Abbey's Curate's Easter Egg
Abbey has presented its with profits policy holders with something of a curate's egg for Easter.
Despite benefiting from improved investment performance on with profits funds, Abbey will pay no annual bonuses on Scottish Provident, Abbey National Life and Scottish Mutual policies.
How nice of them!
However, they are going to reduce Market Value Reductions (MVR's), the penalties for early surrender, for some policyholders and reintroduce terminal bonuses on some long-term policies.
Abbey's Scottish Provident fund had a return of 10.5% last year, with Abbey National Life and Scottish Mutual showing 9.5% for the same period.
MVR's have been reduced by 6%. As noted, there are no annual bonuses declared for 2004, except where the policies carry guaranteed bonuses.
Scottish Mutual's traditional 25 year maturing endowments now pay a terminal bonus of 30%, an increase of 5%. The 15 year policies now receive a 5% terminal bonus, no change on the previous period.
Abbey National Life 10 year pension plans receive a 5% terminal bonus, introduced for single premium policies, and 1% for regular premiums. Scottish Provident?s 20 year endowment terminal bonus goes up from 0% to 7%.
These "improvements" are on the backs of large cuts in the past. So don't bother getting the champagne out!
At this rate, if MVR's continue to decline, investors will at least be able to take their money out and put it somewhere more useful instead.
At the end of the day endowment policy holders are being screwed left, right and centre!
Wednesday, March 23, 2005
Friday, March 18, 2005
Another Nail In The Endowment Coffin
Another Nail In The Endowment Coffin
Gordon Brown has managed to bang another nail into the endowment coffin, by adding a new tax on with profits funds.
If this tax is implemented, it will reduce the sums of money available to pay bonuses on with-profits policies.
In other words the already useless endowment policies will be further undermined, and pay out even less money to the hapless holders of these policies.
Gary Withers, chief executive of Norwich Union Life, is reported to have said:
"As we said to the Treasury in December, this is simply a piggy bank raid on the funds that support our customers' savings policies. One of the most effective ways to destroy confidence in savings is to introduce arbitrary tax raids on savings vehicles. We will continue to oppose this stealth tax in the interests of protecting our customers. I would again urge the Treasury to review their proposals in order to promote confidence in long term savings."
Brown started his assault on Britain's savings, when he made a £5BN a year charge on pension funds in 1997.
The new tax will lead to an increase in the tax burden on the free reserves supporting with-profits policyholders' funds.
Peter Vipond, head of financial regulation and taxation at the ABI, is quoted as saying:
"We remain very concerned about the government's intentions in this area. This proposal would represent a significant extra charge on with-profits policyholders and contradict the government's desire to encourage more saving in Britain...We are currently in detailed discussions with the government and negotiations have not concluded. We are determined to do all we can to prevent a rise in taxation on these savings products..".
Up until now, life companies have paid a 20% tax on life fund surpluses and no tax at all on pension fund surpluses. The chancellor is proposing to impose a 30% tax on both these surpluses, which means that there will be less money available to pay bonuses to policyholders.
The bottom line is that we, endowment policy holders, are screwed!
Gordon Brown has managed to bang another nail into the endowment coffin, by adding a new tax on with profits funds.
If this tax is implemented, it will reduce the sums of money available to pay bonuses on with-profits policies.
In other words the already useless endowment policies will be further undermined, and pay out even less money to the hapless holders of these policies.
Gary Withers, chief executive of Norwich Union Life, is reported to have said:
"As we said to the Treasury in December, this is simply a piggy bank raid on the funds that support our customers' savings policies. One of the most effective ways to destroy confidence in savings is to introduce arbitrary tax raids on savings vehicles. We will continue to oppose this stealth tax in the interests of protecting our customers. I would again urge the Treasury to review their proposals in order to promote confidence in long term savings."
Brown started his assault on Britain's savings, when he made a £5BN a year charge on pension funds in 1997.
The new tax will lead to an increase in the tax burden on the free reserves supporting with-profits policyholders' funds.
Peter Vipond, head of financial regulation and taxation at the ABI, is quoted as saying:
"We remain very concerned about the government's intentions in this area. This proposal would represent a significant extra charge on with-profits policyholders and contradict the government's desire to encourage more saving in Britain...We are currently in detailed discussions with the government and negotiations have not concluded. We are determined to do all we can to prevent a rise in taxation on these savings products..".
Up until now, life companies have paid a 20% tax on life fund surpluses and no tax at all on pension fund surpluses. The chancellor is proposing to impose a 30% tax on both these surpluses, which means that there will be less money available to pay bonuses to policyholders.
The bottom line is that we, endowment policy holders, are screwed!
Saturday, March 12, 2005
Comment On FSA Procedures
Comment On FSA Procedures
The Financial Services Authority (FSA) has asked the City to comment on its review of enforcement procedures, specifically it has asked as to whether its regulatory decisions committee is the "right model" for making contentious decisions.
The committee's Chairman, Christopher Fitzgerald, was forced to resign following him being seen talking with a lawyer who was sitting on a panel hearing an appeal against one of its decisions.
The FSA has put out a series of questions about its enforcement process, but indicated that it will not ask for changes in the legislation that sets the terms under which it operates.
The FSA was forced to review its procedures, after the financial services markets tribunal ruled against its £1.1m fine on Legal & General for endowment mis-selling could not be justified.
The Financial Services Authority (FSA) has asked the City to comment on its review of enforcement procedures, specifically it has asked as to whether its regulatory decisions committee is the "right model" for making contentious decisions.
The committee's Chairman, Christopher Fitzgerald, was forced to resign following him being seen talking with a lawyer who was sitting on a panel hearing an appeal against one of its decisions.
The FSA has put out a series of questions about its enforcement process, but indicated that it will not ask for changes in the legislation that sets the terms under which it operates.
The FSA was forced to review its procedures, after the financial services markets tribunal ruled against its £1.1m fine on Legal & General for endowment mis-selling could not be justified.
Thursday, March 03, 2005
A Nice Little Earner
A Nice Little Earner
It is reported that Andy Hornby, head of the branch business of the banking group HBOS, is to receive shares worth £2.2m; after reaching targets to boost profits in the bank's Halifax and Bank of Scotland network.
The 38 year old former supermarket executive was offered the shares under a package designed to prevent him becoming chief executive of the troubled chemist chain Boots two years ago.
Thsi despite tha fact that profits have been hit by a £130m provision, to cover claims for endowment misselling.
How nice.
It is reported that Andy Hornby, head of the branch business of the banking group HBOS, is to receive shares worth £2.2m; after reaching targets to boost profits in the bank's Halifax and Bank of Scotland network.
The 38 year old former supermarket executive was offered the shares under a package designed to prevent him becoming chief executive of the troubled chemist chain Boots two years ago.
Thsi despite tha fact that profits have been hit by a £130m provision, to cover claims for endowment misselling.
How nice.
Sunday, February 27, 2005
Abbey's New Sales Drive
Abbey's New Sales Drive
It seems that Abbey is going to start pushing its savings products in a new sales drive.
It is reported that this sales drive will be launched despite the fact that Abbey has increased its provisions for mis-selling by £154M.
The new CEO, Francisco Gomez-Roldan, has stated that he will introduce a new incentive scheme and impose minimum sales targets on branch staff.
It seems that not everyone is happy with this new sales drive; Marianne Fitzjohn, a director of Endowment Justice, is reported to have said:
"Abbey has an appalling record for mis-selling and its handling of complaints has been equally shabby. I'm very concerned to see this heavy drive on sales..."
Abbey National was fined £1M by the Financial Services Authority in 2002, for mis-selling mortgage endowments to over 40000 customers. Then, for good measure, it was fined over £2M a year later for compliance failings.
It seems that Abbey is going to start pushing its savings products in a new sales drive.
It is reported that this sales drive will be launched despite the fact that Abbey has increased its provisions for mis-selling by £154M.
The new CEO, Francisco Gomez-Roldan, has stated that he will introduce a new incentive scheme and impose minimum sales targets on branch staff.
It seems that not everyone is happy with this new sales drive; Marianne Fitzjohn, a director of Endowment Justice, is reported to have said:
"Abbey has an appalling record for mis-selling and its handling of complaints has been equally shabby. I'm very concerned to see this heavy drive on sales..."
Abbey National was fined £1M by the Financial Services Authority in 2002, for mis-selling mortgage endowments to over 40000 customers. Then, for good measure, it was fined over £2M a year later for compliance failings.
Wednesday, February 23, 2005
Prudential's Little Ray of Sunshine
Prudential's Little Ray of Sunshine
Those of your with underperforming and useless endowment polices, will no doubt be dreading this year's round of letters from your life assurance companies; as they tell you, yet again, that they are cutting their bonuses on their pitifully pathetic products.
However, there is one small piece of good news for those of you with a Prudential with profits policy.
It is reported that bonuses paid to with-profits policy-holders will be the same or bigger than last year's.
Around 5.5M people hold a Prudential with-profits fund. Prudential said the fund had seen an "exceptionally strong" return of 13.4% gross over the past year, compared with the FTSE 100 index's total return of 11.25%. Over the past five years, the fund has seen a pre-tax return of 20.7%, while the FTSE 100 has seen a negative total return of 19.5%.
Prudential said that buoyant performance meant it would add £2.2bn to the value of its policies.
This means that Prudential will at least maintain the same level of bonus it paid last year across all with-profits policies. Additionally, its with-profits annuities total bonus was to be increased to 7.12% this year, up from 6.35% last year.
David Belsham, actuarial director at Prudential Assurance, said that the fund's good performance was down to "long-term prudence" quote:
"We are now seeing the benefit of long-term prudence. We took early action to protect policyholders' funds by switching out of equities ahead of the prolonged bear market and policyholders are now benefiting from the strong returns earned on Prudential's with-profits fund...This year's bonus declaration shows that with-profits continues to be an attractive investment for policyholders when provided by a financially strong and well managed fund, such as Prudential."
I have but two simple questions:
1 If the Pru can do this, why can't the other life assurance companies?
2 The implication of the Pru's prudence (forgive the pun), is that other life assurance companies have not been prudent. This surely means that they (the other life assurance companies that have cut bonuses) can be sued for mismanagement, doesn't it?
Those of your with underperforming and useless endowment polices, will no doubt be dreading this year's round of letters from your life assurance companies; as they tell you, yet again, that they are cutting their bonuses on their pitifully pathetic products.
However, there is one small piece of good news for those of you with a Prudential with profits policy.
It is reported that bonuses paid to with-profits policy-holders will be the same or bigger than last year's.
Around 5.5M people hold a Prudential with-profits fund. Prudential said the fund had seen an "exceptionally strong" return of 13.4% gross over the past year, compared with the FTSE 100 index's total return of 11.25%. Over the past five years, the fund has seen a pre-tax return of 20.7%, while the FTSE 100 has seen a negative total return of 19.5%.
Prudential said that buoyant performance meant it would add £2.2bn to the value of its policies.
This means that Prudential will at least maintain the same level of bonus it paid last year across all with-profits policies. Additionally, its with-profits annuities total bonus was to be increased to 7.12% this year, up from 6.35% last year.
David Belsham, actuarial director at Prudential Assurance, said that the fund's good performance was down to "long-term prudence" quote:
"We are now seeing the benefit of long-term prudence. We took early action to protect policyholders' funds by switching out of equities ahead of the prolonged bear market and policyholders are now benefiting from the strong returns earned on Prudential's with-profits fund...This year's bonus declaration shows that with-profits continues to be an attractive investment for policyholders when provided by a financially strong and well managed fund, such as Prudential."
I have but two simple questions:
1 If the Pru can do this, why can't the other life assurance companies?
2 The implication of the Pru's prudence (forgive the pun), is that other life assurance companies have not been prudent. This surely means that they (the other life assurance companies that have cut bonuses) can be sued for mismanagement, doesn't it?
Tuesday, February 22, 2005
The Lottery of Claiming Compensation
The Lottery of Claiming Compensation
This is Money has an interesting article about the mixed fortunes of two people with identical endowment mortgages, taken out with Canada Life.
It seems that despite the similarity of their policies, when they tried to claim compensation for an expected shortfall, they were treated differently and offered different amounts of compensation.
As I have long suspected, since I began this site over two and a half years ago, the treatment that you get from the life assurance companies and their acolytes is a lottery.
Some win, the majority lose.
This is Money has an interesting article about the mixed fortunes of two people with identical endowment mortgages, taken out with Canada Life.
It seems that despite the similarity of their policies, when they tried to claim compensation for an expected shortfall, they were treated differently and offered different amounts of compensation.
As I have long suspected, since I began this site over two and a half years ago, the treatment that you get from the life assurance companies and their acolytes is a lottery.
Some win, the majority lose.
Monday, February 21, 2005
Slightly Off Topic
Slightly Off Topic
Here is a useful site, that I found today, for checking house prices.
UK House Prices - 3 million UK property records searched here
Here is a useful site, that I found today, for checking house prices.
UK House Prices - 3 million UK property records searched here
Sunday, February 13, 2005
The Long March
The Long March
Those of you with long memories, who have been following my attempts to try to secure redress for the mis-selling of my two underperforming useless endowment policies, may recall that I lodged a claim via professional complaint handlers way back on January 21 2004.
This claim was in respect of the endowment policy that was sold to me in 1987.
Well, over one year on, the claim handlers have written to me enclosing a "mortgage history/authority request".
Apparently my life assurance company requires that I sign this, before they gather information relevant to my case.
I think I will ask one very obvious question here, why the hell has it taken over a year just to get to this stage of the investigation?
This either means that the professional claims firm a re incompetent, or the life assurance company is being deliberately obstructive.
Those of you with long memories, who have been following my attempts to try to secure redress for the mis-selling of my two underperforming useless endowment policies, may recall that I lodged a claim via professional complaint handlers way back on January 21 2004.
This claim was in respect of the endowment policy that was sold to me in 1987.
Well, over one year on, the claim handlers have written to me enclosing a "mortgage history/authority request".
Apparently my life assurance company requires that I sign this, before they gather information relevant to my case.
I think I will ask one very obvious question here, why the hell has it taken over a year just to get to this stage of the investigation?
This either means that the professional claims firm a re incompetent, or the life assurance company is being deliberately obstructive.
Wednesday, February 09, 2005
Terminal Decline
Terminal Decline
The Scotsman writes that endowment policies are in "terminal decline". They cite the recent cuts in bonuses, announced by the larger life assurance companies; quote:
"..Standard Life and Clerical Medical were this week the latest in a string of assurors to serve up unpalatable news to policyholders: the former slashed bonuses almost across the board, despite a 10.4 per cent pre-tax return on its with-profits fund, while the latter's investors fared little better, although its fund was up 9.9 per cent.
That followed grim tidings from Scottish Widows, a subsidiary of Lloyds TSB, and Aviva - owned Norwich Union. Like Standard Life, Widows cut final payouts for the sixth time in three years, following a 10.5 per cent lift in its fund.
Earlier, Norwich Union, the UK's largest insurer, became the first this year to deliver a stinging blow, slashing payouts by up to 11.5 per cent when its four funds overall enjoyed the same rise.
Prudential's bonus declaration is over a fortnight away, while Abbey National is not due to make its announcement until March. The Pru has claimed it will increase or maintain total bonus rates on all unitised with-profits and offer good year-on-year increases in value..".
The bottom line to this is that we, the holders of these lousy underperforming polices, are screwed.
The Scotsman writes that endowment policies are in "terminal decline". They cite the recent cuts in bonuses, announced by the larger life assurance companies; quote:
"..Standard Life and Clerical Medical were this week the latest in a string of assurors to serve up unpalatable news to policyholders: the former slashed bonuses almost across the board, despite a 10.4 per cent pre-tax return on its with-profits fund, while the latter's investors fared little better, although its fund was up 9.9 per cent.
That followed grim tidings from Scottish Widows, a subsidiary of Lloyds TSB, and Aviva - owned Norwich Union. Like Standard Life, Widows cut final payouts for the sixth time in three years, following a 10.5 per cent lift in its fund.
Earlier, Norwich Union, the UK's largest insurer, became the first this year to deliver a stinging blow, slashing payouts by up to 11.5 per cent when its four funds overall enjoyed the same rise.
Prudential's bonus declaration is over a fortnight away, while Abbey National is not due to make its announcement until March. The Pru has claimed it will increase or maintain total bonus rates on all unitised with-profits and offer good year-on-year increases in value..".
The bottom line to this is that we, the holders of these lousy underperforming polices, are screwed.
Monday, February 07, 2005
The Ombudsman
The Ombudsman
The Financial Ombudsman Service (FOS) wrote to me today, about my request for their assistance in extracting details from my life assurance provider of commission payments made on my two endowment policies.
The FOS say that they cannot help as my life assurance company, under the terms of the commission disclosure rules, is not obliged to provide me with that information.
This is very odd; it is my policy and my money, yet I am not allowed to know what they do with it!
Given the response of the FOS, I am more than a little surprised that they made me fill in a form with precisely the same details as those contained in my original request to them; when they could have told me that they couldn't help me at the outset.
The Financial Ombudsman Service (FOS) wrote to me today, about my request for their assistance in extracting details from my life assurance provider of commission payments made on my two endowment policies.
The FOS say that they cannot help as my life assurance company, under the terms of the commission disclosure rules, is not obliged to provide me with that information.
This is very odd; it is my policy and my money, yet I am not allowed to know what they do with it!
Given the response of the FOS, I am more than a little surprised that they made me fill in a form with precisely the same details as those contained in my original request to them; when they could have told me that they couldn't help me at the outset.
Thursday, February 03, 2005
Standard Life Cuts Bonus
Standard Life Cuts Bonus
In more bad news for holders of failing endowment policies, Standard Life has yet again cut bonuses; for good measure it also warned that lower payouts will continue, irrespective of the recovery in equity markets.
Standard Life has around 2.6m with profits endowment policy holders.
The cuts are the 6th in 3 years; you will recall that Standard Life "welched" on its mortgage endowment promise a few months ago, I assume its 2.6m policy holders must be feeling pretty sick by now.
The effect of this latest round of cuts can be seen in this example:
A £50 per month mortgage endowment over 25 years was worth £55K, until the latest cut; now it is worth just £49K.
I wonder of the directors of Standard Life have had their bonuses cut for good measure?
In more bad news for holders of failing endowment policies, Standard Life has yet again cut bonuses; for good measure it also warned that lower payouts will continue, irrespective of the recovery in equity markets.
Standard Life has around 2.6m with profits endowment policy holders.
The cuts are the 6th in 3 years; you will recall that Standard Life "welched" on its mortgage endowment promise a few months ago, I assume its 2.6m policy holders must be feeling pretty sick by now.
The effect of this latest round of cuts can be seen in this example:
A £50 per month mortgage endowment over 25 years was worth £55K, until the latest cut; now it is worth just £49K.
I wonder of the directors of Standard Life have had their bonuses cut for good measure?
Sunday, January 30, 2005
New Rules
New Rules
The Financial Services Authority (FSA), has issued final rules and guidance to help ensure that with profits policyholders are treated fairly.
The rules are intended to increase the transparency, and accountability, of the life assurance industry. The rules cover ao:
Mick McAteer, principal policy advisor at Which?, believes that these rules represent a retrograde step; he argues that they put even more power, and discretion, into the hands of directors.
He goes on to point out that directors will be able to carry on protecting shareholder interests, by using with profits funds as a slush fund to pay compensation costs.
Quote:
"With profits policies which are still one of the riskiest products people can invest in. The FSA has done nothing meaningful to ensure that firms spell this out. Neither have they provided the necessary checks and balances to ensure that directing minds in the sector put consumers' interests on the same level as shareholders..".
The Financial Services Authority (FSA), has issued final rules and guidance to help ensure that with profits policyholders are treated fairly.
The rules are intended to increase the transparency, and accountability, of the life assurance industry. The rules cover ao:
- The costs charged to a with profits fund, by the firm managing the fund
- Penalties levied on policyholders, who surrender their policies early
- The need for funds to be managed, to ensure maturity payouts fall within a target range set for the fund
- The requirement that information be presented to policyholders, or potential policyholders, in a format they can more readily understand
- Firms must provide information to with profits policyholders within 28 working days of a decision to close a fund to new business
- A policyholder advocate will be appointed to protect the interests of policyholders
Mick McAteer, principal policy advisor at Which?, believes that these rules represent a retrograde step; he argues that they put even more power, and discretion, into the hands of directors.
He goes on to point out that directors will be able to carry on protecting shareholder interests, by using with profits funds as a slush fund to pay compensation costs.
Quote:
"With profits policies which are still one of the riskiest products people can invest in. The FSA has done nothing meaningful to ensure that firms spell this out. Neither have they provided the necessary checks and balances to ensure that directing minds in the sector put consumers' interests on the same level as shareholders..".
Friday, January 28, 2005
Form Filling
Form Filling
I finally got "off my backside", and filled the form that I received from the Financial Ombudsman Service the other day.
This form relates to my complaint against my life assurance company, for not providing me with details of commission payments made on my two endowment policies as requested back in November.
The wheels of justice turn slowly!
I finally got "off my backside", and filled the form that I received from the Financial Ombudsman Service the other day.
This form relates to my complaint against my life assurance company, for not providing me with details of commission payments made on my two endowment policies as requested back in November.
The wheels of justice turn slowly!
Thursday, January 27, 2005
Fallout
Fallout
The Financial Services Authority (FSA) is reported to be conducting an internal review of its investigations and enforcement operations, after the financial services and markets tribunal overturned its £1.1M fine on Legal & General (L&G) for endowment mis-selling.
The FSA is expected to appoint one of its top officials to lead the review.
The Financial Services Authority (FSA) is reported to be conducting an internal review of its investigations and enforcement operations, after the financial services and markets tribunal overturned its £1.1M fine on Legal & General (L&G) for endowment mis-selling.
The FSA is expected to appoint one of its top officials to lead the review.
Monday, January 24, 2005
The Dead Hand of Bureaucracy
The Dead Hand of Bureaucracy
The Financial Ombudsman Service (FOS) wrote to me today, in respect of my complaint against my life assurance provider not answering my query about commission payments on my two endowment policies.
The FOS will deal with my complaint; however, they need me to fill in a form.
Needless to say, the form requires me to regurgitate details that were already included within my original letter sent to the FOS.
The ways of the bureaucrat are indeed mysterious to behold!
No matter, a small delay of a week, is nothing in comparison to the 2.5 years I have spent on trying to claim redress.
The Financial Ombudsman Service (FOS) wrote to me today, in respect of my complaint against my life assurance provider not answering my query about commission payments on my two endowment policies.
The FOS will deal with my complaint; however, they need me to fill in a form.
Needless to say, the form requires me to regurgitate details that were already included within my original letter sent to the FOS.
The ways of the bureaucrat are indeed mysterious to behold!
No matter, a small delay of a week, is nothing in comparison to the 2.5 years I have spent on trying to claim redress.
Saturday, January 22, 2005
Tick Tock
Tick Tock
Time is running out for the hapless holders of underperforming, and useless, endowment mortgages to complain over mis-selling.
The life assurance companies will be writing to their policy holders in the coming months, warning them that they have a limited length of time left to complain.
After that, tough luck!
It is reported that Standard Life and Lloyds TSB will shortly be starting their mail shot about this issue.
Norwich Union, will be writing to its 1.1m endowment policy holders in March, reversing its earlier commitment not to impose a time bar.
How nice of them!
Friends Provident and Zurich will also be writing to their policy holders.
Some will allow 6 months to complain, others 12.
The Financial Services Authority (FSA) rules give policyholders three years to complain, after the arrival of an initial letter warning that an endowment has underperformed.
Out of the large firms, only Legal & General and Prudential have not imposed time limits on complaints.
Time is running out for the hapless holders of underperforming, and useless, endowment mortgages to complain over mis-selling.
The life assurance companies will be writing to their policy holders in the coming months, warning them that they have a limited length of time left to complain.
After that, tough luck!
It is reported that Standard Life and Lloyds TSB will shortly be starting their mail shot about this issue.
Norwich Union, will be writing to its 1.1m endowment policy holders in March, reversing its earlier commitment not to impose a time bar.
How nice of them!
Friends Provident and Zurich will also be writing to their policy holders.
Some will allow 6 months to complain, others 12.
The Financial Services Authority (FSA) rules give policyholders three years to complain, after the arrival of an initial letter warning that an endowment has underperformed.
Out of the large firms, only Legal & General and Prudential have not imposed time limits on complaints.
Friday, January 21, 2005
L&G Puts The Boot In
L&G Puts The Boot In
It is reported that David Prosser, CEO of Legal & General (L&G), has demanded changes to the Financial Services Authority's (FSA) disciplinary procedures.
This is in the wake of the partly successful appeal by L&G, against the FSA fine of £1.1M for endowment policy mis-selling by L&G.
Prosser asked for greater independence in the FSA's regulatory decisions committee (RDC), that is the body that considers recommendations made by the regulator's enforcement staff.
Currently the chair of the RDC is an FSA employee.
It is reported that L&G may ask the Financial Services and Markets Tribunal to enforce these changes.
It is reported that David Prosser, CEO of Legal & General (L&G), has demanded changes to the Financial Services Authority's (FSA) disciplinary procedures.
This is in the wake of the partly successful appeal by L&G, against the FSA fine of £1.1M for endowment policy mis-selling by L&G.
Prosser asked for greater independence in the FSA's regulatory decisions committee (RDC), that is the body that considers recommendations made by the regulator's enforcement staff.
Currently the chair of the RDC is an FSA employee.
It is reported that L&G may ask the Financial Services and Markets Tribunal to enforce these changes.
Wednesday, January 19, 2005
Norwich Union Cuts Payouts
Norwich Union Cuts Payouts
Norwich Union gave 1M holders of its with profits endowment policies a kick in the teeth yesterday.
It announced that it would be cutting payouts on maturing, longer term, policies by up to 11%.
The cuts are in spite of an investment return of over 11% before tax in 2004.
Norwich Union did at least try to ease the pain, by announcing that it has put aside £1BN to help its policy holders stuck with an underperforming endowment policy.
Mike Urmston, the chief actuary at Norwich Union Life, is reported to have said:
"The last two years of positive returns have not compensated for the negative returns of the previous three years."
Norwich noted that its maturing 25 year mortgage endowments are producing surpluses, over and above the target amounts. However, its 15 year mortgage endowments are falling short.
The company has reduced its exit penalties, that are charged when people cash in their policies early or move their money to other insurers, to a rather high 18%.
Norwich Union gave 1M holders of its with profits endowment policies a kick in the teeth yesterday.
It announced that it would be cutting payouts on maturing, longer term, policies by up to 11%.
The cuts are in spite of an investment return of over 11% before tax in 2004.
Norwich Union did at least try to ease the pain, by announcing that it has put aside £1BN to help its policy holders stuck with an underperforming endowment policy.
Mike Urmston, the chief actuary at Norwich Union Life, is reported to have said:
"The last two years of positive returns have not compensated for the negative returns of the previous three years."
Norwich noted that its maturing 25 year mortgage endowments are producing surpluses, over and above the target amounts. However, its 15 year mortgage endowments are falling short.
The company has reduced its exit penalties, that are charged when people cash in their policies early or move their money to other insurers, to a rather high 18%.
Score Draw
Score Draw
The Financial Services and Markets Tribunal (FSMT) issued its judgement in the Legal & General (L&G) vs Financial Services Authority (FSA) case.
The FSMT yesterday cleared L&G of wide-spread mis-selling of endowments, it noted that only 8 out of the 152 sales reviewed could be proven to be mis-sold.
The Tribunal also noted that the £1.1m fine imposed by the FSA should be reduced, and said a further hearing will be held on this issue.
It noted that ruled that the FSA had been "in error in its approach to the mis-selling case", adding that its conclusions were "not justified by the material before it".
The case has ended up costing L&G more in legal fees, than it will save through a lowering of its fine.
Needless to say both L&G and the FSA are claiming victory.
Whether this ruling helps the 8 million hapless holders of these underperforming, and useless, products remains to be seen.
The Financial Services and Markets Tribunal (FSMT) issued its judgement in the Legal & General (L&G) vs Financial Services Authority (FSA) case.
The FSMT yesterday cleared L&G of wide-spread mis-selling of endowments, it noted that only 8 out of the 152 sales reviewed could be proven to be mis-sold.
The Tribunal also noted that the £1.1m fine imposed by the FSA should be reduced, and said a further hearing will be held on this issue.
It noted that ruled that the FSA had been "in error in its approach to the mis-selling case", adding that its conclusions were "not justified by the material before it".
The case has ended up costing L&G more in legal fees, than it will save through a lowering of its fine.
Needless to say both L&G and the FSA are claiming victory.
Whether this ruling helps the 8 million hapless holders of these underperforming, and useless, products remains to be seen.
Tuesday, January 18, 2005
Judgement Day
Judgement Day
Today is judgement day in the battle between the Financial Services Authority (FSA) and Legal and General (L&G).
The Financial Services and Markets Tribunal will rule in the appeal made by L&G, over the FSA's fine of £1.1M for mis-selling endowment mortgages.
Smart money in the City is on the tribunal giving the FSA a "drubbing" over it's role in this case, and in the manner in which it decided on the fine.
A partial victory for L&G would severely damage the FSA, and open the gates for others to appeal their fines.
Today is judgement day in the battle between the Financial Services Authority (FSA) and Legal and General (L&G).
The Financial Services and Markets Tribunal will rule in the appeal made by L&G, over the FSA's fine of £1.1M for mis-selling endowment mortgages.
Smart money in the City is on the tribunal giving the FSA a "drubbing" over it's role in this case, and in the manner in which it decided on the fine.
A partial victory for L&G would severely damage the FSA, and open the gates for others to appeal their fines.
Monday, January 17, 2005
Backlog Developing
Backlog Developing
It seems that there is quite a backlog of endowment mis-selling cases piling up, at the Financial Ombudsman Service (FOS).
These cases are now likely to take a year or more to resolve. The FOS had budgeted for around 35000 cases, but now believes that it will be dealing with 67000.
The FOS has hired 200 new adjudicators in 2004, but that does not seem to be enough to cope with the increased number of complaints from people holding useless and underperforming endowment policies.
The FOS is pretty "pissed off" with the endowment providers, and believes that they are not co-operating with the FOS adjudicators.
It seems that there are 10 well known trouble making life assurance companies, who simply reject consumer complaints out of hand. These rejected complaints then land on the desk of the FOS.
It seems that these 10 naughty companies don't even bother to investigate the complaints, but are happy to let the poor consumer wait in limbo for 8 weeks (the FSA time limit) before telling them that their complaint is rejected.
Nice trick guys!
I am pleased to note that the names of these 10 companies have been passed on to the FSA, for fines.
It would be even better, if the names were released to the media; thus "naming and shaming" these companies as well.
It seems that there is quite a backlog of endowment mis-selling cases piling up, at the Financial Ombudsman Service (FOS).
These cases are now likely to take a year or more to resolve. The FOS had budgeted for around 35000 cases, but now believes that it will be dealing with 67000.
The FOS has hired 200 new adjudicators in 2004, but that does not seem to be enough to cope with the increased number of complaints from people holding useless and underperforming endowment policies.
The FOS is pretty "pissed off" with the endowment providers, and believes that they are not co-operating with the FOS adjudicators.
It seems that there are 10 well known trouble making life assurance companies, who simply reject consumer complaints out of hand. These rejected complaints then land on the desk of the FOS.
It seems that these 10 naughty companies don't even bother to investigate the complaints, but are happy to let the poor consumer wait in limbo for 8 weeks (the FSA time limit) before telling them that their complaint is rejected.
Nice trick guys!
I am pleased to note that the names of these 10 companies have been passed on to the FSA, for fines.
It would be even better, if the names were released to the media; thus "naming and shaming" these companies as well.
Waste Not Want Not
Waste Not Want Not
It is not the place of this site to lecture people on what they should do with their endowment compensation, if they are lucky enough to receive some.
However, I must admit to being more than a little concerned to read that some people; instead of using the compensation to reduce their outstanding mortgages, are in fact "blowing it" on holidays and consumer items.
The full story is in the Sunday Herald.
This is, in my humble view, a very stupid thing to be doing.
It is not the place of this site to lecture people on what they should do with their endowment compensation, if they are lucky enough to receive some.
However, I must admit to being more than a little concerned to read that some people; instead of using the compensation to reduce their outstanding mortgages, are in fact "blowing it" on holidays and consumer items.
The full story is in the Sunday Herald.
This is, in my humble view, a very stupid thing to be doing.
Wednesday, January 12, 2005
Halifax Tardy
Halifax Tardy
It is reported that Halifax is being somewhat tardy with paying compensation to its endowment policy holders.
Complaints handler, Brunel Franklin, accused Halifax of delaying payments up to 6 months.
Claims director for Brunel Franklin, Ian Allison, is reported to have said:
"We have supplied Halifax with all the information they need to settle these claims quickly, yet they are still refusing to pay out monies that they have admitted is due to clients....This is an outrageous state of affairs and one that people need to know about..."
Halifax say that all cases were handled within the guidelines laid down by the Financial Services Authority.
Halifax spokesman Mark Hemingway is reported to have said:
"We aim to clear compensation cases as quickly as possible, but often we are reliant on calculations coming back from third parties, such as life companies, so this can take time...Among banks and insurers, we are not unusual in the time we take over payment of claims..".
In other words, whoever you are claiming against, you are going to have to wait a long time.
It is reported that Halifax is being somewhat tardy with paying compensation to its endowment policy holders.
Complaints handler, Brunel Franklin, accused Halifax of delaying payments up to 6 months.
Claims director for Brunel Franklin, Ian Allison, is reported to have said:
"We have supplied Halifax with all the information they need to settle these claims quickly, yet they are still refusing to pay out monies that they have admitted is due to clients....This is an outrageous state of affairs and one that people need to know about..."
Halifax say that all cases were handled within the guidelines laid down by the Financial Services Authority.
Halifax spokesman Mark Hemingway is reported to have said:
"We aim to clear compensation cases as quickly as possible, but often we are reliant on calculations coming back from third parties, such as life companies, so this can take time...Among banks and insurers, we are not unusual in the time we take over payment of claims..".
In other words, whoever you are claiming against, you are going to have to wait a long time.
Tuesday, January 11, 2005
Complaint Raised With Ombudsman
Complaint Raised With Ombudsman
Copy of a letter sent to the Financial Ombudsman Service today:
"Dear Sir/Madam,
I wish to make a formal complaint about ***’s handling of my request for information about commission payments, on my two endowment policies.
I originally made the request for information on 11 November 2004 and, despite several letters and a phone call, I have yet to receive an answer.
I regard their handling of this matter to be unhelpful and obstructive.
I have enclosed copies of the correspondence, and a summary of the phone call.
Please feel free to contact me if you require further information.
Thank you in advance for your help..."
Copy of a letter sent to the Financial Ombudsman Service today:
"Dear Sir/Madam,
I wish to make a formal complaint about ***’s handling of my request for information about commission payments, on my two endowment policies.
I originally made the request for information on 11 November 2004 and, despite several letters and a phone call, I have yet to receive an answer.
I regard their handling of this matter to be unhelpful and obstructive.
I have enclosed copies of the correspondence, and a summary of the phone call.
Please feel free to contact me if you require further information.
Thank you in advance for your help..."
Monday, January 10, 2005
Bonuses Cut
Bonuses Cut
More bad news for the hapless holders of underperforming, and useless, endowment policies.
Axa Equity & Law has announced that it will be halving the annual bonus payments on its with-profits policies from a pathetic 2%, to a derisory 1%.
That is less than inflation, and certainly less than you would get for leaving your money in a savings account.
Legal & General (L&G) has cut interim bonuses on some of its with-profits bonds from 3.5% to 2.75%.
Prudential is maintaining its annual bonus payouts on its Prudence Bond, at 3.25%.
The Actuarial Profession are reported to have said that, despite rising equity markets, bonus payouts "are continuing to fall and are set to do so for a number of years yet".
More bad news for the hapless holders of underperforming, and useless, endowment policies.
Axa Equity & Law has announced that it will be halving the annual bonus payments on its with-profits policies from a pathetic 2%, to a derisory 1%.
That is less than inflation, and certainly less than you would get for leaving your money in a savings account.
Legal & General (L&G) has cut interim bonuses on some of its with-profits bonds from 3.5% to 2.75%.
Prudential is maintaining its annual bonus payouts on its Prudence Bond, at 3.25%.
The Actuarial Profession are reported to have said that, despite rising equity markets, bonus payouts "are continuing to fall and are set to do so for a number of years yet".
Sunday, January 09, 2005
Three Cheers for Liverpool Victoria
Three Cheers for Liverpool Victoria
Liverpool Victoria, the UK's largest friendly society, announced this week that all of its currently maturing mortgage endowment policies would receive a surplus on top of the mortgage amount covered.
In other words, those who hold endowment polices with Liverpool Victoria will receive a small profit over and above the mortgage.
Malcolm Berryman, Liverpool Victoria's group chief executive, said:
"The strong performance of our with-profits fund has ensured a surplus for all of our mortgage endowment policies that have matured or are currently maturing..In addition, our unconditional guarantee gives total peace of mind to our members for the future...."
Liverpool Victoria confirmed that none of its 6,000 mortgage endowment policyholders will suffer a shortfall, whatever happens to future investment returns.
It has made a financial provision to cover this guarantee, this will not have any adverse impact on future financial performance.
Now let us compare this excellent piece of news, with the dismal announcements made by the life assurance industry recently.
After all, they have all faced the same declining stock market!
The answer lies in the manner in which the companies manage their funds. Liverpool Victoria were more cautious when it came to paying out vast annual bonuses, in years of high returns.
They understood the concept of "with profits", namely that the profits made in one year should be used to smooth returns in the years of poor performance.
Unfortunately, it seems that many other "big names" in the "profession" chose to go for big bonuses in order to attract customers.
Needless to say, famine follows feast; when the stock markets started to fall, and with it investment returns, these companies that had paid out super inflated bonuses had nothing left in the cupboard to smooth things over with in the lean years.
I would argue that, in addition to persuing these companies for "mis-selling" polices, people, the FSA and the Treasury Select Committee should be going after them for mismanaging the funds.
After all if one company can produce a surplus whilst operating in the exactly the same market, why couldn't the others?
Liverpool Victoria, the UK's largest friendly society, announced this week that all of its currently maturing mortgage endowment policies would receive a surplus on top of the mortgage amount covered.
In other words, those who hold endowment polices with Liverpool Victoria will receive a small profit over and above the mortgage.
Malcolm Berryman, Liverpool Victoria's group chief executive, said:
"The strong performance of our with-profits fund has ensured a surplus for all of our mortgage endowment policies that have matured or are currently maturing..In addition, our unconditional guarantee gives total peace of mind to our members for the future...."
Liverpool Victoria confirmed that none of its 6,000 mortgage endowment policyholders will suffer a shortfall, whatever happens to future investment returns.
It has made a financial provision to cover this guarantee, this will not have any adverse impact on future financial performance.
Now let us compare this excellent piece of news, with the dismal announcements made by the life assurance industry recently.
- AXA has announced that it will be reducing their payouts
- Standard Life will reduce its payouts to its 2.4M policy holders
- The Actuarial Profession, the body which represents those who run with-profits funds, has warned that the majority of customers will face falls in value of their policies for several years to come
After all, they have all faced the same declining stock market!
The answer lies in the manner in which the companies manage their funds. Liverpool Victoria were more cautious when it came to paying out vast annual bonuses, in years of high returns.
They understood the concept of "with profits", namely that the profits made in one year should be used to smooth returns in the years of poor performance.
Unfortunately, it seems that many other "big names" in the "profession" chose to go for big bonuses in order to attract customers.
Needless to say, famine follows feast; when the stock markets started to fall, and with it investment returns, these companies that had paid out super inflated bonuses had nothing left in the cupboard to smooth things over with in the lean years.
I would argue that, in addition to persuing these companies for "mis-selling" polices, people, the FSA and the Treasury Select Committee should be going after them for mismanaging the funds.
After all if one company can produce a surplus whilst operating in the exactly the same market, why couldn't the others?
Procter Jumps Ship
Procter Jumps Ship
Andrew Procter, head of enforcement at the Financial Services Authority (FSA), is leaving to join Deutsche Bank; as head of compliance for Britain and Western Europe.
Procter was involved in the investigation into endowment mis-selling at Legal & General (L&G), which is currently appealing the £1.1m fine at the financial services and markets tribunal.
The result of their appeal is expected to be announced this week; and it was assumed, by some, that if L&G won then Procter would have to resign.
Andrew Procter, head of enforcement at the Financial Services Authority (FSA), is leaving to join Deutsche Bank; as head of compliance for Britain and Western Europe.
Procter was involved in the investigation into endowment mis-selling at Legal & General (L&G), which is currently appealing the £1.1m fine at the financial services and markets tribunal.
The result of their appeal is expected to be announced this week; and it was assumed, by some, that if L&G won then Procter would have to resign.
Wednesday, January 05, 2005
A Straw in The Wind
A Straw in The Wind
The Financial Services authority (FSA) has decided that it is now time to "get tough" with the life assurance industry, in respect of the underperforming and useless endowment policies that some 8 million people hold in the UK.
The FSA have written to the chief executives of all companies that sell endowment policies; the letter warns them that, in the opinion of the FSA, they (the life assurance companies) are dismissing complaints from customers without proper investigation.
To date, 500,000 people have complained to insurers and banks; and have received compensation for endowment mortgage mis-selling.
The FSA notes that the Financial Ombudsman Service (FOS) is upholding a large proportion of complaints, that were originally dismissed by the companies that sold the policies; this gives rise to the conclusion that the life assurance companies are not handling the complaints properly.
The FOS now employs 1000 people to handle endowment complaints.
Clive Briault, managing director of retail markets at the FSA, says:
"firms may not be handling complaints properly...Firms should not manage their own caseloads by allowing an excessive number of complaints to flow through to the FOS...".
The FSA has also identified "inconsistencies" in the decisions of some life assurance companies, relating to certain types of complaint.
To date the FSA has fined two companies, for their failure to handle complaints about endowment mortgages properly.
-Allied Dunbar Assurance was fined £725K for serious flaws in March 2004
-Friends Provident was fined £675K for failures in its procedures.
The FSA states that it wants firms to review their policies and procedures for the handling of complaints, and confirm that they are appropriate or take any necessary action.
The FSA will continue to monitor progress and outcomes to assure itself and the public that complaints are being handled fairly, and to act in any cases where it finds weaknesses that put consumers' interests at risk.
There is reportedly a straw in the wind, albeit a rather small one, that indicates that the mood at FSA headquarters is shifting in favour of the hapless endowment policy holder. Namely, that the majority of policies were not mis-bought but mis-sold.
Which? goes one better.
Which? wants the FSA to order a wholesale re-investigation of all rejected complaints, to ensure that people have been dealt with fairly.
Louise Hanson, head of campaigns at Which?, said:
"The FSA must continue to take these bad apples to task by immediately naming and shaming them, and then implementing significant fines where rules have been broken.."
This site fully endorses this suggestion.
The Financial Services authority (FSA) has decided that it is now time to "get tough" with the life assurance industry, in respect of the underperforming and useless endowment policies that some 8 million people hold in the UK.
The FSA have written to the chief executives of all companies that sell endowment policies; the letter warns them that, in the opinion of the FSA, they (the life assurance companies) are dismissing complaints from customers without proper investigation.
To date, 500,000 people have complained to insurers and banks; and have received compensation for endowment mortgage mis-selling.
The FSA notes that the Financial Ombudsman Service (FOS) is upholding a large proportion of complaints, that were originally dismissed by the companies that sold the policies; this gives rise to the conclusion that the life assurance companies are not handling the complaints properly.
The FOS now employs 1000 people to handle endowment complaints.
Clive Briault, managing director of retail markets at the FSA, says:
"firms may not be handling complaints properly...Firms should not manage their own caseloads by allowing an excessive number of complaints to flow through to the FOS...".
The FSA has also identified "inconsistencies" in the decisions of some life assurance companies, relating to certain types of complaint.
To date the FSA has fined two companies, for their failure to handle complaints about endowment mortgages properly.
-Allied Dunbar Assurance was fined £725K for serious flaws in March 2004
-Friends Provident was fined £675K for failures in its procedures.
The FSA states that it wants firms to review their policies and procedures for the handling of complaints, and confirm that they are appropriate or take any necessary action.
The FSA will continue to monitor progress and outcomes to assure itself and the public that complaints are being handled fairly, and to act in any cases where it finds weaknesses that put consumers' interests at risk.
There is reportedly a straw in the wind, albeit a rather small one, that indicates that the mood at FSA headquarters is shifting in favour of the hapless endowment policy holder. Namely, that the majority of policies were not mis-bought but mis-sold.
Which? goes one better.
Which? wants the FSA to order a wholesale re-investigation of all rejected complaints, to ensure that people have been dealt with fairly.
Louise Hanson, head of campaigns at Which?, said:
"The FSA must continue to take these bad apples to task by immediately naming and shaming them, and then implementing significant fines where rules have been broken.."
This site fully endorses this suggestion.
Tuesday, January 04, 2005
Judgement Day
Judgement Day
The long awaited judgement, in the case of the FSA vs Legal and General (L&G) will be announced around the 10th of January.
The Financial Services and Markets Tribunal said that the delay in announcing their judgement, was due to sickness and holidays.
L&G went to the tribunal in 2004, in the hope of overturning the £1.1M fine imposed on it by the FSA for endowment mis-selling.
The FSA claimed that there were "fundamental deficiencies" in the way that L&G sold mortgage endowments to low-risk customers, between 1997 and 1999; specifically, their sales and compliance procedures were found to be wanting.
It is reported that customers were given unsuitable recommendations by sales people.
An internal memo at L&G admitted, that the policies had "a very real risk of shortfall at maturity". The FSA also detailed how L&G had failed its own mock regulatory inspections.
The 5 week hearing ended in October, the FSA and insurance industry having been holding their breath ever since.
Should L&G win the case, then the credibility of the FSA would take a severe "hammering". It would also act as the green light for other insurance companies to challenge decisions, and fines imposed upon them by the FSA.
However, should the FSA win it would provide a boost for its reputation and provide a firm underpinning of John Tiner's position as CEO. Whereas the CEO of L&G, David Prosser, may well have to resign.
We, the hapless holders of these underperforming and useless endowment policies, wait with baited breath.
The long awaited judgement, in the case of the FSA vs Legal and General (L&G) will be announced around the 10th of January.
The Financial Services and Markets Tribunal said that the delay in announcing their judgement, was due to sickness and holidays.
L&G went to the tribunal in 2004, in the hope of overturning the £1.1M fine imposed on it by the FSA for endowment mis-selling.
The FSA claimed that there were "fundamental deficiencies" in the way that L&G sold mortgage endowments to low-risk customers, between 1997 and 1999; specifically, their sales and compliance procedures were found to be wanting.
It is reported that customers were given unsuitable recommendations by sales people.
An internal memo at L&G admitted, that the policies had "a very real risk of shortfall at maturity". The FSA also detailed how L&G had failed its own mock regulatory inspections.
The 5 week hearing ended in October, the FSA and insurance industry having been holding their breath ever since.
Should L&G win the case, then the credibility of the FSA would take a severe "hammering". It would also act as the green light for other insurance companies to challenge decisions, and fines imposed upon them by the FSA.
However, should the FSA win it would provide a boost for its reputation and provide a firm underpinning of John Tiner's position as CEO. Whereas the CEO of L&G, David Prosser, may well have to resign.
We, the hapless holders of these underperforming and useless endowment policies, wait with baited breath.
Monday, December 20, 2004
Trouble Ahead
It is reported that the Financial Ombudsman Service (FOS) has warned that it won't be unable to cope with the mortgage endowment complaints, next year; as there is expected to be steep rise in these complaints.
The rise in endowment complaints is expected, because the large life assurance companies will be sending out letters in the New Year to their policyholders; these will warn them about the 3 year time-bar rule.
Policyholders have 3 years from receipt of the first warning letter to complain.
The FOS is now getting fed up with endowment providers, who are disregarding complaint handling guidelines.
"..Some firms are systematically rejecting swathes of complaints with little or no investigation..."
It is reported that Halifax and Abbey National are among the names passed on to the FSA, by the FOS, in respect of shortcomings on complaint handling.
The FOS wants steps taken to force providers to settle cases themselves.
It is reported that the Financial Ombudsman Service (FOS) has warned that it won't be unable to cope with the mortgage endowment complaints, next year; as there is expected to be steep rise in these complaints.
The rise in endowment complaints is expected, because the large life assurance companies will be sending out letters in the New Year to their policyholders; these will warn them about the 3 year time-bar rule.
Policyholders have 3 years from receipt of the first warning letter to complain.
The FOS is now getting fed up with endowment providers, who are disregarding complaint handling guidelines.
"..Some firms are systematically rejecting swathes of complaints with little or no investigation..."
It is reported that Halifax and Abbey National are among the names passed on to the FSA, by the FOS, in respect of shortcomings on complaint handling.
The FOS wants steps taken to force providers to settle cases themselves.
Wednesday, December 15, 2004
The Costs Begin to Mount
The costs of compensating people for being mis-sold underperforming, and useless, endowment polices is beginning to bite into life assurance companies profits.
Lloyds TSB yesterday announced that it has had to set aside a further £110M to compensate customers, who were mis-sold endowment mortgages.
This brings their total provision for mis-selling endowments to £360M.
The costs of compensating people for being mis-sold underperforming, and useless, endowment polices is beginning to bite into life assurance companies profits.
Lloyds TSB yesterday announced that it has had to set aside a further £110M to compensate customers, who were mis-sold endowment mortgages.
This brings their total provision for mis-selling endowments to £360M.
Tuesday, December 14, 2004
Endowment Claims Cost HBOS £40M
HBOS bank has earmarked approximately £40M, in compensation for customers who may have been mis-sold underperforming performing endowment mortgages.
HBOS has reportedly admitted to an increase in the number of endowment cases being compensated, and said the precise figure will emerge in an exceptional provision in the 2004 results.
HBOS bank has earmarked approximately £40M, in compensation for customers who may have been mis-sold underperforming performing endowment mortgages.
HBOS has reportedly admitted to an increase in the number of endowment cases being compensated, and said the precise figure will emerge in an exceptional provision in the 2004 results.
Wednesday, December 08, 2004
A Slight Untruth
My dear friends at my life assurance company wrote to me today, in connection with my ongoing enquiries into how much commission they are charging on my two endowment policies.
Here is an extract of the letter, signed by their Customer Service Agent:
"Thank you for your telephone call on 30 November 2004. I apologise for the delay in my reply.
Unfortunately, due to systems limitations I am unable to advise you of the commission charges that have been paid on your policy...
I am sorry I can be of no further assistance..."
I would make a simple observation here.
The company is one of Britain's largest, and best known, life assurance company. They handle billions of pounds of investments, and have very sophisticated management information systems monitoring returns, payments, income etc.
Do they seriously expect me to believe that they do not keep records of commission payments?
My dear friends at my life assurance company wrote to me today, in connection with my ongoing enquiries into how much commission they are charging on my two endowment policies.
Here is an extract of the letter, signed by their Customer Service Agent:
"Thank you for your telephone call on 30 November 2004. I apologise for the delay in my reply.
Unfortunately, due to systems limitations I am unable to advise you of the commission charges that have been paid on your policy...
I am sorry I can be of no further assistance..."
I would make a simple observation here.
The company is one of Britain's largest, and best known, life assurance company. They handle billions of pounds of investments, and have very sophisticated management information systems monitoring returns, payments, income etc.
Do they seriously expect me to believe that they do not keep records of commission payments?
Friday, December 03, 2004
Formal Complaint
I have made a formal complaint to the Financial Ombudsman Service, about the obstructive and unhelpful attitude of my life assurance company; in respect of my enquiry about commission payments made on my endowment policies.
I have also copied all correspondence on this matter to the Treasury Select Committee.
I have made a formal complaint to the Financial Ombudsman Service, about the obstructive and unhelpful attitude of my life assurance company; in respect of my enquiry about commission payments made on my endowment policies.
I have also copied all correspondence on this matter to the Treasury Select Committee.
Tuesday, November 30, 2004
I rang my life assurance company today, asking them for the address of the part of their organisation where I should send my queries concerning commission payments made on my endowment policy.
You will recall that, despite the fact that I have already raised these queries with their central "help" centre, their "help" centre was unable to answer them.
One reason being that another branch deals with these queries.
Oddly enough the "help" centre did not forward my queries; nor indeed did it provide me with an address, of this branch, in their letter.
I asked why they did not forward the queries, my "help" centre operative did not know; and said it would have been more "helpful".
I asked why they couldn't just forward my queries, now that I have raised the matter again; he answered that he couldn't, as my original letter was "in another department".
Notwithstanding their obstructive attitude, I have now acquired the "correct" address; and have resent my original letter of the 12th November to this address.
We shall see what happens!
You will recall that, despite the fact that I have already raised these queries with their central "help" centre, their "help" centre was unable to answer them.
One reason being that another branch deals with these queries.
Oddly enough the "help" centre did not forward my queries; nor indeed did it provide me with an address, of this branch, in their letter.
I asked why they did not forward the queries, my "help" centre operative did not know; and said it would have been more "helpful".
I asked why they couldn't just forward my queries, now that I have raised the matter again; he answered that he couldn't, as my original letter was "in another department".
Notwithstanding their obstructive attitude, I have now acquired the "correct" address; and have resent my original letter of the 12th November to this address.
We shall see what happens!
Friday, November 26, 2004
Obstructive Unhelpful Delaying Tactics
You will recall that, on the 12th of November, I sent my life assurance company a letter asking about commission payments made from my two endowment policies.
Here is the letter that I sent:
"Dear Sir/Madam,
Endowment Policies (numbers **** and ****)
I have a number of queries concerning my two endowment policies (numbers **** and ***), which you manage on my behalf.
Please can you answer the following queries in respect of the above policies:
1. Please can you advise me as to how much commission has been paid to any third party, or connected party, at the time the policies were taken out?
2. Please can you advise me of the names of the companies to which commission payments have been made, in respect of these policies?
3. Please can you advise me if commission payments have been made, at dates other than at the commencement of the policies?
4. If so please can you quantify the amounts, the frequency and the organisations to which these additional commission payments have been/are being made?
5. Please can you advise me if the commission payments referred to in questions 1- 4 above were deducted directly from my policy payments, or have been charged indirectly?
6. If commission payments are still being made on my policies, please can you advise me as to why?
7. Do I have the right to stop these ongoing commission payments?
8. If I have the right to stop these ongoing commission payments, please can you explain as to why you have not drawn this to my attention before?
9. Please can you provide me with an estimate as to negative impact, on the final expected maturity value of my policies, which these payments have had?
Please feel free to contact me if you need clarification of the above.
Thank you in advance for your prompt co-operation.
Yours faithfully..."
Today I received their response; which, not to put too fine a point on it, I regard as obstructive and unhelpful.
Here is their response:
"Thanks you for your letter of 11 November, asking how much commission is being paid monthly to the adviser.
The policy *** was sold by **, direct sales office, South London branch. If you have any queries concerning the sale of these policies please contact us at the above address (note they do not supply the address in the letter, they are the same company why not just pass my letter on?).
You took out plan (**) before 1 January 1995, when the current commission disclosure rules came into force. I cannot give you details of the commission paid to the selling agent without the agent's permission in writing. In order to obtain the commission information therefore, we suggest that you contact your adviser direct (it is my money, yet they will not tell me how much they are taking!).
...."
I will follow this up.
I do not consider that their response has been at all helpful; it leaves me to wonder precisely what they are hiding.
You will recall that, on the 12th of November, I sent my life assurance company a letter asking about commission payments made from my two endowment policies.
Here is the letter that I sent:
"Dear Sir/Madam,
Endowment Policies (numbers **** and ****)
I have a number of queries concerning my two endowment policies (numbers **** and ***), which you manage on my behalf.
Please can you answer the following queries in respect of the above policies:
1. Please can you advise me as to how much commission has been paid to any third party, or connected party, at the time the policies were taken out?
2. Please can you advise me of the names of the companies to which commission payments have been made, in respect of these policies?
3. Please can you advise me if commission payments have been made, at dates other than at the commencement of the policies?
4. If so please can you quantify the amounts, the frequency and the organisations to which these additional commission payments have been/are being made?
5. Please can you advise me if the commission payments referred to in questions 1- 4 above were deducted directly from my policy payments, or have been charged indirectly?
6. If commission payments are still being made on my policies, please can you advise me as to why?
7. Do I have the right to stop these ongoing commission payments?
8. If I have the right to stop these ongoing commission payments, please can you explain as to why you have not drawn this to my attention before?
9. Please can you provide me with an estimate as to negative impact, on the final expected maturity value of my policies, which these payments have had?
Please feel free to contact me if you need clarification of the above.
Thank you in advance for your prompt co-operation.
Yours faithfully..."
Today I received their response; which, not to put too fine a point on it, I regard as obstructive and unhelpful.
Here is their response:
"Thanks you for your letter of 11 November, asking how much commission is being paid monthly to the adviser.
The policy *** was sold by **, direct sales office, South London branch. If you have any queries concerning the sale of these policies please contact us at the above address (note they do not supply the address in the letter, they are the same company why not just pass my letter on?).
You took out plan (**) before 1 January 1995, when the current commission disclosure rules came into force. I cannot give you details of the commission paid to the selling agent without the agent's permission in writing. In order to obtain the commission information therefore, we suggest that you contact your adviser direct (it is my money, yet they will not tell me how much they are taking!).
...."
I will follow this up.
I do not consider that their response has been at all helpful; it leaves me to wonder precisely what they are hiding.
Monday, November 22, 2004
Ambulance Chasers?
It seems that some of the companies that handle endowment complaints, have incurred the ire of the life assurance companies.
Norwich Union is reportedly asking for endowment complaint handlers to be regulated by the FSA, to protect consumers.
It seems that some complaints firms target people living on estates built in the late 1980s and early 1990s. This was the time when many endowment policies were sold.
Norwich Union believes that these companies should operate under the same rules, and regulations, as the life assurance companies; thus levelling the playing field.
One particular reason that the life assurance companies are irked by complaint handlers, is the fact that nearly one fifth of the complaints that they (the life assurance companies) have to deal with emanate from professional complaint handlers.
The cost to the consumer of using these firms can be 25%, or more, of any compensation won. The cost of using the Financial Ombudsman is zero.
It seems that some of the companies that handle endowment complaints, have incurred the ire of the life assurance companies.
Norwich Union is reportedly asking for endowment complaint handlers to be regulated by the FSA, to protect consumers.
It seems that some complaints firms target people living on estates built in the late 1980s and early 1990s. This was the time when many endowment policies were sold.
Norwich Union believes that these companies should operate under the same rules, and regulations, as the life assurance companies; thus levelling the playing field.
One particular reason that the life assurance companies are irked by complaint handlers, is the fact that nearly one fifth of the complaints that they (the life assurance companies) have to deal with emanate from professional complaint handlers.
The cost to the consumer of using these firms can be 25%, or more, of any compensation won. The cost of using the Financial Ombudsman is zero.
Monday, November 15, 2004
Too Lazy To Claim
It seems that, according to Mori, millions of people that may have been mis-sold an endowment mortgage have not lodged a claim for compensation; and have no intention of doing so.
When it comes to matters of finance, it seems that the British people are "asleep at the wheel".
Wake Up!!
It seems that, according to Mori, millions of people that may have been mis-sold an endowment mortgage have not lodged a claim for compensation; and have no intention of doing so.
When it comes to matters of finance, it seems that the British people are "asleep at the wheel".
Wake Up!!
Friday, November 12, 2004
Digging for Dirt
I have finally drafted a letter, to my endowment policy company, which outlines my queries in respect of commission payments that may have been deducted from my two endowment policies.
I will post their response, as and when I receive one.
Here is an extract:
"..Dear Sir/Madam,
Endowment Policies (numbers **** and ****)
I have a number of queries concerning my two endowment policies (numbers **** and ***), which you manage on my behalf.
Please can you answer the following queries in respect of the above policies:
1. Please can you advise me as to how much commission has been paid to any third party, or connected party, at the time the policies were taken out?
2. Please can you advise me of the names of the companies to which commission payments have been made, in respect of these policies?
3. Please can you advise me if commission payments have been made, at dates other than at the commencement of the policies?
4. If so please can you quantify the amounts, the frequency and the organisations to which these additional commission payments have been/are being made?
5. Please can you advise me if the commission payments referred to in questions 1- 4 above were deducted directly from my policy payments, or have been charged indirectly?
6. If commission payments are still being made on my policies, please can you advise me as to why?
7. Do I have the right to stop these ongoing commission payments?
8. If I have the right to stop these ongoing commission payments, please can you explain as to why you have not drawn this to my attention before?
9. Please can you provide me with an estimate as to negative impact, on the final expected maturity value of my policies, which these payments have had?
Please feel free to contact me if you need clarification of the above.
Thank you in advance for your prompt co-operation.
Yours faithfully..."
I have finally drafted a letter, to my endowment policy company, which outlines my queries in respect of commission payments that may have been deducted from my two endowment policies.
I will post their response, as and when I receive one.
Here is an extract:
"..Dear Sir/Madam,
Endowment Policies (numbers **** and ****)
I have a number of queries concerning my two endowment policies (numbers **** and ***), which you manage on my behalf.
Please can you answer the following queries in respect of the above policies:
1. Please can you advise me as to how much commission has been paid to any third party, or connected party, at the time the policies were taken out?
2. Please can you advise me of the names of the companies to which commission payments have been made, in respect of these policies?
3. Please can you advise me if commission payments have been made, at dates other than at the commencement of the policies?
4. If so please can you quantify the amounts, the frequency and the organisations to which these additional commission payments have been/are being made?
5. Please can you advise me if the commission payments referred to in questions 1- 4 above were deducted directly from my policy payments, or have been charged indirectly?
6. If commission payments are still being made on my policies, please can you advise me as to why?
7. Do I have the right to stop these ongoing commission payments?
8. If I have the right to stop these ongoing commission payments, please can you explain as to why you have not drawn this to my attention before?
9. Please can you provide me with an estimate as to negative impact, on the final expected maturity value of my policies, which these payments have had?
Please feel free to contact me if you need clarification of the above.
Thank you in advance for your prompt co-operation.
Yours faithfully..."
Tuesday, November 09, 2004
Renewal Commissions
I received an interesting email from the Consumers' Association, in respect of my earlier post on "Secret Commission Payments".
It seems that these payments, also called renewal commissions, are quite common. The Consumers' Association believe that they should be stopped.
Indeed the Treasury Select Committee are also of the same mind.
Their cross examination of some of the representatives of the endowment industry, in January 2004, makes amusing reading; as they make the endowment people squirm, as they try to justify these payments.
You can read the minutes here.
I received an interesting email from the Consumers' Association, in respect of my earlier post on "Secret Commission Payments".
It seems that these payments, also called renewal commissions, are quite common. The Consumers' Association believe that they should be stopped.
Indeed the Treasury Select Committee are also of the same mind.
Their cross examination of some of the representatives of the endowment industry, in January 2004, makes amusing reading; as they make the endowment people squirm, as they try to justify these payments.
You can read the minutes here.
Saturday, November 06, 2004
The New FSA Regime
The Financial Services Authority (FSA) now regulates the mortgage market.
The theory being that the scandals of the past, ie the endowment mis-selling scandal, will be avoided in the future.
However, regulation comes at a price; especially when the FSA is involved.
It is reported that there have been quite a few teething troubles with the new regime.
It seems that many mortgage brokers have not received their firm's mortgage authorisation number, which is provided by the FSA.
Some lenders have experienced problems with their IT systems, and consequently have not produced documents on line.
Others have refused to provide certain documents, as they believe that this will breach the Data Protection Act.
It is estimated that the cost of the new regime, £100 per application, will be placed fairly and squarely on the shoulders of the consumer.
That's you and me folks!
The Financial Services Authority (FSA) now regulates the mortgage market.
The theory being that the scandals of the past, ie the endowment mis-selling scandal, will be avoided in the future.
However, regulation comes at a price; especially when the FSA is involved.
It is reported that there have been quite a few teething troubles with the new regime.
It seems that many mortgage brokers have not received their firm's mortgage authorisation number, which is provided by the FSA.
Some lenders have experienced problems with their IT systems, and consequently have not produced documents on line.
Others have refused to provide certain documents, as they believe that this will breach the Data Protection Act.
It is estimated that the cost of the new regime, £100 per application, will be placed fairly and squarely on the shoulders of the consumer.
That's you and me folks!
Friday, October 29, 2004
The Devious Tricks of Life Assurance Companies and Banks
It seems that the life assurance companies and banks that sold us our useless and underperforming endowment policies, are doing their very best to avoid paying compensation.
That is at least the view of the Financial Ombudsman Service (FOS).
It seems that our "professional friends" in the life assurance companies and banks are ignoring guidelines, set down 3 years ago, as to how to handle endowment complaints.
The FOS will receive 70000 complaints this year, relating to endowment policies; in 2003 the FOS received 50000, and in 2002 they received 15000.
Needless to say, as I warned on this site over a year ago, the sheer volume of the complaints means that the FOS is having trouble processing them.
Delays of over a year are now standard, and indeed the FOS is having to "farm out" the processing to third parties.
One of the little "tricks" employed by the banks and life assurance companies, according to the FOS, is to make the complainant wait for 8 weeks before responding.
Apparently, the "professionals" believe that if they ignore the problem it will simply go away, like a bad dream.
My message to the banks and life assurance companies is simple:
-The problem won't go away
-The problem will get worse
-People are becoming angry
-Grow up, stop avoiding the issue and address the problem.
It seems that the life assurance companies and banks that sold us our useless and underperforming endowment policies, are doing their very best to avoid paying compensation.
That is at least the view of the Financial Ombudsman Service (FOS).
It seems that our "professional friends" in the life assurance companies and banks are ignoring guidelines, set down 3 years ago, as to how to handle endowment complaints.
The FOS will receive 70000 complaints this year, relating to endowment policies; in 2003 the FOS received 50000, and in 2002 they received 15000.
Needless to say, as I warned on this site over a year ago, the sheer volume of the complaints means that the FOS is having trouble processing them.
Delays of over a year are now standard, and indeed the FOS is having to "farm out" the processing to third parties.
One of the little "tricks" employed by the banks and life assurance companies, according to the FOS, is to make the complainant wait for 8 weeks before responding.
Apparently, the "professionals" believe that if they ignore the problem it will simply go away, like a bad dream.
My message to the banks and life assurance companies is simple:
-The problem won't go away
-The problem will get worse
-People are becoming angry
-Grow up, stop avoiding the issue and address the problem.
Thursday, October 28, 2004
Secret Commission Payments II
In view of the issues raised in the article "Secret Commission Payments", posted on the 19th of October, I have decided to write to my endowment company; asking them for details of all commission payments made on my two endowment policies.
I will update this site, with their response.
In view of the issues raised in the article "Secret Commission Payments", posted on the 19th of October, I have decided to write to my endowment company; asking them for details of all commission payments made on my two endowment policies.
I will update this site, with their response.
Tuesday, October 26, 2004
Judgement Day
A survey, recently undertaken by Abbey, has revealed the true extent of the mortgage crisis that will engulf the UK.
It seems that over 1 million homeowners with interest only mortgages, many of whom who have endowment polices, have not put together any plan for paying off their mortgages.
The housing market, and consequently the economy, will take a hard knock if these issues are not addressed.
A survey, recently undertaken by Abbey, has revealed the true extent of the mortgage crisis that will engulf the UK.
It seems that over 1 million homeowners with interest only mortgages, many of whom who have endowment polices, have not put together any plan for paying off their mortgages.
The housing market, and consequently the economy, will take a hard knock if these issues are not addressed.
Sunday, October 24, 2004
From Bad to Worse
"The insurance industry needs to take a long, hard look at itself ... there is simply no responsible argument for a system that rigs bids, stifles competition and cheats customers."
Not my words, but those of Eliot Spitzer, New York's attorney general; talking about the probity of the United States insurance industry.
He has launched a law suit, which will have ramifications for our own well loved insurance industry. He accuses the US insurance industry of corruption, and anti competitive practices.
The FSA is monitoring Spitzer's progress.
The crux of Spitzer's case rests on contingent commissions, that is commissions paid on top of normal commissions for selling insurance policies. The UK insurance industry is fretting, because it knows that there are contingent commissions paid in the UK as well.
It is a pity that the FSA needs to wait for the US to take the lead, in exposing corruption and dishonesty.
The fallout from this lawsuit adds to the worries surrounding the insurance industry; which were heightened this week, by the announcement from the Prudential that they needed £1BN to shore up their finances.
"The insurance industry needs to take a long, hard look at itself ... there is simply no responsible argument for a system that rigs bids, stifles competition and cheats customers."
Not my words, but those of Eliot Spitzer, New York's attorney general; talking about the probity of the United States insurance industry.
He has launched a law suit, which will have ramifications for our own well loved insurance industry. He accuses the US insurance industry of corruption, and anti competitive practices.
The FSA is monitoring Spitzer's progress.
The crux of Spitzer's case rests on contingent commissions, that is commissions paid on top of normal commissions for selling insurance policies. The UK insurance industry is fretting, because it knows that there are contingent commissions paid in the UK as well.
It is a pity that the FSA needs to wait for the US to take the lead, in exposing corruption and dishonesty.
The fallout from this lawsuit adds to the worries surrounding the insurance industry; which were heightened this week, by the announcement from the Prudential that they needed £1BN to shore up their finances.
Friday, October 22, 2004
Standard Life Celebrates in Style
Standard Life celebrated breaking their £10BN target for mortgage sales, by giving their staff 1000 bottles of champagne (total costs £15K).
You will recall that Standard Life recently reneged on it promise to underwrite its endowment policies; it is expected that over 500K of its customers face endowment misery, as their policies fail to meet their targets.
I doubt that they will be cracking open bottles of champagne.
Nice bit of PR guys!
Standard Life celebrated breaking their £10BN target for mortgage sales, by giving their staff 1000 bottles of champagne (total costs £15K).
You will recall that Standard Life recently reneged on it promise to underwrite its endowment policies; it is expected that over 500K of its customers face endowment misery, as their policies fail to meet their targets.
I doubt that they will be cracking open bottles of champagne.
Nice bit of PR guys!
Wednesday, October 20, 2004
FOS Gets Tough
It seems that the Financial Ombudsman Service (FOS) is now thoroughly fed up with the tactics used by the life assurance companies, in trying to evade paying for their lousy underperforming endowment polices that 8 million UK households are saddled with.
The FOS has warned the life assurers that they will face large fines if they don't clean up their act.
The FOS is reportedly to be of the opinion that some endowment providers routinely rejected complaints, that they knew would be upheld if they were referred to the FOS.
I understand that at the end of March 2004, life assurance companies had handled 452,201 endowment complaints while the FOS had dealt with around 125,000.
Large fines are all very well and good, but the life assurance companies are wealthy enough to weather those; and indeed will probably just pass the costs on to the hapless policy holders.
What is needed is for the life assurance companies to underwrite these underperforming, poorly designed, polices.
It seems that the Financial Ombudsman Service (FOS) is now thoroughly fed up with the tactics used by the life assurance companies, in trying to evade paying for their lousy underperforming endowment polices that 8 million UK households are saddled with.
The FOS has warned the life assurers that they will face large fines if they don't clean up their act.
The FOS is reportedly to be of the opinion that some endowment providers routinely rejected complaints, that they knew would be upheld if they were referred to the FOS.
I understand that at the end of March 2004, life assurance companies had handled 452,201 endowment complaints while the FOS had dealt with around 125,000.
Large fines are all very well and good, but the life assurance companies are wealthy enough to weather those; and indeed will probably just pass the costs on to the hapless policy holders.
What is needed is for the life assurance companies to underwrite these underperforming, poorly designed, polices.
Tuesday, October 19, 2004
Secret Commission Payments
I received this email today, from someone who has made a very interesting discovery about the commission payments being made "secretly" from his endowment policy.
It seems that, despite the fact the policy was sold to him back in the 80's, commissions of 2.5% are still being deducted annually from his policy; and paid to the IFA that sold him the policy.
Even more startling, is the fact that he could have cancelled these payments at anytime; had the life assurance company that runs his endowment policy bothered to tell him of their existence.
However, as his life assurance company puts it:
"..The representative said that whilst he conceded that
it would be in the interest of policy holders it would not be in the
interest of ** (edited) since the company required the firms of advisors,
brokers etc to provide it with a continual stream of new business.."
The 2.5% could well make a very significant difference to the maturity value of the policy.
In my view this is a very serious issue. The action of the life assurance company; in not telling him of these commission payments, and his right to cancel them, is scandalous to say the least.
I would be interested to hear from anyone else who has encountered this issue.
The text of the email is reproduced in full below, the name of the life assurance company has been withheld for the time being.
"..I have an endowment policy with ** (edited) that I acquired in March
1988. I recently had cause to telephone that organisation to ask why I
had not received any annual bonus statements for a couple of years. The
representative that fielded my call told me that statements had been
issued. I inquired as to where they had been sent and was given an address
that was a complete mystery to me, having never resided anywhere remotely
close to that location.
The representative explained that this must be the address of a firm who
were acting as my financial advisor. I said that I didn't have a financial
advisor and what on earth was he talking about? He explained to me that
normally a copy of the annual bonus statement is sent to the policy
holder's financial advisor at the same time as the original is sent to the
policy holder. He added that in my case, for some strange reason, my
address details had been overwritten with those of my "financial advisor"
and that consequently the original had been sent to them whilst I had
received nothing.
I repeated my statement that I did not have a financial advisor and asked
who exactly were this firm. After a little searching through my file the
representative explained that this was a firm that had taken over another
firm who were at the time also acting as my "advisor". That second firm's
name I did recall, just about. It was the company that had originally sold
me my endowment policy all those years ago.
I told the representative that at no time during the last 16 years had I
any contact with either of those firms, except during the time of the
policy sale back in March 1988. I then asked what possible reason could
there be for sending copies of my bonus statements to parties with whom I
had no ongoing relationship. I was told that whilst I may not have any
direct relationship, ** (edited) was paying out a commission each month
to the firm currently acting as my "advisor". I asked how much was the
commission and was told 2.5%. I was then told not to worry as this was not
coming out of my monthly premium. I then explained to the representative
that I was ultimately bearing the cost as the effect of the commission was
to reduce the available funds from which ** (edited) could declare a
bonus to policy holders. The representative agreed.
I said that I was aware that when an endowment policy is sold the firm
brokering the deal receives a lump sum commission payment. However, I said
that I was not aware that an ongoing commission is payable on each and
every premium until maturity. Nor was I aware that the entitlement to that
commission could be purchased by another firm. I asked whether the firms
were contractually entitled to this ongoing commission and was told that
they were not! I then asked what needed to happen for the commission not
to be paid. I was informed that all that needed to happen was for me to
tell ** (edited), in writing, that I wanted the payments to stop. I said
I would be writing immediately.
I then said to the representative that I was willing to wager that a
sizeable majority of policy holders were similarly unaware that such
ongoing commission charges were being paid. I also commented that the sum
total of these charges would amount to a significant sum ....a sum that
could surely have a material impact on the size of the bonus declared. I
put it to the representative that it would surely be in the best interests
of all policy holders for ** (edited) to immediately stop all ongoing
commission payments. The representative said that whilst he conceded that
it would be in the interest of policy holders it would not be in the
interest of ** (edited) since the company required the firms of advisors,
brokers etc to provide it with a continual stream of new business.
I shall be writing to ** (edited) instructing that all ongoing commission
payments in respect of my policy cease immediately. I shall further be
stating that:
1. I was unaware that such payments were being made;
2. ** (edited) had not made me aware that I had the right to terminate
such payments;
3. The corollary of the fact that only I can terminate these payments is
that only I should be able to authorise the payments in the first place.
Needless to say, I did not give my consent to the payments;
4. Notwithstanding 3. above, if ongoing commission was not a contractual
entitlement then it should not have been paid out in the first place.
As a consequence of 1 to 4 above, I shall be demanding that the value of
the commission paid (plus compound growth thereon) be added to the
cumulative total of my reversionary bonuses.
I should be very interested to learn whether other policy holders are
similarly unaware of the existence of the ongoing commission payments and
that they have the right to terminate them...."
I received this email today, from someone who has made a very interesting discovery about the commission payments being made "secretly" from his endowment policy.
It seems that, despite the fact the policy was sold to him back in the 80's, commissions of 2.5% are still being deducted annually from his policy; and paid to the IFA that sold him the policy.
Even more startling, is the fact that he could have cancelled these payments at anytime; had the life assurance company that runs his endowment policy bothered to tell him of their existence.
However, as his life assurance company puts it:
"..The representative said that whilst he conceded that
it would be in the interest of policy holders it would not be in the
interest of ** (edited) since the company required the firms of advisors,
brokers etc to provide it with a continual stream of new business.."
The 2.5% could well make a very significant difference to the maturity value of the policy.
In my view this is a very serious issue. The action of the life assurance company; in not telling him of these commission payments, and his right to cancel them, is scandalous to say the least.
I would be interested to hear from anyone else who has encountered this issue.
The text of the email is reproduced in full below, the name of the life assurance company has been withheld for the time being.
"..I have an endowment policy with ** (edited) that I acquired in March
1988. I recently had cause to telephone that organisation to ask why I
had not received any annual bonus statements for a couple of years. The
representative that fielded my call told me that statements had been
issued. I inquired as to where they had been sent and was given an address
that was a complete mystery to me, having never resided anywhere remotely
close to that location.
The representative explained that this must be the address of a firm who
were acting as my financial advisor. I said that I didn't have a financial
advisor and what on earth was he talking about? He explained to me that
normally a copy of the annual bonus statement is sent to the policy
holder's financial advisor at the same time as the original is sent to the
policy holder. He added that in my case, for some strange reason, my
address details had been overwritten with those of my "financial advisor"
and that consequently the original had been sent to them whilst I had
received nothing.
I repeated my statement that I did not have a financial advisor and asked
who exactly were this firm. After a little searching through my file the
representative explained that this was a firm that had taken over another
firm who were at the time also acting as my "advisor". That second firm's
name I did recall, just about. It was the company that had originally sold
me my endowment policy all those years ago.
I told the representative that at no time during the last 16 years had I
any contact with either of those firms, except during the time of the
policy sale back in March 1988. I then asked what possible reason could
there be for sending copies of my bonus statements to parties with whom I
had no ongoing relationship. I was told that whilst I may not have any
direct relationship, ** (edited) was paying out a commission each month
to the firm currently acting as my "advisor". I asked how much was the
commission and was told 2.5%. I was then told not to worry as this was not
coming out of my monthly premium. I then explained to the representative
that I was ultimately bearing the cost as the effect of the commission was
to reduce the available funds from which ** (edited) could declare a
bonus to policy holders. The representative agreed.
I said that I was aware that when an endowment policy is sold the firm
brokering the deal receives a lump sum commission payment. However, I said
that I was not aware that an ongoing commission is payable on each and
every premium until maturity. Nor was I aware that the entitlement to that
commission could be purchased by another firm. I asked whether the firms
were contractually entitled to this ongoing commission and was told that
they were not! I then asked what needed to happen for the commission not
to be paid. I was informed that all that needed to happen was for me to
tell ** (edited), in writing, that I wanted the payments to stop. I said
I would be writing immediately.
I then said to the representative that I was willing to wager that a
sizeable majority of policy holders were similarly unaware that such
ongoing commission charges were being paid. I also commented that the sum
total of these charges would amount to a significant sum ....a sum that
could surely have a material impact on the size of the bonus declared. I
put it to the representative that it would surely be in the best interests
of all policy holders for ** (edited) to immediately stop all ongoing
commission payments. The representative said that whilst he conceded that
it would be in the interest of policy holders it would not be in the
interest of ** (edited) since the company required the firms of advisors,
brokers etc to provide it with a continual stream of new business.
I shall be writing to ** (edited) instructing that all ongoing commission
payments in respect of my policy cease immediately. I shall further be
stating that:
1. I was unaware that such payments were being made;
2. ** (edited) had not made me aware that I had the right to terminate
such payments;
3. The corollary of the fact that only I can terminate these payments is
that only I should be able to authorise the payments in the first place.
Needless to say, I did not give my consent to the payments;
4. Notwithstanding 3. above, if ongoing commission was not a contractual
entitlement then it should not have been paid out in the first place.
As a consequence of 1 to 4 above, I shall be demanding that the value of
the commission paid (plus compound growth thereon) be added to the
cumulative total of my reversionary bonuses.
I should be very interested to learn whether other policy holders are
similarly unaware of the existence of the ongoing commission payments and
that they have the right to terminate them...."
Sunday, October 17, 2004
I wrote to the Treasury Select Committee a while ago, alerting them to the existence of this site.
I received a reply on Friday.
Here is an extract of the reply, received from the Senior Clerk to the Treasury Select Committee:
"....I have made your comments, together with the address of your endowment diary, available to all members of the Committee..."
Could be interesting.
I received a reply on Friday.
Here is an extract of the reply, received from the Senior Clerk to the Treasury Select Committee:
"....I have made your comments, together with the address of your endowment diary, available to all members of the Committee..."
Could be interesting.
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