responding.

Apparently, the "professionals" believe that if they ignore the problem it will simply go away, like a bad dream.

My message to the banks and life assurance companies is simple:

-The problem won't go away

-The problem will get worse

-People are becoming angry

-Grow up, stop avoiding the issue and address the problem.

Secret Commission Payments II

In view of the issues raised in the article "Secret Commission Payments", posted on the 19th of October, I have decided to write to my endowment company; asking them for details of all commission payments made on my two endowment policies.

I will update this site, with their response.

Judgement Day

A survey, recently undertaken by Abbey, has revealed the true extent of the mortgage crisis that will engulf the UK.

It seems that over 1 million homeowners with interest only mortgages, many of whom who have endowment polices, have not put together any plan for paying off their mortgages.

The housing market, and consequently the economy, will take a hard knock if these issues are not addressed.

From Bad to Worse

"The insurance industry needs to take a long, hard look at itself ... there is simply no responsible argument for a system that rigs bids, stifles competition and cheats customers."

Not my words, but those of Eliot Spitzer, New York's attorney general; talking about the probity of the United States insurance industry.

He has launched a law suit, which will have ramifications for our own well loved insurance industry. He accuses the US insurance industry of corruption, and anti competitive practices.

The FSA is monitoring Spitzer's progress.

The crux of Spitzer's case rests on contingent commissions, that is commissions paid on top of normal commissions for selling insurance policies. The UK insurance industry is fretting, because it knows that there are contingent commissions paid in the UK as well.

It is a pity that the FSA needs to wait for the US to take the lead, in exposing corruption and dishonesty.

The fallout from this lawsuit adds to the worries surrounding the insurance industry; which were heightened this week, by the announcement from the Prudential that they needed £1BN to shore up their finances.

Standard Life Celebrates in Style

Standard Life celebrated breaking their £10BN target for mortgage sales, by giving their staff 1000 bottles of champagne (total costs £15K).

You will recall that Standard Life recently reneged on it promise to underwrite its endowment policies; it is expected that over 500K of its customers face endowment misery, as their policies fail to meet their targets.

I doubt that they will be cracking open bottles of champagne.

Nice bit of PR guys!

FOS Gets Tough

It seems that the Financial Ombudsman Service (FOS) is now thoroughly fed up with the tactics used by the life assurance companies, in trying to evade paying for their lousy underperforming endowment polices that 8 million UK households are saddled with.

The FOS has warned the life assurers that they will face large fines if they don't clean up their act.

The FOS is reportedly to be of the opinion that some endowment providers routinely rejected complaints, that they knew would be upheld if they were referred to the FOS.

I understand that at the end of March 2004, life assurance companies had handled 452,201 endowment complaints while the FOS had dealt with around 125,000.

Large fines are all very well and good, but the life assurance companies are wealthy enough to weather those; and indeed will probably just pass the costs on to the hapless policy holders.

What is needed is for the life assurance companies to underwrite these underperforming, poorly designed, polices.