Standard Life Ignore Policy Holders
Standard Life treated their endowment policy holders with contempt today, at its first annual general meeting.
Standard Life faced repeated calls to specify the aggregate level of the shortfall on endowment policies, which they refused to reveal.
Sandy Crombie, the Group CEO, admitted that shortfalls on endowments exceeded the staggering figure of £1.3BN that the insurer had identified in its now-closed Heritage with profits fund.
However, the company didn't make any firm pledge to calculate the overall shortfalls faced by policyholders.
Seemingly the expectations of policy holders are, in the words of outgoing chairman Brian Stewart "unreasonable".
Crombie added:
"We cannot generate money that is not there. We are trying exceptionally hard to make sure the fund continues to perform for those who are invested in it."
Hardly much comfort for the hapless policy holders.
Why not come clean with them?
Tuesday, May 29, 2007
Thursday, May 24, 2007
Endowment Complaints Tailing Off
Endowment Complaints Tailing Off
In its annual review, the Financial Ombudsman Service (FOS) said that endowment complaints are tailing off.
Last year's review reported 69,149 endowment problems, while this year the figure had fallen to 46,134.
Chief ombudsman, Walter Merricks, said:
"This year marked the completion of over 500,000 financial disputes by the FOS since we were set up in 2001. Half of these complaints have involved mortgage endowments, although the record numbers of these cases is now at last decreasing, as we had predicted was likely to happen."
That does not of course mean that the problem is resolved, or indeed has gone away.
Many endowments were a "crock" form start to finish!
In its annual review, the Financial Ombudsman Service (FOS) said that endowment complaints are tailing off.
Last year's review reported 69,149 endowment problems, while this year the figure had fallen to 46,134.
Chief ombudsman, Walter Merricks, said:
"This year marked the completion of over 500,000 financial disputes by the FOS since we were set up in 2001. Half of these complaints have involved mortgage endowments, although the record numbers of these cases is now at last decreasing, as we had predicted was likely to happen."
That does not of course mean that the problem is resolved, or indeed has gone away.
Many endowments were a "crock" form start to finish!
Monday, May 14, 2007
The List of Shame
The List of Shame
Those of us who are unfortunate enough to have bought an endowment policy in the late 1980's and early 1990's may find an analysis produced by Money Management to be of interest.
It shows that, despite rising stock markets, payouts to policy holder continue to fall in most cases.
They compared policies maturing in 2007 with those maturing in 2006, for a male non smoker investing £50 from the outset over 25 years. The variation in returns was staggering. The average growth rate was 8.5%.
The top performer was Reliance Mutual with a return of 13.6%. However, the laggards showing below average returns were as follows (%):
Norwich Union - 8.3
Canada Life - 8.3
CGU - 8.2
General Accident - 8.2
Brittanic Assurance - 8.2
Clerical Medical - 7.9
Legal&General - 7.7
Scottish Widows - 7.3
Scottish Life - 7.2
Standard Mutual - 6.8
Scottish Mutual - 6.8
Friends Provident - 6.7
Equitable Life - 6.5
Eagle Star - 5.7
Well done!
The key question that policy holders should be asking of their endowment company, if they are in one of the under performing ones, is why are your returns worse than others?
Does that not reflect badly on the quality of management, and on the charges levied against the fund?
Those of us who are unfortunate enough to have bought an endowment policy in the late 1980's and early 1990's may find an analysis produced by Money Management to be of interest.
It shows that, despite rising stock markets, payouts to policy holder continue to fall in most cases.
They compared policies maturing in 2007 with those maturing in 2006, for a male non smoker investing £50 from the outset over 25 years. The variation in returns was staggering. The average growth rate was 8.5%.
The top performer was Reliance Mutual with a return of 13.6%. However, the laggards showing below average returns were as follows (%):
Norwich Union - 8.3
Canada Life - 8.3
CGU - 8.2
General Accident - 8.2
Brittanic Assurance - 8.2
Clerical Medical - 7.9
Legal&General - 7.7
Scottish Widows - 7.3
Scottish Life - 7.2
Standard Mutual - 6.8
Scottish Mutual - 6.8
Friends Provident - 6.7
Equitable Life - 6.5
Eagle Star - 5.7
Well done!
The key question that policy holders should be asking of their endowment company, if they are in one of the under performing ones, is why are your returns worse than others?
Does that not reflect badly on the quality of management, and on the charges levied against the fund?
Wednesday, May 09, 2007
Standard Life
Standard Life
Congratulations to Standard Life on their bumper first quarter results, worldwide sales rose by 40% to £3.92BN.
The question that the endowment policy holders are asking is, whether these bumper results will be reflected in bumper returns on their flagging endowment policies.
Highly unlikely I would say, as since July 2006 the masters of Standard Life are the shareholders not the policy holders.
Congratulations to Standard Life on their bumper first quarter results, worldwide sales rose by 40% to £3.92BN.
The question that the endowment policy holders are asking is, whether these bumper results will be reflected in bumper returns on their flagging endowment policies.
Highly unlikely I would say, as since July 2006 the masters of Standard Life are the shareholders not the policy holders.
Monday, April 23, 2007
Bridging Loans
As thousands of underfunded endowment policies start coming to the end of their lives, the demand for bridging loans is expected to rise; as people struggle to make up the shortfall on their under performing endowment policies.
Bridging loans are a very expensive way of borrowing, with monthly rates of between 1.5% to 2% (akin to credit cards).
People should exercise due care when thinking of taking out one of these expensive products.
Bridging loans are a very expensive way of borrowing, with monthly rates of between 1.5% to 2% (akin to credit cards).
People should exercise due care when thinking of taking out one of these expensive products.
Monday, March 26, 2007
Sacked By Text
Cheshireonline reports that police had to be called after a Chester businessman sacked his workers by mobile phone text message.
"Lee Wilson, MD of Stanley Porters and Co Ltd, texted staff at 7.45am on Wednesday, with the words: 'Due to the lack of professionalism and poor overall performance of the Chester office, i hav no option but to let u go.
'Ur pay wil be calculated and paid on pay day. U are not required to go into the office. All belongings wil be sent to u.'
But the four workers, whose job was to win compensation for home owners who had been mis-sold endowment mortgages, collected their belongings from the Union Street offices and asked for the attendance of police to prevent trouble."
"Lee Wilson, MD of Stanley Porters and Co Ltd, texted staff at 7.45am on Wednesday, with the words: 'Due to the lack of professionalism and poor overall performance of the Chester office, i hav no option but to let u go.
'Ur pay wil be calculated and paid on pay day. U are not required to go into the office. All belongings wil be sent to u.'
But the four workers, whose job was to win compensation for home owners who had been mis-sold endowment mortgages, collected their belongings from the Union Street offices and asked for the attendance of police to prevent trouble."
Monday, March 19, 2007
Standard Life
Standard Life
In rather a curate's egg development, Standard Life is due to write to its 750,000 endowment policy holders informing them that their endowments may not pay off their mortgages.
However, Standard Life will attempt to sugar the unpleasant pill by telling its hapless policy holders that the shortfall may not be as bad as it was anticipated a year ago.
So that's alright then!
It is estimated that around 90% of Standard Life's policies are not on target to meet the debt that they were meant to cover.
A Standard Life spokesman said:
"For many customers, a small shortfall will not present a problem, as these consumers have already paid off the mortgage, and were holding on to their policies for savings purposes. Others may be fully aware of the position of their contract, but have other savings to make up the shortfall, and so be comfortable with the situation."
I find the logic of the above to be highly dubious. Was not the point of taking these useless policies out to cover the mortgage?
Therefore how can a policy holder be "comfortable" with a shortfall?
In rather a curate's egg development, Standard Life is due to write to its 750,000 endowment policy holders informing them that their endowments may not pay off their mortgages.
However, Standard Life will attempt to sugar the unpleasant pill by telling its hapless policy holders that the shortfall may not be as bad as it was anticipated a year ago.
So that's alright then!
It is estimated that around 90% of Standard Life's policies are not on target to meet the debt that they were meant to cover.
A Standard Life spokesman said:
"For many customers, a small shortfall will not present a problem, as these consumers have already paid off the mortgage, and were holding on to their policies for savings purposes. Others may be fully aware of the position of their contract, but have other savings to make up the shortfall, and so be comfortable with the situation."
I find the logic of the above to be highly dubious. Was not the point of taking these useless policies out to cover the mortgage?
Therefore how can a policy holder be "comfortable" with a shortfall?
Thursday, March 01, 2007
HBOS Profits
HBOS Profits
Congratulations to HBOS, which has announced a 26% rise in profits for 2006 to £2.12BN.
This despite that fact that last year HBOS had to set aside a £95MN provision for compensation related to customer complaints over the bank's sale of endowment mortgages.
Congratulations to HBOS, which has announced a 26% rise in profits for 2006 to £2.12BN.
This despite that fact that last year HBOS had to set aside a £95MN provision for compensation related to customer complaints over the bank's sale of endowment mortgages.
Tuesday, January 23, 2007
Insurers Cash Grab
Insurers Cash Grab
Aviva and Prudential are planning to divert billions of pounds of surplus cash in their with-profits funds to shareholders, despite the fact that those who hold endowments, bonds and pensions are suffering lousy returns.
Aviva own Norwich Union, which recently warned 90% of its endowment policy holders to expect shortfalls on their policies. Aviva wants to pass a large part of the £4BN of inherited estate, in its Commercial Union Life and CGNU Life with-profits funds, to shareholders in 2008.
It is estimated that 1.4m policyholders will each received several hundreds of pounds of compensation. However, Which? believes that they are entitled to over £2K.
Doug Taylor at Which is quoted in The Times as saying:
"The fair solution would be to give 90% to policyholders and 10% to shareholders, even if this is not Norwich Union's preferred result."
Patrick Connolly at JS&P Towry Law, said:
"Norwich Union doesn't want to release the funds to benefit policyholders but because it wants to use them to support the business and boost shareholders' profits."
Prudential also wants to pass on £9BN billion from the inherited estate to shareholders.
These moves are expected to encourage other insurers to do the same, in order to prop up their share prices and to keep the shareholders quiet and subservient.
David Riddington, a senior actuary for Norwich Union, said:
"The inherited estate is legally owned by the company and its shareholders, so policyholders don't have any rights as such. Payments to customers are likely to be comparatively modest."
Ian Allison at Brunel Franklin, said:
"We are astonished that Norwich Union sees fit to attribute some of its surplus to shareholders while many endowment victims' finances remain in tatters."
Clare Spottiswoode has been appointed as "policyholder advocate", by Norwich.
The Policyholder Advocate is the representative for all the eligible with-profits policyholders of a company that is considering a reattribution of inherited estates.
The Policyholder Advocate's key job is to negotiate the size of any incentive to withy-profits policyholders to give up their rights to any possible future distribution from the inherited estate.
Details about Spottiswoode can be found on the website www.policyholderadvocate.org.
The outcome of these two moves will impact the rest of the industry, and the finances of the long suffering endowment policy holders.
Aviva and Prudential are planning to divert billions of pounds of surplus cash in their with-profits funds to shareholders, despite the fact that those who hold endowments, bonds and pensions are suffering lousy returns.
Aviva own Norwich Union, which recently warned 90% of its endowment policy holders to expect shortfalls on their policies. Aviva wants to pass a large part of the £4BN of inherited estate, in its Commercial Union Life and CGNU Life with-profits funds, to shareholders in 2008.
It is estimated that 1.4m policyholders will each received several hundreds of pounds of compensation. However, Which? believes that they are entitled to over £2K.
Doug Taylor at Which is quoted in The Times as saying:
"The fair solution would be to give 90% to policyholders and 10% to shareholders, even if this is not Norwich Union's preferred result."
Patrick Connolly at JS&P Towry Law, said:
"Norwich Union doesn't want to release the funds to benefit policyholders but because it wants to use them to support the business and boost shareholders' profits."
Prudential also wants to pass on £9BN billion from the inherited estate to shareholders.
These moves are expected to encourage other insurers to do the same, in order to prop up their share prices and to keep the shareholders quiet and subservient.
David Riddington, a senior actuary for Norwich Union, said:
"The inherited estate is legally owned by the company and its shareholders, so policyholders don't have any rights as such. Payments to customers are likely to be comparatively modest."
Ian Allison at Brunel Franklin, said:
"We are astonished that Norwich Union sees fit to attribute some of its surplus to shareholders while many endowment victims' finances remain in tatters."
Clare Spottiswoode has been appointed as "policyholder advocate", by Norwich.
The Policyholder Advocate is the representative for all the eligible with-profits policyholders of a company that is considering a reattribution of inherited estates.
The Policyholder Advocate's key job is to negotiate the size of any incentive to withy-profits policyholders to give up their rights to any possible future distribution from the inherited estate.
Details about Spottiswoode can be found on the website www.policyholderadvocate.org.
The outcome of these two moves will impact the rest of the industry, and the finances of the long suffering endowment policy holders.
Friday, January 12, 2007
Norwich Issues Red Alert
Norwich Issues Red Alert
Norwich Union has given its hapless endowment policy holders an unwelcome New Year present, by categorising nearly 90% of its 750,000 mortgage endowments as being in the "Red" category.
The red alert means that policyholders need to take urgent action, to avoid shortfalls on their home loans.
Norwich Union stated that 89.5% of endowment holders had been placed in the 'red' category, this is a staggering rise of 72% from last year.
Last year Norwich Union categorised 7% of its endowment policyholders as green and 21% amber.
David Riddington, senior actuary for Norwich Union, said:
"We didn't think amber was adding a lot. What we want, and what the FSA wants, is if people aren't on green, they should really think about the position they're in and decide whether to take action.
What happened with the amber is it perhaps lulled people into not doing anything, so this is a way to get people to at least sit up and take notice."
A fair and honest point, in my view, which in effect makes a mockery of the FSA's three coloured traffic light system.
The average shortfall projected by Norwich Union for 2007 is £1,400.
As I keep repeating, all of this heartache, wasted time and money could be avoided if the life assurance industry "bit the bullet" and underwrote these useless underperforming products.
Norwich Union has given its hapless endowment policy holders an unwelcome New Year present, by categorising nearly 90% of its 750,000 mortgage endowments as being in the "Red" category.
The red alert means that policyholders need to take urgent action, to avoid shortfalls on their home loans.
Norwich Union stated that 89.5% of endowment holders had been placed in the 'red' category, this is a staggering rise of 72% from last year.
Last year Norwich Union categorised 7% of its endowment policyholders as green and 21% amber.
David Riddington, senior actuary for Norwich Union, said:
"We didn't think amber was adding a lot. What we want, and what the FSA wants, is if people aren't on green, they should really think about the position they're in and decide whether to take action.
What happened with the amber is it perhaps lulled people into not doing anything, so this is a way to get people to at least sit up and take notice."
A fair and honest point, in my view, which in effect makes a mockery of the FSA's three coloured traffic light system.
The average shortfall projected by Norwich Union for 2007 is £1,400.
As I keep repeating, all of this heartache, wasted time and money could be avoided if the life assurance industry "bit the bullet" and underwrote these useless underperforming products.
Thursday, January 11, 2007
The Manx Black Hole
The Manx Black Hole
Those of you in the UK with underperforming endowment mortgages, who feel that they have been given the wrong end of a very unpleasant stick, should spare a thought for those endowment mortgage holders resident in the Isle of Man.
Reports from the Isle of Man indicate that there is a legislative black hole there, relating to the mis-selling of investment products.
A discrepancy in legislation has been highlighted, which means that the Manx ombudsman's power only applies to policies sold after April 20 1999, some 11 years later than the UK.
What a mess!
Those of you in the UK with underperforming endowment mortgages, who feel that they have been given the wrong end of a very unpleasant stick, should spare a thought for those endowment mortgage holders resident in the Isle of Man.
Reports from the Isle of Man indicate that there is a legislative black hole there, relating to the mis-selling of investment products.
A discrepancy in legislation has been highlighted, which means that the Manx ombudsman's power only applies to policies sold after April 20 1999, some 11 years later than the UK.
What a mess!
Tuesday, December 12, 2006
Extra Compensation Won
Extra Compensation Won
The Financial Services Authority (FSA) claims that due to its pressure, life assurance companies and others involved in the most notorious financial scandal in recent British history, have been forced to pay compensation to over 100,000 customers whose endowment mis-selling complaints had previously been rejected.
The FSA claims that due to its pressure, 75% of the rejected claims have so far been decided in favour of the customers.
This represents around an extra £120m in compensation.
Vernon Everitt from the FSA gave warning to the financial services industry that the FSA would be keeping a very close eye on how the firms were operating.
Quote:
"It is encouraging that firms have improved the speed and quality of how they handle complaints.
News of a potential shortfall is a major worry for consumers and firms owe it to them to deal with their complaints quickly and fairly.
They need to pay particular attention to helping people deal with shortfalls when policies mature."
Around 1.8 million people have received compensation for mis-sold underperforming useless endowment products, totalling £2.7BN.
The FSA should be wary of indulging in too much self congratulations. Millions of people are still facing a shortfall on their endowment policy, with little idea of how they are going to cover their mortgage debt.
The life assurance industry could put a stop to this chaos now, by agreeing to underwrite these useless underperforming products. Instead they are more than happy to pass the buck to others.
The Financial Services Authority (FSA) claims that due to its pressure, life assurance companies and others involved in the most notorious financial scandal in recent British history, have been forced to pay compensation to over 100,000 customers whose endowment mis-selling complaints had previously been rejected.
The FSA claims that due to its pressure, 75% of the rejected claims have so far been decided in favour of the customers.
This represents around an extra £120m in compensation.
Vernon Everitt from the FSA gave warning to the financial services industry that the FSA would be keeping a very close eye on how the firms were operating.
Quote:
"It is encouraging that firms have improved the speed and quality of how they handle complaints.
News of a potential shortfall is a major worry for consumers and firms owe it to them to deal with their complaints quickly and fairly.
They need to pay particular attention to helping people deal with shortfalls when policies mature."
Around 1.8 million people have received compensation for mis-sold underperforming useless endowment products, totalling £2.7BN.
The FSA should be wary of indulging in too much self congratulations. Millions of people are still facing a shortfall on their endowment policy, with little idea of how they are going to cover their mortgage debt.
The life assurance industry could put a stop to this chaos now, by agreeing to underwrite these useless underperforming products. Instead they are more than happy to pass the buck to others.
Thursday, December 07, 2006
Naive
Naive
Research carried out by the Financial Services Consumer Panel indicates that consumers are using mortgage endowment claims companies to save time, and help them through what they see as a complex process.
The research also claims that around 66% of successful claimants believe that they have received value for money from mortgage endowment claims firms. Given that the claim firms usually charge between 20%-30% of the compensation recovered, for work that the claimant usually do himself, this "value for money" seems to be a somewhat misguided belief.
Even more bizarrely, 25% of those who were unsuccessful said that they would definitely recommend the services of a mortgage endowment claims firm.
Given the alarmingly naivety of the respondents, it is hardly surprising that the financial services industry make such "hansom" profits out of the British public year in year out.
John Howard, chairman of the Financial Services Consumer Panel said:
"Some consumers seem quite prepared to pay part of their compensation to a claims firm, especially when the alternative is to receive no compensation at all, because they do not have the time or the confidence to pursue a claim themselves.
It is not clear the claim firms save consumers that much time and there was dissatisfaction with some aspects of the service provided by some firms; not giving details about the fees up front, and poor service in telling clients when the claim was not successful. This needs to be considered as the government starts to regulate this arena through the Department of Constitutional Affairs."
Quite why this is a DCA matter is beyond me, as it clearly comes under the FSA's and Treasury's remit.
Research carried out by the Financial Services Consumer Panel indicates that consumers are using mortgage endowment claims companies to save time, and help them through what they see as a complex process.
The research also claims that around 66% of successful claimants believe that they have received value for money from mortgage endowment claims firms. Given that the claim firms usually charge between 20%-30% of the compensation recovered, for work that the claimant usually do himself, this "value for money" seems to be a somewhat misguided belief.
Even more bizarrely, 25% of those who were unsuccessful said that they would definitely recommend the services of a mortgage endowment claims firm.
Given the alarmingly naivety of the respondents, it is hardly surprising that the financial services industry make such "hansom" profits out of the British public year in year out.
John Howard, chairman of the Financial Services Consumer Panel said:
"Some consumers seem quite prepared to pay part of their compensation to a claims firm, especially when the alternative is to receive no compensation at all, because they do not have the time or the confidence to pursue a claim themselves.
It is not clear the claim firms save consumers that much time and there was dissatisfaction with some aspects of the service provided by some firms; not giving details about the fees up front, and poor service in telling clients when the claim was not successful. This needs to be considered as the government starts to regulate this arena through the Department of Constitutional Affairs."
Quite why this is a DCA matter is beyond me, as it clearly comes under the FSA's and Treasury's remit.
Saturday, December 02, 2006
Legal Loophole Helps Scots
Legal Loophole Helps Scots
An estimated 100,000 Scots homeowners, who missed the deadline for lodging endowment mis-selling claims, may still be eligible for compensation.
That at least is the view of Gerry Diamond, of the Endowment Compensation Centre, who has discovered a possible legal loophole which may help those who bought policies from Scottish providers including; Standard Life, Scottish Widows and Scottish Amicable.
Mr Diamond believes that the tree year time limit imposed by the Financial services Authority (FSA) is illegal in Scotland, because Scots law allows five years to challenge unfair contracts.
Quote:
"This means that people should have two more years to claim than the three-year FSA rule that is currently applied by many sellers of endowment policies."
It is estimated that over 400,000 Scots have been mis-sold endowment policies.
As I keep saying, all of this trouble could be stopped here and now if the life assurance companies "stepped up to the plate" and underwrote these useless underperforming products.
An estimated 100,000 Scots homeowners, who missed the deadline for lodging endowment mis-selling claims, may still be eligible for compensation.
That at least is the view of Gerry Diamond, of the Endowment Compensation Centre, who has discovered a possible legal loophole which may help those who bought policies from Scottish providers including; Standard Life, Scottish Widows and Scottish Amicable.
Mr Diamond believes that the tree year time limit imposed by the Financial services Authority (FSA) is illegal in Scotland, because Scots law allows five years to challenge unfair contracts.
Quote:
"This means that people should have two more years to claim than the three-year FSA rule that is currently applied by many sellers of endowment policies."
It is estimated that over 400,000 Scots have been mis-sold endowment policies.
As I keep saying, all of this trouble could be stopped here and now if the life assurance companies "stepped up to the plate" and underwrote these useless underperforming products.
Monday, November 20, 2006
Compensation Payments Stalled
Compensation Payments Stalled
It seems that, according to endowment claims company Brunel Franklin, consumers who were mis-sold underperforming and useless endowment policies are being kept waiting weeks/months for their compensation cheques to arrive.
Why?
Seemingly the financial institutions are struggling to cope with a flood of complaints, and some are stalling payouts to successful claimants.
Ian Allison, claims director for Brunel Franklin, said:
"It is wholly unreasonable to wait two months or more for your compensation payout when the figures have already been agreed and the offer accepted by the client. At this point there is no reason why the claim can't be settled within a few days."
It is hardly surprising that the financial services industry in Britain has such a lousy reputation, and that the ordinary man in the street no longer has any trust in it.
It is also worth noting that many in the financial services industry in the City will enjoy massive six figure bonuses this year end. Maybe they would like to use some of their windfalls to help out those who will be suffering shortfalls on their endowment polices?
Yes, that will happen!
It seems that, according to endowment claims company Brunel Franklin, consumers who were mis-sold underperforming and useless endowment policies are being kept waiting weeks/months for their compensation cheques to arrive.
Why?
Seemingly the financial institutions are struggling to cope with a flood of complaints, and some are stalling payouts to successful claimants.
Ian Allison, claims director for Brunel Franklin, said:
"It is wholly unreasonable to wait two months or more for your compensation payout when the figures have already been agreed and the offer accepted by the client. At this point there is no reason why the claim can't be settled within a few days."
It is hardly surprising that the financial services industry in Britain has such a lousy reputation, and that the ordinary man in the street no longer has any trust in it.
It is also worth noting that many in the financial services industry in the City will enjoy massive six figure bonuses this year end. Maybe they would like to use some of their windfalls to help out those who will be suffering shortfalls on their endowment polices?
Yes, that will happen!
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