Standard Life Float Delayed
It is reported that Standard Life's flotation might be delayed until 2007, due to outstanding issues with the Financial Services Authority (FSA) over endowment mortgages.
The float was originally planned to happen in 2006. However, the FSA is reported to be seeking assurances from the company over a number of issues; including allocation of capital and how much new money they want to raise.
Specifically the FSA want clarification over assurances that Standard Life gave last year, when it announced that it was unable to fulfill its mortgage promise to 600,000 holders of endowment policies.
Standard Life also set a deadline of May 2006 for considering mis-selling complaints over endowment policies, this hits 350,000 endowment policy holders.
Standard Life has set aside £393m to pay top-ups to policyholders facing shortfalls.
However, customers whose endowment policies mature after the end of this year will receive only 40%-60% of the top-ups.
You will recall that the FSA and Standard Life had something of a run in earlier last year; the dispute, over the measurement of its solvency, forced Standard Life to change its chief executive and reverse its long-standing opposition to demutualisation and sell £7.5bn of equities.
What goes around comes around!
Monday, October 10, 2005
Tuesday, October 04, 2005
MP Acts
MP Acts
Sandra Osborne, a Scottish MP, has promised to act and to try to help thousands of house owners who have been mis-sold mortgage endowment policies.
Sandra Osborne helped bring in new rules governing the sale of endowment policies by banks and building societies.
She said that she intended to lobby the government to help the thousands of people who have been mis-sold the same policies by their solicitor.
She was prompted to act after listening to BBC Radio Scotland's series, The Investigation.
The show explained how many people, who were mis-sold these policies in the 1980's and 90's by banks, building societies and other financial institutions, have successfully claimed compensation for performance shortfalls.
However, it seems that Scots who were sold identical policies by their solicitor when buying their homes have virtually no hope of being compensated for their losses.
The programme featured Gail McEwan, who is running a campaign to win compensation for people in Scotland.
If you think you have been mis-sold an endowment policy by your solicitor and want to join Gail McEwan's campaign to get parliament to act, you can contact her at PO Box 19582, Johnstone.
I wish her every success.
Sandra Osborne, a Scottish MP, has promised to act and to try to help thousands of house owners who have been mis-sold mortgage endowment policies.
Sandra Osborne helped bring in new rules governing the sale of endowment policies by banks and building societies.
She said that she intended to lobby the government to help the thousands of people who have been mis-sold the same policies by their solicitor.
She was prompted to act after listening to BBC Radio Scotland's series, The Investigation.
The show explained how many people, who were mis-sold these policies in the 1980's and 90's by banks, building societies and other financial institutions, have successfully claimed compensation for performance shortfalls.
However, it seems that Scots who were sold identical policies by their solicitor when buying their homes have virtually no hope of being compensated for their losses.
The programme featured Gail McEwan, who is running a campaign to win compensation for people in Scotland.
If you think you have been mis-sold an endowment policy by your solicitor and want to join Gail McEwan's campaign to get parliament to act, you can contact her at PO Box 19582, Johnstone.
I wish her every success.
Monday, September 19, 2005
New Forum
New Forum
The financial services industry is supporting a new forum to improve the quality of products and services provided to the retail investor.
The Retail Financial Services Forum will bring together representatives of banks, insurers and financial advisers to test out new ideas and initiatives and to promote best practice.
It will meet quarterly, starting on October 21, and will publish details of its deliberations on the internet.
The financial services industry is supporting a new forum to improve the quality of products and services provided to the retail investor.
The Retail Financial Services Forum will bring together representatives of banks, insurers and financial advisers to test out new ideas and initiatives and to promote best practice.
It will meet quarterly, starting on October 21, and will publish details of its deliberations on the internet.
Monday, September 12, 2005
Campaign Launched
Campaign Launched
Gail McEwan from Scotland is planning to mount a nationwide campaign for justice on behalf of hundreds of Scots, allegedly missold mortgage endowments by solicitors.
She has been awarded £700 in compensation by the legal services ombudsman, after the Law Society of Scotland bungled her own complaints about a policy she was sold by a Glasgow firm of lawyers.
However, she still has a shortfall which she wishes to be made good.
She plans to pressure MSPs, and the Scottish Executive, for fresh legislation which would give consumers who were missold endowments the same rights of redress as customers of financial services firms.
The Herald has the full details here.
I wish her the very best of luck.
Gail McEwan from Scotland is planning to mount a nationwide campaign for justice on behalf of hundreds of Scots, allegedly missold mortgage endowments by solicitors.
She has been awarded £700 in compensation by the legal services ombudsman, after the Law Society of Scotland bungled her own complaints about a policy she was sold by a Glasgow firm of lawyers.
However, she still has a shortfall which she wishes to be made good.
She plans to pressure MSPs, and the Scottish Executive, for fresh legislation which would give consumers who were missold endowments the same rights of redress as customers of financial services firms.
The Herald has the full details here.
I wish her the very best of luck.
Thursday, September 08, 2005
It's An Ill Wind..
It's An Ill Wind...
As the saying goes, "it's an ill wind that blows nobody any good". This certainly appears to be the case for Avalon, a firm of solicitors based in Warrington.
Whilst those of you who hold underperforming endowment policies may be wondering how to pay off the shortfall, Avalon are doing rather well out of the crisis.
Avalon is headed by former TV presenter, Andrew Nulty, and has recently opened a second office. Its turnover is now £5m for the 12 months to the end of July.
Mr Nulty, who presented "Hitman and Her" before setting up Avalon in Manchester four years ago, is confident that fee income will reach £15m over the next year as the firm's caseload is expected to increase.
Avalon switched from being a personal injury practice, to one specialising in industrial disease (eg mining compensation claims) and financial negligence cases.
Mr Nulty is leading a team of 30, who are acting for thousands of people who claim to have been mis-sold endowment policies.
Quote:
"We saw a niche in the market. We are representing thousands of people who are facing shortfalls on their endowment policies.
Our role is to recoup their losses from the insurance companies, and we take a percentage of the money they receive as a fee."
As the saying goes, "it's an ill wind that blows nobody any good". This certainly appears to be the case for Avalon, a firm of solicitors based in Warrington.
Whilst those of you who hold underperforming endowment policies may be wondering how to pay off the shortfall, Avalon are doing rather well out of the crisis.
Avalon is headed by former TV presenter, Andrew Nulty, and has recently opened a second office. Its turnover is now £5m for the 12 months to the end of July.
Mr Nulty, who presented "Hitman and Her" before setting up Avalon in Manchester four years ago, is confident that fee income will reach £15m over the next year as the firm's caseload is expected to increase.
Avalon switched from being a personal injury practice, to one specialising in industrial disease (eg mining compensation claims) and financial negligence cases.
Mr Nulty is leading a team of 30, who are acting for thousands of people who claim to have been mis-sold endowment policies.
Quote:
"We saw a niche in the market. We are representing thousands of people who are facing shortfalls on their endowment policies.
Our role is to recoup their losses from the insurance companies, and we take a percentage of the money they receive as a fee."
Monday, September 05, 2005
Higher Fines Urged
Higher Fines Urged
Which?, the consumer group, is urging the Financial Services Authority (FSA) to significantly increase the fines it imposes on companies found guilty of mis-selling; in an attempt to crack down on the financial services industry.
Which? says that it wants the Financial Services Authority to levy penalties that are big enough to alarm institutional investors that own shares in the companies facing fines.
Which? believes large penalties would persuade investors to put pressure on financial services companies to prevent mis-selling.
Not a moment too soon in my view.
Which?, the consumer group, is urging the Financial Services Authority (FSA) to significantly increase the fines it imposes on companies found guilty of mis-selling; in an attempt to crack down on the financial services industry.
Which? says that it wants the Financial Services Authority to levy penalties that are big enough to alarm institutional investors that own shares in the companies facing fines.
Which? believes large penalties would persuade investors to put pressure on financial services companies to prevent mis-selling.
Not a moment too soon in my view.
Monday, August 29, 2005
Further Endowment Confusion
Further Endowment Confusion
As if endowment policy holders were not confused and worried enough, there is now a report that suggests that some of the warnings of shortfalls may in fact be wrong.
According to Independent Financial Adviser, Alan Lakey of Highclere Financial Services, not all endowments linked to a mortgage, where red or amber warning letters have been issued, will suffer a shortfall.
In a report in Money Management magazine, he warns that some are being sent out where no real risk exists.
"What began as an exercise designed to advise policyholders of the probable maturity value of their plans, and the possible need to take remedial action, has since turned into a major bloodletting,".
Lakey makes the point that the typical reprojection letter appears to show the with profit endowment as off track, and unlikely to hit the relevant target. However, he points out that not all red or amber warning letters are issued on the same basis.
He also notes that the deluge of warnings has led to the creation of a compensation industry, designed to extract money from the hapless policy holders.
To my view the best way for the life assurance industry to restore some of their shattered credibility, and brand value, would be for them to unconditionally underwrite their endowment products.
This would, at a single stroke, eliminate the need for a compensation industry which is living off the misery of policy holders.
As if endowment policy holders were not confused and worried enough, there is now a report that suggests that some of the warnings of shortfalls may in fact be wrong.
According to Independent Financial Adviser, Alan Lakey of Highclere Financial Services, not all endowments linked to a mortgage, where red or amber warning letters have been issued, will suffer a shortfall.
In a report in Money Management magazine, he warns that some are being sent out where no real risk exists.
"What began as an exercise designed to advise policyholders of the probable maturity value of their plans, and the possible need to take remedial action, has since turned into a major bloodletting,".
Lakey makes the point that the typical reprojection letter appears to show the with profit endowment as off track, and unlikely to hit the relevant target. However, he points out that not all red or amber warning letters are issued on the same basis.
He also notes that the deluge of warnings has led to the creation of a compensation industry, designed to extract money from the hapless policy holders.
To my view the best way for the life assurance industry to restore some of their shattered credibility, and brand value, would be for them to unconditionally underwrite their endowment products.
This would, at a single stroke, eliminate the need for a compensation industry which is living off the misery of policy holders.
Tuesday, August 23, 2005
Standard Life
Standard Life
Nice results from Standard Life.
Standard Life announced a 4% rise in first-half revenues today, as business improved in its home market, boosted by new personalised pension plans.
The insurer, which is expected to float next year, said insurance sales for the first six months of 2005 rose from £593M to £619M and sales of life products and pensions in its key home market rose 10% to £459M.
I wonder if their endowment policy holders are also feeling pleased?
Nice results from Standard Life.
Standard Life announced a 4% rise in first-half revenues today, as business improved in its home market, boosted by new personalised pension plans.
The insurer, which is expected to float next year, said insurance sales for the first six months of 2005 rose from £593M to £619M and sales of life products and pensions in its key home market rose 10% to £459M.
I wonder if their endowment policy holders are also feeling pleased?
Thursday, August 18, 2005
Selling Endowments
Selling Endowments
The Scotsman has some interesting background material about selling endowment policies, see Selling Endowments.
However, as they warn, this does not constitute investment advice and you should seek independent financial advice if you are unsure as to the suitability of any investment for your circumstances. Past performance is not an indication of future performance. The value of investments may fall as well as rise and you might not get back the full amount invested.
The Scotsman has some interesting background material about selling endowment policies, see Selling Endowments.
However, as they warn, this does not constitute investment advice and you should seek independent financial advice if you are unsure as to the suitability of any investment for your circumstances. Past performance is not an indication of future performance. The value of investments may fall as well as rise and you might not get back the full amount invested.
Monday, August 08, 2005
Standard Life Fails To Deliver
Standard Life Fails To Deliver
According to new figures, those people unfortunate enough to have an endowment policy maturing with Standard Life this year will not only miss out on any windfall but have had to endure a further decline in their investments over the past year.
It seems that Standard Life's useless endowment policies have produced a negative return of 2.7% this year.
Pathetic!
The figures were revealed as Standard Life unveiled its mid-year "bonus declaration", and made a useless attempt to focus attention on one-year returns of existing policies rather than the year-on-year change for maturing policies.
I think that it is time for the hapless holders of these useless, and underperforming, polices to act up.
According to new figures, those people unfortunate enough to have an endowment policy maturing with Standard Life this year will not only miss out on any windfall but have had to endure a further decline in their investments over the past year.
It seems that Standard Life's useless endowment policies have produced a negative return of 2.7% this year.
Pathetic!
The figures were revealed as Standard Life unveiled its mid-year "bonus declaration", and made a useless attempt to focus attention on one-year returns of existing policies rather than the year-on-year change for maturing policies.
I think that it is time for the hapless holders of these useless, and underperforming, polices to act up.
Friday, August 05, 2005
HBOS Increases Provisions
HBOS Increases Provisions
HBOS has reported an interim six month profit of £2.2BN, an increase of 15%.
In view of this success HBOS has set aside an other £130M, on top of the existing £130M already set aside, to cover claims for endowment policy misselling.
HBOS increased their dividends by 9% to 11.75p.
HBOS has reported an interim six month profit of £2.2BN, an increase of 15%.
In view of this success HBOS has set aside an other £130M, on top of the existing £130M already set aside, to cover claims for endowment policy misselling.
HBOS increased their dividends by 9% to 11.75p.
Monday, August 01, 2005
From Bad To Worse
From Bad To Worse
The endowment policy crisis could be far worse than experts expect.
That is the view of Clive Cowdery, chief executive of Resolution Life. He predicts that the amount of assets held in close funds funds will double to £400BN, in the next five years, as more insurers shut off their funds to new money.
Closed funds do not take in contributions, their only purpose is to pay existing liabilities; in other words they are winding down, as such their returns are lower than open ones.
Cowdery believes that closed funds will account for 15 million policies by 2011.
That will be when the "fun really starts"; as people realise that their funds don't work, and wake up to the fact that they have a debt that they cannot afford to settle.
I would hope that, despite the fact that the life assurance companies are doing their best to sweep the biggest financial scandal of the 20th century under the carpet, people wake up to this disaster a little earlier than that.
Time for the politicians to wake up as well!
The endowment policy crisis could be far worse than experts expect.
That is the view of Clive Cowdery, chief executive of Resolution Life. He predicts that the amount of assets held in close funds funds will double to £400BN, in the next five years, as more insurers shut off their funds to new money.
Closed funds do not take in contributions, their only purpose is to pay existing liabilities; in other words they are winding down, as such their returns are lower than open ones.
Cowdery believes that closed funds will account for 15 million policies by 2011.
That will be when the "fun really starts"; as people realise that their funds don't work, and wake up to the fact that they have a debt that they cannot afford to settle.
I would hope that, despite the fact that the life assurance companies are doing their best to sweep the biggest financial scandal of the 20th century under the carpet, people wake up to this disaster a little earlier than that.
Time for the politicians to wake up as well!
Thursday, July 28, 2005
Mortgage Advisory Centre In Liquidation
Mortgage Advisory Centre In Liquidation
Mortgage Advisory Centre, based in Edinburgh, run by Robert McGrail, a businessman and shareholder in Hearts football club, has reportedly gone into liquidation.
The Financial Services Authority is expected to issue a statement about the firm, within the next few days. It is unclear how many customers have complained about endowment mortgages sold by the company.
Mr McGrail is reported to control the independent broker First Mortgage Direct.
Mortgage Advisory Centre, based in Edinburgh, run by Robert McGrail, a businessman and shareholder in Hearts football club, has reportedly gone into liquidation.
The Financial Services Authority is expected to issue a statement about the firm, within the next few days. It is unclear how many customers have complained about endowment mortgages sold by the company.
Mr McGrail is reported to control the independent broker First Mortgage Direct.
Tuesday, July 26, 2005
Misery For Scottish Widows
Misery For Scottish Widows
Bad news for those of you who hold with-profits policies with Scottish Widows, the maturity values of these policies have fallen again; despite the recovery of equity markets.
The value of an average 25-year with-profits contract has dropped in the past six months, rather worrying given the fact that the stock market has been rising.
Scottish Widows said that payouts were lower because funds were invested over different time periods, yielding different earnings.
It still expects its £18BN with-profits fund to produce a pre-tax investment return of 15% in the 12 months to end-June, compared to 7.3% in the same period the previous year.
However, the company warned that maturity payouts could continue to fall, even in years where positive investment returns were achieved.
The Widows have tried to explain the reason for the fall as being due to the returns on with-profits, which aim to smooth payouts by holding back some of the return in good years to pay out in the bad, as being historically "significantly higher" than those of late.
To my simple view that means that they were paying out too much in earlier years, and not applying the "smoothing principle" properly.
Now there are two possible reasons for this:
1 Poor management of the policy
2 Deliberate over payment to attract new customers and shareholders
A typical 25-year endowment with Scottish Widows, maturing on 1 August, dropped 2.8% on February and 7.4% on the year. A mortgage-linked endowment over the same period fell 2.8% in value since February and 8.1% over the past year.
Bad news for those of you who hold with-profits policies with Scottish Widows, the maturity values of these policies have fallen again; despite the recovery of equity markets.
The value of an average 25-year with-profits contract has dropped in the past six months, rather worrying given the fact that the stock market has been rising.
Scottish Widows said that payouts were lower because funds were invested over different time periods, yielding different earnings.
It still expects its £18BN with-profits fund to produce a pre-tax investment return of 15% in the 12 months to end-June, compared to 7.3% in the same period the previous year.
However, the company warned that maturity payouts could continue to fall, even in years where positive investment returns were achieved.
The Widows have tried to explain the reason for the fall as being due to the returns on with-profits, which aim to smooth payouts by holding back some of the return in good years to pay out in the bad, as being historically "significantly higher" than those of late.
To my simple view that means that they were paying out too much in earlier years, and not applying the "smoothing principle" properly.
Now there are two possible reasons for this:
1 Poor management of the policy
2 Deliberate over payment to attract new customers and shareholders
A typical 25-year endowment with Scottish Widows, maturing on 1 August, dropped 2.8% on February and 7.4% on the year. A mortgage-linked endowment over the same period fell 2.8% in value since February and 8.1% over the past year.
Thursday, July 21, 2005
Endowment Complaints Rise In Scotland
Endowment Complaints Rise In Scotland
The number of complaints to Scotland's legal watchdog rose by more than a quarter last year, from 395 to 505, arising from the mis-selling of endowment policies.
See The Herald.
The number of complaints to Scotland's legal watchdog rose by more than a quarter last year, from 395 to 505, arising from the mis-selling of endowment policies.
See The Herald.
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