Diversionary Tactics
It is reported that Legal and General (L&G) brought in a "memory expert" yesterday, to support their case against the £1M fine imposed on them by the Financial Services Authority (FSA).
The expert noted that customers' memories were likely to be distorted over the passage of time.
L&G are trying to undermine the customer survey, that was used by the FSA in their case against L&G for endowment mis-selling.
L&G allege that the survey of 152 customers was not large enough, and that the recollections of those questioned must be called into question.
Let us not get sidetracked by these courtroom games.
The real issue here is that people bought these useless polices, in the expectation that they would pay off the mortgage.
These policies are not going to pay off the mortgages. As a result of a combination of:
-Mis-selling
-Passing the entire risk of holding the policy onto the customer, whilst taking a fat commission
-Excessive commission payments
-Diabolical mismanagement of the funds in which the policies are invested
endowment policies are going to dramatically undershoot their targets.
In other words, they are not fit for purpose.
The FSA and the life assurance companies should stop messing around with these diversionary tactics. The issue is simply this, the policies were not fit for purpose; as such the life assurance industry, which has made some very large profits out of creating, selling and "managing" these useless products, must agree to underwrite them.
Wednesday, October 13, 2004
Tuesday, October 12, 2004
A "Shabby Habit"?
It seems that Abbey National are allegedly not playing fair with endowment complaints, relating to policies sold before 1988.
According to reports, the Abbey National are automatically rejecting out of hand any complaints made about policies sold pre 1988.
This despite the fact that the Financial Ombudsman Service (FOS) has warned them that they must investigate each case.
According to mortgage complaint handlers, such as Endowment Justice and CPH Financial Advisory Services, 100% of complaints are being rejected by a pro forma letter; which claims that Abbey do not have to establish attitudes to risk, or keep records of what was discussed pre 1988.
Over a year ago the FOS warned banks and building societies that mis-selling still can have occurred pre 1988. Our chums in the life assurance industry, despite attempts to obfuscate over this issue, still owe us the hapless owners of these useless policies a duty of care.
Our chums may now find themselves in hot water over this, as the FOS has reported their names to the FSA.
Abbey denies the allegations.
Will anyone who was sold a policy by the Abbey, pre 1988, and who has managed to gain compensation from them please drop me a note.
I am more than happy to back up Abbey's claim!
The bottom line here is, that if you receive a rejection letter from the company that sold you a worthless policy; don't accept it.
Fight back!
It seems that Abbey National are allegedly not playing fair with endowment complaints, relating to policies sold before 1988.
According to reports, the Abbey National are automatically rejecting out of hand any complaints made about policies sold pre 1988.
This despite the fact that the Financial Ombudsman Service (FOS) has warned them that they must investigate each case.
According to mortgage complaint handlers, such as Endowment Justice and CPH Financial Advisory Services, 100% of complaints are being rejected by a pro forma letter; which claims that Abbey do not have to establish attitudes to risk, or keep records of what was discussed pre 1988.
Over a year ago the FOS warned banks and building societies that mis-selling still can have occurred pre 1988. Our chums in the life assurance industry, despite attempts to obfuscate over this issue, still owe us the hapless owners of these useless policies a duty of care.
Our chums may now find themselves in hot water over this, as the FOS has reported their names to the FSA.
Abbey denies the allegations.
Will anyone who was sold a policy by the Abbey, pre 1988, and who has managed to gain compensation from them please drop me a note.
I am more than happy to back up Abbey's claim!
The bottom line here is, that if you receive a rejection letter from the company that sold you a worthless policy; don't accept it.
Fight back!
Monday, October 11, 2004
Expert Conned
It seems that even those at the very top of the finance industry, were conned into believing that endowment policies would work.
It is reported that Simon Chapman, a senior partner with PricewaterhouseCoopers (PWC) and an expert on financial services compliance, bought a Legal & General (L&G) endowment policy.
He was assured that the L&G policy was "a sure fire way" to pay off his mortgage, and produce a cash surplus.
Familiar words?
This revelation came out during the court battle between the Financial Services Authority (FSA) and L&G, last week.
Happily for Mr Chapman, after complaining about the policy being mis-sold, he received compensation of premiums plus interest.
Let us hope that we all receive such treatment from our life assurance companies!
Ironically he was then hired, jointly by the FSA and L&G, to investigate a sample of L&G endowment customers; as part of an FSA investigation into alleged mis-selling.
It seems that even those at the very top of the finance industry, were conned into believing that endowment policies would work.
It is reported that Simon Chapman, a senior partner with PricewaterhouseCoopers (PWC) and an expert on financial services compliance, bought a Legal & General (L&G) endowment policy.
He was assured that the L&G policy was "a sure fire way" to pay off his mortgage, and produce a cash surplus.
Familiar words?
This revelation came out during the court battle between the Financial Services Authority (FSA) and L&G, last week.
Happily for Mr Chapman, after complaining about the policy being mis-sold, he received compensation of premiums plus interest.
Let us hope that we all receive such treatment from our life assurance companies!
Ironically he was then hired, jointly by the FSA and L&G, to investigate a sample of L&G endowment customers; as part of an FSA investigation into alleged mis-selling.
Saturday, October 09, 2004
Friday, October 08, 2004
Lies, Damned Lies
Embattled endowment policy holders, that's you and me folks, suffered another kick in the "cahoonas" yesterday; as Standard Life reneged on its promise to cover endowment shortfalls.
The reason that they reneged on this promise, was in effect to make the company look more attractive to investors when it floats in 2006.
The promise, known as the "Standard Life Mortgage Endowment Promise", was made four years ago. Standard Life had pledged to provide financial support to customers with endowments that failed to meet their target value.
Seemingly that promise was bullshit.
The cover will now only apply to those polices maturing before the end of 2005.
This move is expected to adversely affect 600000 policy holders with underperforming endowments.
This is bad news for policy holders in Norwich Union, which had also given a similar undertaking to attract customers. It is likely that Norwich Union will feel free to renege on their promise, now that they have no pressure to keep it. They have stated that they intend to honour it.
Standard Life has also set May 2006 as the deadline for complaining about endowment shortfalls.
As if this was not bad enough, Standard Life also announced that they will be cutting top ups on other policies by 40%-60%. This will exacerbate the size of policyholders' shortfalls.
Maybe disgruntled policy holders should buy a stake in the company, when it floats, then sack the directors?
The problem being, that most policy holders are now fretting as to where they will find the money to cover the shortfall on their underperforming useless endowment policies.
Embattled endowment policy holders, that's you and me folks, suffered another kick in the "cahoonas" yesterday; as Standard Life reneged on its promise to cover endowment shortfalls.
The reason that they reneged on this promise, was in effect to make the company look more attractive to investors when it floats in 2006.
The promise, known as the "Standard Life Mortgage Endowment Promise", was made four years ago. Standard Life had pledged to provide financial support to customers with endowments that failed to meet their target value.
Seemingly that promise was bullshit.
The cover will now only apply to those polices maturing before the end of 2005.
This move is expected to adversely affect 600000 policy holders with underperforming endowments.
This is bad news for policy holders in Norwich Union, which had also given a similar undertaking to attract customers. It is likely that Norwich Union will feel free to renege on their promise, now that they have no pressure to keep it. They have stated that they intend to honour it.
Standard Life has also set May 2006 as the deadline for complaining about endowment shortfalls.
As if this was not bad enough, Standard Life also announced that they will be cutting top ups on other policies by 40%-60%. This will exacerbate the size of policyholders' shortfalls.
Maybe disgruntled policy holders should buy a stake in the company, when it floats, then sack the directors?
The problem being, that most policy holders are now fretting as to where they will find the money to cover the shortfall on their underperforming useless endowment policies.
Thursday, October 07, 2004
What is The Point of The FSA?
A few days ago, as noted on this site, I sent the FSA an email; asking for their reaction to the fact that my life assurance company suggested that I "top up" my underperforming, failing, endowment policy.
They replied today.
Their note contained links to parts of their site, with general information about endowments. However, they noted that they could not give opinions or rule interpretations; indeed they could offer no specific advice on the validity of any complaint that I may have.
May I ask, precisely what is the point of the FSA if it is not there to assist members of the public such as myself; when we are faced with a blatant attempt, by the life assurance companies, to con more money out of us?
A few days ago, as noted on this site, I sent the FSA an email; asking for their reaction to the fact that my life assurance company suggested that I "top up" my underperforming, failing, endowment policy.
They replied today.
Their note contained links to parts of their site, with general information about endowments. However, they noted that they could not give opinions or rule interpretations; indeed they could offer no specific advice on the validity of any complaint that I may have.
May I ask, precisely what is the point of the FSA if it is not there to assist members of the public such as myself; when we are faced with a blatant attempt, by the life assurance companies, to con more money out of us?
Wednesday, October 06, 2004
More Mis-selling
My "friendly" life assurance company has written to me again, this time they have sent me a warning letter about my other endowment policy.
This policy, taken out in 1987, was meant to cover a mortgage of £35K.
The projected shortfall is, roll on the drums......£10600.
In other words 30% of my mortgage.
Put that together with the other shortfall of £14500 projected by my life assurance company (see earlier post), and I am going to have to find £25K when my two endowments expire in 2012.
Do I think that I have been ripped off?
I do.
To add insult to injury, the life assurance company then goes on to suggest that I could top up my underperforming policy.
I think that it is high time that these companies were brought "to book" over this £40BN scandal that is bordering on the criminal.
My "friendly" life assurance company has written to me again, this time they have sent me a warning letter about my other endowment policy.
This policy, taken out in 1987, was meant to cover a mortgage of £35K.
The projected shortfall is, roll on the drums......£10600.
In other words 30% of my mortgage.
Put that together with the other shortfall of £14500 projected by my life assurance company (see earlier post), and I am going to have to find £25K when my two endowments expire in 2012.
Do I think that I have been ripped off?
I do.
To add insult to injury, the life assurance company then goes on to suggest that I could top up my underperforming policy.
I think that it is high time that these companies were brought "to book" over this £40BN scandal that is bordering on the criminal.
Tuesday, October 05, 2004
Think It's Bad in England?
Those of you who think that you are having a tough time in England, trying to claim redress for an underperforming endowment policy; should spare a thought for those living in Scotland.
It seems that the only channel Scottish endowment holders can take, when claiming compensation, is to use a solicitor to make a case against the original solicitor who mis-sold the policy.
In Scotland it is solicitors who handle property sales.
The Financial Ombudsman Service (FOS) cannot help, as solicitors advising on investments only came under the Financial Services Authority in December 2001.
The Law Society of Scotland can only order a solicitor to pay compensation up to a mere £1000, so they are not much use.
I hold the view that it is not so much the IFA that should be blamed, but the life assurance company that created this underperforming worthless product.
In my view tha the Sale of Goods Act should be invoked, after all these endowments were sold like TV's and cars, noting that the product is "not fit for purpose".
Those of you who think that you are having a tough time in England, trying to claim redress for an underperforming endowment policy; should spare a thought for those living in Scotland.
It seems that the only channel Scottish endowment holders can take, when claiming compensation, is to use a solicitor to make a case against the original solicitor who mis-sold the policy.
In Scotland it is solicitors who handle property sales.
The Financial Ombudsman Service (FOS) cannot help, as solicitors advising on investments only came under the Financial Services Authority in December 2001.
The Law Society of Scotland can only order a solicitor to pay compensation up to a mere £1000, so they are not much use.
I hold the view that it is not so much the IFA that should be blamed, but the life assurance company that created this underperforming worthless product.
In my view tha the Sale of Goods Act should be invoked, after all these endowments were sold like TV's and cars, noting that the product is "not fit for purpose".
Monday, October 04, 2004
What is The Worst Criminal Act? Car Theft, or Mis-selling an Endowment Policy?
An interesting report is due to be published later this month by the Crime and Society Foundation, a new criminal justice think-tank.
The report claims that official crime statistics are not a reliable indicator of the true level of offences.
One section of the report refers to the damage done to society as a whole, by the mis-selling of endowment mortgages. Quote:
"A prolific car thief might blight the lives of tens of hundreds of people. The mis-selling of endowment policies has blighted the lives of many thousands...".
As many of us have long suspected, despite what the FSA and life assurance companies pretend, the mis-selling of endowment policies was bordering on the criminal.
Are we likely to see any arrests?
An interesting report is due to be published later this month by the Crime and Society Foundation, a new criminal justice think-tank.
The report claims that official crime statistics are not a reliable indicator of the true level of offences.
One section of the report refers to the damage done to society as a whole, by the mis-selling of endowment mortgages. Quote:
"A prolific car thief might blight the lives of tens of hundreds of people. The mis-selling of endowment policies has blighted the lives of many thousands...".
As many of us have long suspected, despite what the FSA and life assurance companies pretend, the mis-selling of endowment policies was bordering on the criminal.
Are we likely to see any arrests?
Sunday, October 03, 2004
Saturday, October 02, 2004
Red Alert High Risk of Shortfall
That is the opening line of the letter that I received today, from the life assurance company that "manages" my two endowment policies.
This "red alert" is in respect of my second endowment policy taken out in 1991, and due to expire in 2012.
The policy was originally meant to cover a mortgage of £39700.
Today's "prediction" shows that it is likely to produce a shortfall of up to £14500, that is about 36% of the target amount.
How these people can call themselves professionals is beyond me.
The letter then helpfully suggests that I may need to take action, other than just suing the idiots who designed this worthless product.
To add insult to injury, one of their suggestions is that I may like to top up my endowment plan.
Who are they trying to kid?
Having been castigated by the press, the FSA and the Treasury Select Committee for mis-selling worthless products; our ever resourceful "professionals" now seek to make another quick buck, by trying to persuade people to put more money into these underperforming white elephants.
This strikes me as being another blatant example of mis-selling.
That is the opening line of the letter that I received today, from the life assurance company that "manages" my two endowment policies.
This "red alert" is in respect of my second endowment policy taken out in 1991, and due to expire in 2012.
The policy was originally meant to cover a mortgage of £39700.
Today's "prediction" shows that it is likely to produce a shortfall of up to £14500, that is about 36% of the target amount.
How these people can call themselves professionals is beyond me.
The letter then helpfully suggests that I may need to take action, other than just suing the idiots who designed this worthless product.
To add insult to injury, one of their suggestions is that I may like to top up my endowment plan.
Who are they trying to kid?
Having been castigated by the press, the FSA and the Treasury Select Committee for mis-selling worthless products; our ever resourceful "professionals" now seek to make another quick buck, by trying to persuade people to put more money into these underperforming white elephants.
This strikes me as being another blatant example of mis-selling.
Friday, October 01, 2004
Endowment Crisis Spreads
It seems that it is not only the hapless home owners in the UK, who are suffering from being mis-sold non performing endowment polices.
The cancer of this financial scandal has spread to the Republic of Ireland.
It is reported by RTE that the Irish Financial Services Regulatory Authority, has strongly urged anyone who believes that they were mis-sold an endowment mortgage to complain to the companies who sold them these white elephants.
It seems that out of the 90000 polices sold in Ireland, most endowment mortgage holders have been told that their policies will have shortfalls.
Well, I wish them luck.
Doubtless they will encounter the same instrasigence, and evasion, that the UK holders have encountered as they try to claim redress.
It seems that it is not only the hapless home owners in the UK, who are suffering from being mis-sold non performing endowment polices.
The cancer of this financial scandal has spread to the Republic of Ireland.
It is reported by RTE that the Irish Financial Services Regulatory Authority, has strongly urged anyone who believes that they were mis-sold an endowment mortgage to complain to the companies who sold them these white elephants.
It seems that out of the 90000 polices sold in Ireland, most endowment mortgage holders have been told that their policies will have shortfalls.
Well, I wish them luck.
Doubtless they will encounter the same instrasigence, and evasion, that the UK holders have encountered as they try to claim redress.
Wednesday, September 29, 2004
Heads You Lose, Tails You Lose
It seems that those of us who are trying to get compensation for mis-sold endowment policies, are having even more obstacles placed in our way.
The Herald reports the case of one of their readers who managed to obtain a judgement in his favour from the Ombudsman service. However, there was a small problem, the company against which the judgement was made no longer was in business; as it had wound itself up.
The Ombudsman can only enforce orders against companies that are in existence, and the Financial Services Compensation Scheme (FSCS) can only help where the firm has gone out of business; not where the firm has voluntarily ceased trading.
The result being that the hapless policy holder is no nearer gaining compensation.
This is just one of many stories, in the progressively worsening endowment policy scandal, that shows how the system is weighted against the individual who tries to claim redress.
To use a technical term here, it "Sucks, big time!"
It seems that those of us who are trying to get compensation for mis-sold endowment policies, are having even more obstacles placed in our way.
The Herald reports the case of one of their readers who managed to obtain a judgement in his favour from the Ombudsman service. However, there was a small problem, the company against which the judgement was made no longer was in business; as it had wound itself up.
The Ombudsman can only enforce orders against companies that are in existence, and the Financial Services Compensation Scheme (FSCS) can only help where the firm has gone out of business; not where the firm has voluntarily ceased trading.
The result being that the hapless policy holder is no nearer gaining compensation.
This is just one of many stories, in the progressively worsening endowment policy scandal, that shows how the system is weighted against the individual who tries to claim redress.
To use a technical term here, it "Sucks, big time!"
Monday, September 27, 2004
What the Life Assurance Firms Don't Want to Tell You
The real reason that the endowment polices have failed, in my view, is that when they were designed by the bright boys in the life assurance industry they had a number of fatal flaws built into them.
Life assurance firms are "experts", so they would have us believe, in risk management. They try to ensure that risks are accounted for, minimised and spread.
What the "bright boys" did when they designed these non performing endowment white elephants, was to spread the risk around the hapless purchasers. They were safe in the knowledge that with 8 million sales, they could spread the risk with little collateral damage to themselves.
They assumed that, in the "unlikely event" that the polices did not perform as well as expected, no one individual would be so out of pocket that they could afford to, or be bothered to complain.
The trouble is, they never bothered telling the hapless endowment policy holder that they were spreading the risk in this manner; nor indeed will they admit to it today.
The other problem is that the polices were very poorly designed; and that the extortionate commission payments extracted from them at the begining, effectively killed the product at birth.
Again, something that they will not admit to.
The final flaw in their great design was the fact that, having spread the risk, with a £40BN shortfall being faced by 8 million people; they know that there is now a massive incentive to complain, yet there is no way that they can ever admit to 8 million people that they were sold "a pup".
Now it is up to the 8 million of us to make them face the consequences.
The real reason that the endowment polices have failed, in my view, is that when they were designed by the bright boys in the life assurance industry they had a number of fatal flaws built into them.
Life assurance firms are "experts", so they would have us believe, in risk management. They try to ensure that risks are accounted for, minimised and spread.
What the "bright boys" did when they designed these non performing endowment white elephants, was to spread the risk around the hapless purchasers. They were safe in the knowledge that with 8 million sales, they could spread the risk with little collateral damage to themselves.
They assumed that, in the "unlikely event" that the polices did not perform as well as expected, no one individual would be so out of pocket that they could afford to, or be bothered to complain.
The trouble is, they never bothered telling the hapless endowment policy holder that they were spreading the risk in this manner; nor indeed will they admit to it today.
The other problem is that the polices were very poorly designed; and that the extortionate commission payments extracted from them at the begining, effectively killed the product at birth.
Again, something that they will not admit to.
The final flaw in their great design was the fact that, having spread the risk, with a £40BN shortfall being faced by 8 million people; they know that there is now a massive incentive to complain, yet there is no way that they can ever admit to 8 million people that they were sold "a pup".
Now it is up to the 8 million of us to make them face the consequences.
Friday, September 24, 2004
On The Ropes?
Legal and General (L&G) continue to be kicked around the courtroom, in their appeal against the FSA £1.1M fine for endowment mis-selling.
In the latest spat it is reported that Ian Malcolmson, an L&G customer, told the hearing it was never explained to him that the endowment policy might not pay off the mortgage in full.
Mr Malcolmson felt that, despite being given a booklet outlining some of the risks, he would have expected the sales adviser to give him a verbal explanation of the risk of a shortfall; rather than putting the warning in "small print".
This seems to have been the normal practice with the sales of these underperforming white elephants, the salesmen never could quite bring themselves to speak of the risks involved; or indeed the sizable chunk being taken out of the profits by the commission payments.
Legal and General (L&G) continue to be kicked around the courtroom, in their appeal against the FSA £1.1M fine for endowment mis-selling.
In the latest spat it is reported that Ian Malcolmson, an L&G customer, told the hearing it was never explained to him that the endowment policy might not pay off the mortgage in full.
Mr Malcolmson felt that, despite being given a booklet outlining some of the risks, he would have expected the sales adviser to give him a verbal explanation of the risk of a shortfall; rather than putting the warning in "small print".
This seems to have been the normal practice with the sales of these underperforming white elephants, the salesmen never could quite bring themselves to speak of the risks involved; or indeed the sizable chunk being taken out of the profits by the commission payments.
Tuesday, September 21, 2004
About Time!
It is reported that the Financial Services Authority (FSA) has been asked to investigate the reward schemes of financial advisers; apparently there are concerns that the commissions and bonuses could affect the advice given, and encourage the mis-selling of financial products.
Now it seems to me that the hapless holders of the splendidly underperforming, and useless, endowment products sold some 10 or more years ago could have told them that.
The Consumers Association has asked the FSA to investigate how products are sold, and the level of commissions paid.
It has also requested that senior directors of financial firms be held accountable for the actions of their employees, and lose their own annual bonus if the firm is fined by the FSA for malpractice.
Now that is a good idea!
In other news, it is reported that a few hundred advisers at Bradford & Bingley are about to quit; as a protest against their new commission policy, which requires them to sell a set number of policies every year.
If they don't hit the target, they don't get a commission.
Bradford & Bingley (B&B) claim that B&B would never encourage staff to give misleading information.
It is certainly long overdue, that the FSA investigates the commission structure of the life assurance companies.
It is reported that the Financial Services Authority (FSA) has been asked to investigate the reward schemes of financial advisers; apparently there are concerns that the commissions and bonuses could affect the advice given, and encourage the mis-selling of financial products.
Now it seems to me that the hapless holders of the splendidly underperforming, and useless, endowment products sold some 10 or more years ago could have told them that.
The Consumers Association has asked the FSA to investigate how products are sold, and the level of commissions paid.
It has also requested that senior directors of financial firms be held accountable for the actions of their employees, and lose their own annual bonus if the firm is fined by the FSA for malpractice.
Now that is a good idea!
In other news, it is reported that a few hundred advisers at Bradford & Bingley are about to quit; as a protest against their new commission policy, which requires them to sell a set number of policies every year.
If they don't hit the target, they don't get a commission.
Bradford & Bingley (B&B) claim that B&B would never encourage staff to give misleading information.
It is certainly long overdue, that the FSA investigates the commission structure of the life assurance companies.
Sunday, September 19, 2004
More Misery
The 350,000 of you who hold endowment policies with Scottish Life, will be feeling even worse about your underperforming policies.
Scottish Life have cut their payouts on their "with profits" polices, for the second time this year.
The polices are now so, I will use an accounting term here, "crappy" that they are not even keeping pace with inflation.
The returns on the Scottish Life polices are a "staggering" 1.1% (inflation is around 2.5%), the FTSE has grown by 6% since January 2004.
Well done lads, are you proud of your product?
Now, Scottish Life (and indeed all the other "professional" life assurance companies) claim that the cuts are to "smooth" the returns on the policies; as a result of the falls in the FTSE between 2000 and 2001.
I would like to ask the following:
Aside from those two years, the FTSE has performed quite well over the past decade (allegedly the longest "bull run" in living memory); where the hell has the money gone?????
The 350,000 of you who hold endowment policies with Scottish Life, will be feeling even worse about your underperforming policies.
Scottish Life have cut their payouts on their "with profits" polices, for the second time this year.
The polices are now so, I will use an accounting term here, "crappy" that they are not even keeping pace with inflation.
The returns on the Scottish Life polices are a "staggering" 1.1% (inflation is around 2.5%), the FTSE has grown by 6% since January 2004.
Well done lads, are you proud of your product?
Now, Scottish Life (and indeed all the other "professional" life assurance companies) claim that the cuts are to "smooth" the returns on the policies; as a result of the falls in the FTSE between 2000 and 2001.
I would like to ask the following:
Aside from those two years, the FTSE has performed quite well over the past decade (allegedly the longest "bull run" in living memory); where the hell has the money gone?????
Saturday, September 18, 2004
A Nice Legal Spat
The Financial Services Authority (FSA) had a splendid courtroom "bust up" with Legal and General (L&G) yesterday; as the hearing about the £1.1M fine, imposed by the FSA on L&G for mis-selling endwoment policies, continued.
The QC for the FSA, Hodge Malek, noted that the the charge by L&G that the FSA broke the law was "wholly spurious"; he then went on the label the L&G case as "kamikaze defence."
I love a good punch up!
It is clear that, whoever wins this case, the relationship between the FSA and L&G will be irreparably damaged.
Insiders in the FSA are, according to reports, suggesting that the L&G tactic is purely a publicity gimmick.
The Financial Services Authority (FSA) had a splendid courtroom "bust up" with Legal and General (L&G) yesterday; as the hearing about the £1.1M fine, imposed by the FSA on L&G for mis-selling endwoment policies, continued.
The QC for the FSA, Hodge Malek, noted that the the charge by L&G that the FSA broke the law was "wholly spurious"; he then went on the label the L&G case as "kamikaze defence."
I love a good punch up!
It is clear that, whoever wins this case, the relationship between the FSA and L&G will be irreparably damaged.
Insiders in the FSA are, according to reports, suggesting that the L&G tactic is purely a publicity gimmick.
Friday, September 17, 2004
Legal and General in The Dock
It seems that Legal and General (L&G) may find that their appeal against the £1.1M fine imposed on it by the Financial Services Authority (FSA), for mis-selling endowment mortgages, has brought some of their "dirty laundry" into the public arena.
Yesterday the appeal heard from two homeowners that L&G did not explain the risks of endowment mortgages.
The FSA have now brought in five of L&G's customers to take the stand at the hearing. This hearing is scheduled to last six weeks, so it is not unreasonable to expect to hear from a few more unhappy endowment policy holders.
The essence of the questioning of the hapless borrowers was, how clearly L&G's salesmen warned them that endowment policies could not be guaranteed to pay off mortgages.
The crux of their response was that they were not warned, and had they known of the risk they would not have taken the policy on.
This is precisely what I have been saying for these past two years; why on earth would you take on a something that is not going to pay off the mortgage?
The endowment policies were designed to pay off the mortgages of those who took them out, they have failed to work; therefore the holders are entitled to recompense.
It seems that Legal and General (L&G) may find that their appeal against the £1.1M fine imposed on it by the Financial Services Authority (FSA), for mis-selling endowment mortgages, has brought some of their "dirty laundry" into the public arena.
Yesterday the appeal heard from two homeowners that L&G did not explain the risks of endowment mortgages.
The FSA have now brought in five of L&G's customers to take the stand at the hearing. This hearing is scheduled to last six weeks, so it is not unreasonable to expect to hear from a few more unhappy endowment policy holders.
The essence of the questioning of the hapless borrowers was, how clearly L&G's salesmen warned them that endowment policies could not be guaranteed to pay off mortgages.
The crux of their response was that they were not warned, and had they known of the risk they would not have taken the policy on.
This is precisely what I have been saying for these past two years; why on earth would you take on a something that is not going to pay off the mortgage?
The endowment policies were designed to pay off the mortgages of those who took them out, they have failed to work; therefore the holders are entitled to recompense.
Thursday, September 16, 2004
Site Update
By the way, if you find it a bore to have to go to this site via my main site www.kenfrost.com, you will be pleased to know that I now have a more direct route for you to use.
You can now use the web address www.endowmentdiary.com to access this site.
By the way, if you find it a bore to have to go to this site via my main site www.kenfrost.com, you will be pleased to know that I now have a more direct route for you to use.
You can now use the web address www.endowmentdiary.com to access this site.
Wednesday, September 15, 2004
FSA Broke The Law
The start of the appeal hearing by Legal and General, against the fine imposed on it by the Financial Services Authority, revealed some interesting backstage dealing.
It seems that the Financial Services Authority, by offering to "cut a deal" with Legal and General over the size of the fine imposed on it, may have broken the law.
The FSA offered to reduce its £1.3M fine on L&G, if L&G promised not to proceed with its appeal against the fine.
That's a bit cheeky, isn't it?
The law, it seems, is unequivocal on this point; the FSA cannot use means, such as offering to reduce fines, to deter or obstruct firms from going to an appeals tribunal.
L&G are contesting that the FSA changed their minds about the quality of L&G's processes, in respect of endowment sales, after publicity about mortgage shortfalls in 1999/2000.
The FSA claimed that L&G's systems for processing endowments were deficient, and resulted in L&G mis-selling the products to "financially unsophisticated customers including an unemployed housewife."
The outcome of this hearing will be watched by everyone in the life assurance industry. If the FSA loses, it will embolden other life assurance firms to stand up to the FSA.
The start of the appeal hearing by Legal and General, against the fine imposed on it by the Financial Services Authority, revealed some interesting backstage dealing.
It seems that the Financial Services Authority, by offering to "cut a deal" with Legal and General over the size of the fine imposed on it, may have broken the law.
The FSA offered to reduce its £1.3M fine on L&G, if L&G promised not to proceed with its appeal against the fine.
That's a bit cheeky, isn't it?
The law, it seems, is unequivocal on this point; the FSA cannot use means, such as offering to reduce fines, to deter or obstruct firms from going to an appeals tribunal.
L&G are contesting that the FSA changed their minds about the quality of L&G's processes, in respect of endowment sales, after publicity about mortgage shortfalls in 1999/2000.
The FSA claimed that L&G's systems for processing endowments were deficient, and resulted in L&G mis-selling the products to "financially unsophisticated customers including an unemployed housewife."
The outcome of this hearing will be watched by everyone in the life assurance industry. If the FSA loses, it will embolden other life assurance firms to stand up to the FSA.
Tuesday, September 14, 2004
The Curate's Egg
It is reported that the Financial Ombudsman Service (FOS) is upholding complaints, against banks and building societies, for mis-selling endowment policies pre 1988.
In fact it is now upholding around 90% of complaints, excellent!
However, before people raise a cheer, there is a fly in the ointment; those of us who were sold a policy via an "independent" financial adviser (IFA) pre 1988 have no recourse.
The complaints against banks and building societies are being upheld because they were members of the FOS scheme pre 1988, independent financial advisers were not; the FOS is apparently powerless to investigate, and of course the IFA's are rejecting pre 1988 complaints out of hand.
Life is a bitch!
It is reported that the Financial Ombudsman Service (FOS) is upholding complaints, against banks and building societies, for mis-selling endowment policies pre 1988.
In fact it is now upholding around 90% of complaints, excellent!
However, before people raise a cheer, there is a fly in the ointment; those of us who were sold a policy via an "independent" financial adviser (IFA) pre 1988 have no recourse.
The complaints against banks and building societies are being upheld because they were members of the FOS scheme pre 1988, independent financial advisers were not; the FOS is apparently powerless to investigate, and of course the IFA's are rejecting pre 1988 complaints out of hand.
Life is a bitch!
Saturday, September 11, 2004
The Rotten Core at The Heart of Britain's Financial System
The following is an extract of an article published yesterday on "In Your Face", the article is entitled "The Rotten Core at The Heart of Britain's Financial System".
"The endowment mis-selling scandal, of the late eighties and nineties, readily springs to mind as one of the major failings of our financial system. As has been well documented, the life assurance companies used the bull market to create a totally unsuitable, and useless product, that they aggressively sold in the manner of TV sets and washing machines to over 8 million unsuspecting home owners.
The theory being that the bull market would create high yield returns on this product; that would not just pay off the mortgages of the hapless holders, but would also give rise to a modest surplus. Needless to say, what the life assurance companies did not bother to clearly tell people was that their commission charges would rob the product of much of its initial value, and that their projections for growth were totally unrealistic.
It now turns out that the 8 million holders, of these white elephants, are facing shortfalls of over £40BN. Although, in theory the policyholders can try to claim compensation, the life assurance companies are using every excuse in the book to slow the process down in order to avoid paying compensation. To date a paltry £1BN has been paid to those seeking redress.
The FSA, although they offer some fall back position for those refused compensation by the life assurance companies, do not have any intention of ?rocking the boat? too hard. The FSA refuse to acknowledge the fact that the life assurance companies perpetrated the greatest financial scandal in the UK in living memory."
To read the full article visit "In Your Face", and click on the document entitled "The Rotten Core at The Heart of Britain's Financial System".
The following is an extract of an article published yesterday on "In Your Face", the article is entitled "The Rotten Core at The Heart of Britain's Financial System".
"The endowment mis-selling scandal, of the late eighties and nineties, readily springs to mind as one of the major failings of our financial system. As has been well documented, the life assurance companies used the bull market to create a totally unsuitable, and useless product, that they aggressively sold in the manner of TV sets and washing machines to over 8 million unsuspecting home owners.
The theory being that the bull market would create high yield returns on this product; that would not just pay off the mortgages of the hapless holders, but would also give rise to a modest surplus. Needless to say, what the life assurance companies did not bother to clearly tell people was that their commission charges would rob the product of much of its initial value, and that their projections for growth were totally unrealistic.
It now turns out that the 8 million holders, of these white elephants, are facing shortfalls of over £40BN. Although, in theory the policyholders can try to claim compensation, the life assurance companies are using every excuse in the book to slow the process down in order to avoid paying compensation. To date a paltry £1BN has been paid to those seeking redress.
The FSA, although they offer some fall back position for those refused compensation by the life assurance companies, do not have any intention of ?rocking the boat? too hard. The FSA refuse to acknowledge the fact that the life assurance companies perpetrated the greatest financial scandal in the UK in living memory."
To read the full article visit "In Your Face", and click on the document entitled "The Rotten Core at The Heart of Britain's Financial System".
Wednesday, September 08, 2004
The Gloves Are Off
It seems that the forthcoming appeal by Legal and General (L&G) against the fine handed down from the Financial Services Authority (FSA), for endowment mis-selling, has ruffled the feathers of the FSA.
It is reported that John Tiner, the CEO of the FSA, feels that L&G's attempt to "tough it out" with the FSA should not be taken as an example by other firms of how to stand up to the FSA.
Do I detect a touch of arrogance here?
L&G are breaking new ground, as being the first big life assurance firm not to roll over and "play dead" when the FSA hands down a fine.
It will be interesting to see how they do.
In an amusing twist of fate; it emerged that David Prosser, CEO of L&G, is chairing the Financial Services Skills Council (FSSC).
The FSSC has been set up to train the 1.3 million people working in the financial services industry; and is, by a strange quirk of fate, taking over the FSA's responsibility in this field.
A case of "poacher turned gamekeeper" perhaps?
It seems that the forthcoming appeal by Legal and General (L&G) against the fine handed down from the Financial Services Authority (FSA), for endowment mis-selling, has ruffled the feathers of the FSA.
It is reported that John Tiner, the CEO of the FSA, feels that L&G's attempt to "tough it out" with the FSA should not be taken as an example by other firms of how to stand up to the FSA.
Do I detect a touch of arrogance here?
L&G are breaking new ground, as being the first big life assurance firm not to roll over and "play dead" when the FSA hands down a fine.
It will be interesting to see how they do.
In an amusing twist of fate; it emerged that David Prosser, CEO of L&G, is chairing the Financial Services Skills Council (FSSC).
The FSSC has been set up to train the 1.3 million people working in the financial services industry; and is, by a strange quirk of fate, taking over the FSA's responsibility in this field.
A case of "poacher turned gamekeeper" perhaps?
Monday, September 06, 2004
A Watershed Moment
A watershed in the endowment mortgage mis-selling scandal has been reached, a blast on the trumpets please..............
The £1BN barrier has been breached!
Life assurance companies have now paid over £1BN in compensation, to holders of their white elephant useless underperforming endowment policies.
That, on the face of it, is good news; isn't it?
I am afraid not, it represents a "drop in the ocean".
The current estimate for shortfalls on these policies, is running at £40BN to £100BN plus. The £1BN represents only 2.5% of the lower estimate.
A watershed in the endowment mortgage mis-selling scandal has been reached, a blast on the trumpets please..............
The £1BN barrier has been breached!
Life assurance companies have now paid over £1BN in compensation, to holders of their white elephant useless underperforming endowment policies.
That, on the face of it, is good news; isn't it?
I am afraid not, it represents a "drop in the ocean".
The current estimate for shortfalls on these policies, is running at £40BN to £100BN plus. The £1BN represents only 2.5% of the lower estimate.
Friday, September 03, 2004
Reuters report that the Financial Services Authority (FSA) has issued a warning to life insurers, that they may be underestimating their liabilities due to poor record keeping.
That's not very encouraging news, is it?
It seems that the FSA's investigation, into the working practices of with profits life assurers, has identified that most firms do not review whether their obligations (ie what they owe you, the policy holder) were being met.
I would ask the question here, what the hell are these companies doing then?
It seems to me that this would be a fundamental procedure; after all, if you don't know as to whether you have met past obligations how the hell do you know if you will be able to meet future ones?
Additionally, it seems that some firms no longer have the key original documents; outlining their obligations, for some products.
Those of us who have been battling to receive compensation, for our hopelessly underperforming and useless endowment policies, can certainly attest to this problem. My earlier claim hit the buffers, partly because key paperwork had long since been disposed of.
Even more alarmingly, it seems that some smaller firms have been drafting contracts for new products without any legal input or review.
Excuse me, but I thought that we lived in a modern Western country with laws and regulations? These companies seem to be operating in a manner more akin to those tin pot operations based in Nigeria who, via unsolicited emails, offer vast sums in exchange for your bank details and a fee (See the Stupid Punts section of my site for examples of these scams).
The good news is that the FSA want life assurers to review their procedures, and report back by 30 November.
That's alright then, isn't it?
That's not very encouraging news, is it?
It seems that the FSA's investigation, into the working practices of with profits life assurers, has identified that most firms do not review whether their obligations (ie what they owe you, the policy holder) were being met.
I would ask the question here, what the hell are these companies doing then?
It seems to me that this would be a fundamental procedure; after all, if you don't know as to whether you have met past obligations how the hell do you know if you will be able to meet future ones?
Additionally, it seems that some firms no longer have the key original documents; outlining their obligations, for some products.
Those of us who have been battling to receive compensation, for our hopelessly underperforming and useless endowment policies, can certainly attest to this problem. My earlier claim hit the buffers, partly because key paperwork had long since been disposed of.
Even more alarmingly, it seems that some smaller firms have been drafting contracts for new products without any legal input or review.
Excuse me, but I thought that we lived in a modern Western country with laws and regulations? These companies seem to be operating in a manner more akin to those tin pot operations based in Nigeria who, via unsolicited emails, offer vast sums in exchange for your bank details and a fee (See the Stupid Punts section of my site for examples of these scams).
The good news is that the FSA want life assurers to review their procedures, and report back by 30 November.
That's alright then, isn't it?
Thursday, September 02, 2004
Back To The Future
Which has just issued a report, the findings of which could have been based on the experiences of the owners of endowment policy holders who were sold these underperforming white elephants in the 1980's.
The sad, and rather alarming, feature of the report is that it is based on research carried out by Which, this year.
Which checked out approximately 40 financial advisers, in well known banks and building societies; only three of these "professionals" offered satisfactory advice.
The "revelation" of the report was that advisers concentrated on selling life assurance, rather than on giving advice.
Sound familiar?
Remember when we were told that the smart way to cover a mortgage was with an endowment policy?
Among those "professional" institutions visited were Abbey, Halifax, HSBC, Lloyds TSB, NatWest, Nationwide and Northern Rock.
It seems that the advisers did not make it clear that they were only able to recommend in house mortgages. This is a clear breach of the Mortgage Code.
In other words, despite the endowment policy mis-selling debacle (the biggest financial scandal of the century), it seems that not a single lesson has been learned by our trusted and respected financial institutions.
Based on this, are you confident that the financial institutions will handle your endowment complaint in a professional and unbiased manner?
I suggest you sign my petition, if you are worried.
Which has just issued a report, the findings of which could have been based on the experiences of the owners of endowment policy holders who were sold these underperforming white elephants in the 1980's.
The sad, and rather alarming, feature of the report is that it is based on research carried out by Which, this year.
Which checked out approximately 40 financial advisers, in well known banks and building societies; only three of these "professionals" offered satisfactory advice.
The "revelation" of the report was that advisers concentrated on selling life assurance, rather than on giving advice.
Sound familiar?
Remember when we were told that the smart way to cover a mortgage was with an endowment policy?
Among those "professional" institutions visited were Abbey, Halifax, HSBC, Lloyds TSB, NatWest, Nationwide and Northern Rock.
It seems that the advisers did not make it clear that they were only able to recommend in house mortgages. This is a clear breach of the Mortgage Code.
In other words, despite the endowment policy mis-selling debacle (the biggest financial scandal of the century), it seems that not a single lesson has been learned by our trusted and respected financial institutions.
Based on this, are you confident that the financial institutions will handle your endowment complaint in a professional and unbiased manner?
I suggest you sign my petition, if you are worried.
Tuesday, August 24, 2004
The Death of a Thousand Cuts
Yet more cuts in bonus rates have been foisted on endowment policy holders.
This time, it is Friends Provident who give policy holders a kick in the guts; they have reduced their payouts on maturing policies by 3%. This reduction is expected to affect around 1 million endowment policy holders, and is their fourth cut in 18 months.
Reports indicate that, for example, the payout on a £50 per month 25 year endowment will fall from £51K to £48K (in 2003 the same policy was worth £62K).
To my humble view, using a technical term here, these people are simply "taking the piss" out of endowment policy holders.
Friends Provident claim that the reductions will ensure: "that there will be a closer alignment of policy payouts with their underlying investment values."
In other words, the policies are worth "F**k All"; and they, Friends Provident and other life assurance companies, are simply softening up the hapless holders for this bombshell by the death of a thousand cuts.
If you haven't signed my petition yet, then don't you think it is time that you did?
Yet more cuts in bonus rates have been foisted on endowment policy holders.
This time, it is Friends Provident who give policy holders a kick in the guts; they have reduced their payouts on maturing policies by 3%. This reduction is expected to affect around 1 million endowment policy holders, and is their fourth cut in 18 months.
Reports indicate that, for example, the payout on a £50 per month 25 year endowment will fall from £51K to £48K (in 2003 the same policy was worth £62K).
To my humble view, using a technical term here, these people are simply "taking the piss" out of endowment policy holders.
Friends Provident claim that the reductions will ensure: "that there will be a closer alignment of policy payouts with their underlying investment values."
In other words, the policies are worth "F**k All"; and they, Friends Provident and other life assurance companies, are simply softening up the hapless holders for this bombshell by the death of a thousand cuts.
If you haven't signed my petition yet, then don't you think it is time that you did?
Wednesday, August 18, 2004
It is reported that Norwich Union will be introducing a one year time limit, for customers who complain about mis-sold endowment mortgages.
People with a complaint will have 1 year to lodge the complaint, once they receive their third "red letter".
Norwich Union is writing to its 1 million plus policy holders about their "initiative".
The last round of red letters from Norwich Union, is reported to have only given comfort to 13% of policy holders that their polices would reach their target.
To date it is reported that Norwich Union has received 34000 complaints for mis-selling, 17000 of these have been upheld.
People with a complaint will have 1 year to lodge the complaint, once they receive their third "red letter".
Norwich Union is writing to its 1 million plus policy holders about their "initiative".
The last round of red letters from Norwich Union, is reported to have only given comfort to 13% of policy holders that their polices would reach their target.
To date it is reported that Norwich Union has received 34000 complaints for mis-selling, 17000 of these have been upheld.
Thursday, August 12, 2004
Saturday, August 07, 2004
It seems that it is not just the hapless endowment mortgage owner who is being hit by underperforming endowment products.
It is reported that Policy Portfolio and Beale Dobie, two specialist firms which buy up people's unwanted policies and sell them on to other investors, will no longer be buying endowment policies; and would sell off their current stock.
Policy Portfolio and Beale Dobie are owned by Investec.
It is reported that Policy Portfolio and Beale Dobie, two specialist firms which buy up people's unwanted policies and sell them on to other investors, will no longer be buying endowment policies; and would sell off their current stock.
Policy Portfolio and Beale Dobie are owned by Investec.
Friday, August 06, 2004
What Goes Up, Goes Up Again
Interest rates went up again yesterday, they now stand at 4.75%. This rise will inevitably negatively impact mortgage rates.
City "experts" predict that the full 0.25% will be passed on to borrowers; with more rate rises likely, mortgage holders face an uncertain future.
This is of course exacerbated by the fact that the shortfalls on the non performing endowment policies are predicted to worsen.
All in all, it is not a very rosy picture.
Interest rates went up again yesterday, they now stand at 4.75%. This rise will inevitably negatively impact mortgage rates.
City "experts" predict that the full 0.25% will be passed on to borrowers; with more rate rises likely, mortgage holders face an uncertain future.
This is of course exacerbated by the fact that the shortfalls on the non performing endowment policies are predicted to worsen.
All in all, it is not a very rosy picture.
Monday, August 02, 2004
Another "Little Problem" With Endowment Policies
Those of you who are fed up with holding on to your endowment policies, and are thinking of cashing them in, need to be aware of the latest problem coming to light in the savings industry.
It seems that providers of with profits savings products have thought up another ruse, by which they prevent the poor saps who bought these underperforming policies from collecting what is rightfully theirs.
They make use of Market Value Adjusters (MVA's), which are penalties applied to people who cash in their with profits savings plan early. It seems that the owners of these policies are only just becoming aware of the existence of these penalties; as the companies that operate these polices, and the IFA's that recommended them, failed to tell people of their existence when they bought them.
In the event that you are not happy with being charged a penalty to withdraw from an underperforming and useless endowment policy, then you are at liberty to complain to the Financial Ombudsman.
Good Luck!
Those of you who are fed up with holding on to your endowment policies, and are thinking of cashing them in, need to be aware of the latest problem coming to light in the savings industry.
It seems that providers of with profits savings products have thought up another ruse, by which they prevent the poor saps who bought these underperforming policies from collecting what is rightfully theirs.
They make use of Market Value Adjusters (MVA's), which are penalties applied to people who cash in their with profits savings plan early. It seems that the owners of these policies are only just becoming aware of the existence of these penalties; as the companies that operate these polices, and the IFA's that recommended them, failed to tell people of their existence when they bought them.
In the event that you are not happy with being charged a penalty to withdraw from an underperforming and useless endowment policy, then you are at liberty to complain to the Financial Ombudsman.
Good Luck!
Thursday, July 29, 2004
Petition Launched
The Treasury Select Committee have reported that Britain's financial services industry is failing the consumer; ie that it is "crap".
Those of us holding underperforming endowment policies didn't need the Committee to tell us that, we knew that already!
I have today launched an electronic petition; pointing out that endowments were sold like TV's and cars, not investments. In view of this, it is my belief that issues regarding the mis-selling and underperformance of these policies should come under the remit of consumer legislation not the FSA.
If you would like to view, and sign the petition, please visit Compensation for Endowment Mis-selling.
Spread the word!
Thanks.
The Treasury Select Committee have reported that Britain's financial services industry is failing the consumer; ie that it is "crap".
Those of us holding underperforming endowment policies didn't need the Committee to tell us that, we knew that already!
I have today launched an electronic petition; pointing out that endowments were sold like TV's and cars, not investments. In view of this, it is my belief that issues regarding the mis-selling and underperformance of these policies should come under the remit of consumer legislation not the FSA.
If you would like to view, and sign the petition, please visit Compensation for Endowment Mis-selling.
Spread the word!
Thanks.
Saturday, July 24, 2004
It seems that the Nationwide Building Society has a had a change of heart; regarding its treatment of people who have complained about mis-sold endowment polices, after the three year deadline.
The Treasury Select Committee, investigating the mis-selling of endowment policies, made it clear a month ago that the time bar rule should be discarded.
However, until recently the Nationwide had been disbarring late claimants. Now, following the Treasury Committee ruling and FSA rule changes in respect of warning letters, the Nationwide are reported to be writing to everyone they have time barred offering to investigate their complaints.
The Treasury Select Committee, investigating the mis-selling of endowment policies, made it clear a month ago that the time bar rule should be discarded.
However, until recently the Nationwide had been disbarring late claimants. Now, following the Treasury Committee ruling and FSA rule changes in respect of warning letters, the Nationwide are reported to be writing to everyone they have time barred offering to investigate their complaints.
Tuesday, July 20, 2004
In the unlikely event that the Tories win the next election, Oliver Letwin has said that they will seriously consider shutting down the FSA.
How will this help those of us seeking redress for the mis-selling of endowment policies?
Please feel free to use the "Fax Your MP" box on this site to ask him that question.
How will this help those of us seeking redress for the mis-selling of endowment policies?
Please feel free to use the "Fax Your MP" box on this site to ask him that question.
Friday, July 09, 2004
It is reported that Jeremy Goford, the outgoing president of the Institute of Actuaries, has noted that the present system of commission payments to independent financial advisers (IFA's) must be changed.
He feels that the current system encourages IFA's to sell products that are detrimental to the interests of the consumer.
One fine example of this, as we know, was the sale of endowment policies in the 1980's.
Goford is reported to have said, that it is the role of the actuarial profession to speak out when they see a flaw.
Now let me see, the "flaw" was in place some 20 years go. It has taken him 20 years to speak out.
How much confidence in the actuarial profession, and the financial services sector as a whole, does that give the poor consumer?
He feels that the current system encourages IFA's to sell products that are detrimental to the interests of the consumer.
One fine example of this, as we know, was the sale of endowment policies in the 1980's.
Goford is reported to have said, that it is the role of the actuarial profession to speak out when they see a flaw.
Now let me see, the "flaw" was in place some 20 years go. It has taken him 20 years to speak out.
How much confidence in the actuarial profession, and the financial services sector as a whole, does that give the poor consumer?
Thursday, July 08, 2004
Ever Decreasing Circles
The increased number of complaints about failing endowment policies is causing headaches for the FSA.
Not only has its workload increased massively, but the funds sets aside to compensate people claiming under the financial services compensation scheme seem to be running out.
The scheme is used to compensate people who have lost money from firms that have gone bust.
The FSA is asking for a further £15M, on top of the £33M it acquired a few months ago.
The catch is, and there always is a catch, that the money will be derived from higher subscriptions charged to financial services firms; they, no doubt, will pass these charges on to the long suffering holders of endowment policies.
The increased number of complaints about failing endowment policies is causing headaches for the FSA.
Not only has its workload increased massively, but the funds sets aside to compensate people claiming under the financial services compensation scheme seem to be running out.
The scheme is used to compensate people who have lost money from firms that have gone bust.
The FSA is asking for a further £15M, on top of the £33M it acquired a few months ago.
The catch is, and there always is a catch, that the money will be derived from higher subscriptions charged to financial services firms; they, no doubt, will pass these charges on to the long suffering holders of endowment policies.
Monday, July 05, 2004
The Sunday Times had a good article yesterday, about how some life assurance companies may use questionnaires to invalidate claims by endowment policy holders for mis-selling.
If this is true, then it further undermines what little confidence people may have in the savings industry as a whole; and specifically the life assurance companies handling of endowment complaints.
Maybe the FSA should investigate this issue?
To read the article visit Sunday Times.
I wonder quite how low some organisations are prepared to sink, in order to avoid compensating the hapless holders of endowment policies for the mis-selling scandal of the 1980's?
If this is true, then it further undermines what little confidence people may have in the savings industry as a whole; and specifically the life assurance companies handling of endowment complaints.
Maybe the FSA should investigate this issue?
To read the article visit Sunday Times.
I wonder quite how low some organisations are prepared to sink, in order to avoid compensating the hapless holders of endowment policies for the mis-selling scandal of the 1980's?
Wednesday, June 30, 2004
The latest statistics from the Financial Ombudsman, in respect of complaints about mis-sold endowment polices, make unpleasant reading.
It seems that the number of complaints that the Financial Ombudsman Service (FOS) has received has risen dramatically, from 13570 in 2002/03 to 57917 in 2003/04.
That is more than 1000 complaints per week!
In fact, the number of complaints relating to endowment policies is now so great; that the FOS finds that over half of its workload is now devoted to this single issue.
I recall warning well over a year ago, that the system could well be deluged with complaints; as more people realised that their endowment policies were not going to pay off their mortgages.
It is, of course, expected that the number of complaints will continue to rise.
You can view the full Financial Ombudsman Service report by visiting FOS Report.
It seems that the number of complaints that the Financial Ombudsman Service (FOS) has received has risen dramatically, from 13570 in 2002/03 to 57917 in 2003/04.
That is more than 1000 complaints per week!
In fact, the number of complaints relating to endowment policies is now so great; that the FOS finds that over half of its workload is now devoted to this single issue.
I recall warning well over a year ago, that the system could well be deluged with complaints; as more people realised that their endowment policies were not going to pay off their mortgages.
It is, of course, expected that the number of complaints will continue to rise.
You can view the full Financial Ombudsman Service report by visiting FOS Report.
Wednesday, June 23, 2004
Beware The Compensation Offer
It seems that holders of mis-sold endowment polices have yet another issue to worry about.
Having successfully got through the complaints procedure, and been offered compensation by a "reputable" life assurance company, one would have thought that the policy holder could rest easy.
Unfortunately this does not seem to be the case.
It is reported that some well known life assurance companies are doing everything they can to minimise their compensation payments. They are reportedly making "mistakes" in the awards that they offer successful claimants.
One trick that has been used, is to calculate the compensation up to the date that they sent the first warning letter. Allowing for the lengthy time it takes for the complaint to be made and compensation to be agreed, coupled with compound interest rates, this can make a significant difference to the award amount.
However, the FSA take a different view on this; their rules state that the compensation must be calculated up to the point when the policy holder actually took action to deal with the problem.
In my view, the actions of those life assurance companies who seek to "bend" the FSA rules in this manner are reprehensible to say the least. They are undermining what little credibility the life assurance industry has left, and are leaving people with the impression that life assurance firms are little better than sleazy and underhand con artists.
The lesson here is, as with any financial decision, always take independent financial advice from a properly qualified and reputable adviser before making any financial decision (eg accepting a compensation payment).
Do not assume that the life assurance company have got their sums right!
It seems that holders of mis-sold endowment polices have yet another issue to worry about.
Having successfully got through the complaints procedure, and been offered compensation by a "reputable" life assurance company, one would have thought that the policy holder could rest easy.
Unfortunately this does not seem to be the case.
It is reported that some well known life assurance companies are doing everything they can to minimise their compensation payments. They are reportedly making "mistakes" in the awards that they offer successful claimants.
One trick that has been used, is to calculate the compensation up to the date that they sent the first warning letter. Allowing for the lengthy time it takes for the complaint to be made and compensation to be agreed, coupled with compound interest rates, this can make a significant difference to the award amount.
However, the FSA take a different view on this; their rules state that the compensation must be calculated up to the point when the policy holder actually took action to deal with the problem.
In my view, the actions of those life assurance companies who seek to "bend" the FSA rules in this manner are reprehensible to say the least. They are undermining what little credibility the life assurance industry has left, and are leaving people with the impression that life assurance firms are little better than sleazy and underhand con artists.
The lesson here is, as with any financial decision, always take independent financial advice from a properly qualified and reputable adviser before making any financial decision (eg accepting a compensation payment).
Do not assume that the life assurance company have got their sums right!
Monday, June 21, 2004
There is a particularly good article on "This is Money", about the endowment policy mis-selling scandal.
It covers the activities of the Prudential during the 80's and 90's. It seems that in 1993, internal investigations carried out by Prudential uncovered "evidence of widespread activity intended to deceive customers".
To my view it makes damming reading; not just in terms of the activities of the Prudential, but also in terms of highlighting the aggressive selling policy adopted by the life assurance industry at that time.
The article can be read in full at "This is Money".
It covers the activities of the Prudential during the 80's and 90's. It seems that in 1993, internal investigations carried out by Prudential uncovered "evidence of widespread activity intended to deceive customers".
To my view it makes damming reading; not just in terms of the activities of the Prudential, but also in terms of highlighting the aggressive selling policy adopted by the life assurance industry at that time.
The article can be read in full at "This is Money".
Thursday, June 17, 2004
There's a Storm Coming
Those of you holding endowment mortgages, who think that things are bad now, are going to have to steel yourselves for matters to get worse.
It is reported that about 50% of all endowments maturing this year will fail to pay off mortgage debts; this appears to be the straw in the wind of a very unpleasant storm coming our way.
It seems that, according to experts, matters will get worse.
The current estimate is that there will be a shortfall on mis-sold endowment policies of around £40BN.
However, it is reported that Ned Cazalet an insurance analyst at Cazalet Consulting, is predicting that nearly all all mortgage endowment policies that mature after 2008 will miss their targets.
Here are some stats (source Life Insurance Association):
Is it any wonder that people have lost confidence in the financial system in this country?
Those of you holding endowment mortgages, who think that things are bad now, are going to have to steel yourselves for matters to get worse.
It is reported that about 50% of all endowments maturing this year will fail to pay off mortgage debts; this appears to be the straw in the wind of a very unpleasant storm coming our way.
It seems that, according to experts, matters will get worse.
The current estimate is that there will be a shortfall on mis-sold endowment policies of around £40BN.
However, it is reported that Ned Cazalet an insurance analyst at Cazalet Consulting, is predicting that nearly all all mortgage endowment policies that mature after 2008 will miss their targets.
Here are some stats (source Life Insurance Association):
- Norwich Union expects 45% of its 38000 policies maturing this year will not meet target.
- Standard Life expects 47% of its 57000 policies not to meet target this year.
- Scottish Amicable expects 22% of its 18000 policies maturing this year not to meet target.
- Legal and General expects that 25% of its 25000 policies maturing this year not to meet target.
- Scottish Widows expects 67% of its 9000 policies maturing this year not to meet target.
- Abbey Life expects 98% of its 1500 policies maturing this year not to meet target.
Is it any wonder that people have lost confidence in the financial system in this country?
Friday, June 11, 2004
It is reported that the Royal & Sun Alliance has imposed a time limit, preventing customers who may have been mis-sold a mortgage endowment policy from complaining.
They claim that they are reconsidering their approach.
I understand that the other main endowment companies claim that they do not apply time limits.
However, the Financial Ombudsman Service (FOS) believes that the majority of companies do apply time limits.
There seems to be a "confusion of facts" here!
It is reported that the Select Treasury committee will investigate this, when it sits in the next fortnight.
I would say that the reputation of the Financial Services industry must be pretty well in tatters now. There is a report circulating that people are not saving enough for their retirement.
Given the endowment policy mis-selling scandal, why on earth would anyone trust these guys again with their pensions?
Would you?
They claim that they are reconsidering their approach.
I understand that the other main endowment companies claim that they do not apply time limits.
However, the Financial Ombudsman Service (FOS) believes that the majority of companies do apply time limits.
There seems to be a "confusion of facts" here!
It is reported that the Select Treasury committee will investigate this, when it sits in the next fortnight.
I would say that the reputation of the Financial Services industry must be pretty well in tatters now. There is a report circulating that people are not saving enough for their retirement.
Given the endowment policy mis-selling scandal, why on earth would anyone trust these guys again with their pensions?
Would you?
Wednesday, June 09, 2004
Missed The Boat
It seems that about 700000 people, out of the total of 8.5M who hold endowment policies, may have missed the deadline to lodge a complaint for mis-selling.
These figures come from the Treasury, so they are probably reasonably accurate.
The chairman of the Select Committee, John MacFall, is reported to have described the fact that so many people didn't know of the time bar as "inexcusable".
The Financial Services Authority (FSA) is understood to be trying to persuade companies operating a time bar to reconsider their approach. Some of the endowment companies have agreed to waive the time bar.
The committee has also raised the issue of people sold endowment mortgages before 1988. As we all know, the ombudsman cannot consider these complaints because there was no voluntary code or scheme covering their activities before 1988.
The Select Committee is worried that this lack of action wrt pre 1988 policies will harm the reputation of the financial services industry.
I would suggest that the 8 million people facing shortfalls on their endowment policies already think that the financial services industry is pretty poor, whether the FSA deals with the complaints or not.
It seems that there are no stats available on the number of people turned away by the Ombudsman for trying to complain about pre 1988 endowments. The estimate is 1.2M, that's a lot of unhappy people!
Let's give them some stats!
Write to the Select Committee, if you were turned away because your policy was sold pre 1988.
There is a small crumb of comfort, the FSA and government are exploring options for voluntary help for people with pre 1988 policies.
However, don't hold your breath folks, that is a "cop out" in my view.
It seems that about 700000 people, out of the total of 8.5M who hold endowment policies, may have missed the deadline to lodge a complaint for mis-selling.
These figures come from the Treasury, so they are probably reasonably accurate.
The chairman of the Select Committee, John MacFall, is reported to have described the fact that so many people didn't know of the time bar as "inexcusable".
The Financial Services Authority (FSA) is understood to be trying to persuade companies operating a time bar to reconsider their approach. Some of the endowment companies have agreed to waive the time bar.
The committee has also raised the issue of people sold endowment mortgages before 1988. As we all know, the ombudsman cannot consider these complaints because there was no voluntary code or scheme covering their activities before 1988.
The Select Committee is worried that this lack of action wrt pre 1988 policies will harm the reputation of the financial services industry.
I would suggest that the 8 million people facing shortfalls on their endowment policies already think that the financial services industry is pretty poor, whether the FSA deals with the complaints or not.
It seems that there are no stats available on the number of people turned away by the Ombudsman for trying to complain about pre 1988 endowments. The estimate is 1.2M, that's a lot of unhappy people!
Let's give them some stats!
Write to the Select Committee, if you were turned away because your policy was sold pre 1988.
There is a small crumb of comfort, the FSA and government are exploring options for voluntary help for people with pre 1988 policies.
However, don't hold your breath folks, that is a "cop out" in my view.
Friday, June 04, 2004
Alright For Some
The complaints company, which is handling the claim for compensation on one of my mis-sold endowment polices, wrote to me today.
The letter proudly informed me that they are expanding, and moving to larger premises.
Although I am pleased to see that they are doing well, it does seem that the misery of 8 million endowment policy holders is being used to supply the revenue stream for others.
The complaints company, which is handling the claim for compensation on one of my mis-sold endowment polices, wrote to me today.
The letter proudly informed me that they are expanding, and moving to larger premises.
Although I am pleased to see that they are doing well, it does seem that the misery of 8 million endowment policy holders is being used to supply the revenue stream for others.
Wednesday, June 02, 2004
New Rules, Same Problem
New rules came into force yesterday with regard to the information that life assurers must supply endowment policy holders with, concerning their underperforming endowment mortgages.
The rules require that policy providers must warn consumers of approaching deadlines for complaints about failing endowment policies. The policy provider must remind the holder when they have six months left to complain.
This of course does not address the actual problem, namely attaining compensation for the policy shortfall.
New rules came into force yesterday with regard to the information that life assurers must supply endowment policy holders with, concerning their underperforming endowment mortgages.
The rules require that policy providers must warn consumers of approaching deadlines for complaints about failing endowment policies. The policy provider must remind the holder when they have six months left to complain.
This of course does not address the actual problem, namely attaining compensation for the policy shortfall.
Wednesday, May 26, 2004
FSA Gets Tough
It seems that the FSA is getting tough with the rather "laid back" life assurance companies.
They have requested that the life assurance companies provide holders of underperforming endowment policies with more information about how to make a complaint.
Additionally, from June 1st, all insurers who apply the 3 year time limit on complaints have to write to policy holders 6 months before the end of the complaint window; to remind them to complain.
The question is, will they accept yopur complaint once you have made it?
What a mess!
It seems that the FSA is getting tough with the rather "laid back" life assurance companies.
They have requested that the life assurance companies provide holders of underperforming endowment policies with more information about how to make a complaint.
Additionally, from June 1st, all insurers who apply the 3 year time limit on complaints have to write to policy holders 6 months before the end of the complaint window; to remind them to complain.
The question is, will they accept yopur complaint once you have made it?
What a mess!
Monday, May 24, 2004
Tardy Payments
Not content with using all the excuses under the sun to avoid paying compensation, to those of us lumbered with an underperforming endowment policy, it seems that one major life assurer also delays paying compensation; even when it has agreed to pay the compensation.
The life assurer promises to pay within 28 days of compensation being agreed. Yet it appears that it breaches its own promises on a regular basis; keeping people waiting for over 10 weeks.
I understand that the FSA has put a warning shot across their bows, telling them to speed up; or face another fine.
The company claims that the delays are due to the sheer number of complaints.
Well, if it is bad now, wait and see how bad it will get over the coming year; as the penny finally drops that around 6 million people will face a shortfall and the claims flood in.
Not content with using all the excuses under the sun to avoid paying compensation, to those of us lumbered with an underperforming endowment policy, it seems that one major life assurer also delays paying compensation; even when it has agreed to pay the compensation.
The life assurer promises to pay within 28 days of compensation being agreed. Yet it appears that it breaches its own promises on a regular basis; keeping people waiting for over 10 weeks.
I understand that the FSA has put a warning shot across their bows, telling them to speed up; or face another fine.
The company claims that the delays are due to the sheer number of complaints.
Well, if it is bad now, wait and see how bad it will get over the coming year; as the penny finally drops that around 6 million people will face a shortfall and the claims flood in.
Thursday, May 20, 2004
Reuters report that Legal & General will contest the £1M fine from the FSA.
L&G accuse the FSA of having to seek extra evidence, because its original case was not strong enough.
The FSA had accused L&G, in November, of selling risky savings products to risk-averse customers; and mis-selling endowment policies between 1997 and 1999.
Those of you anxiously waiting to hear the outcome of the case, will have to hold your collective breaths; the tribunal will not begin until September.
L&G accuse the FSA of having to seek extra evidence, because its original case was not strong enough.
The FSA had accused L&G, in November, of selling risky savings products to risk-averse customers; and mis-selling endowment policies between 1997 and 1999.
Those of you anxiously waiting to hear the outcome of the case, will have to hold your collective breaths; the tribunal will not begin until September.
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