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Thursday, June 16, 2005
Tuesday, June 14, 2005
Standard Life "Merely Following Orders"
Standard Life "Merely Following Orders"
It seems that Standard Life is getting rather a rough press these days, over its endowment policies.
Standard Life is now facing calls to compensate up to 100,000 mortgage endowment holders, for failing to disclose the full extent of charges levied on their endowment policies.
The hapless holders of their Homeplan policies are now facing 12% shortfall on their policies, because of a charging discrepancy.
Which? is leading the calls to compensate victims of this debacle; other companies (Norwich Union, L&G, Scottish Widows and Axa) which sold policies, with similar charging structures, have topped up their own clients' investments.
Standard Life used "standard charge projections", specified by the regulator, to calculate its premiums. However, the actual charges were up to 10% higher.
Standard Life claim that they have done nothing wrong.
A spokesman said that they were merely following industry guidelines at the time.
Doesn't that, "merely following orders", have a familiar ring to it?
It seems that Standard Life is getting rather a rough press these days, over its endowment policies.
Standard Life is now facing calls to compensate up to 100,000 mortgage endowment holders, for failing to disclose the full extent of charges levied on their endowment policies.
The hapless holders of their Homeplan policies are now facing 12% shortfall on their policies, because of a charging discrepancy.
Which? is leading the calls to compensate victims of this debacle; other companies (Norwich Union, L&G, Scottish Widows and Axa) which sold policies, with similar charging structures, have topped up their own clients' investments.
Standard Life used "standard charge projections", specified by the regulator, to calculate its premiums. However, the actual charges were up to 10% higher.
Standard Life claim that they have done nothing wrong.
A spokesman said that they were merely following industry guidelines at the time.
Doesn't that, "merely following orders", have a familiar ring to it?
Friday, June 10, 2005
FT Article
FT Article
My thanks to Ben for forwarding me this article, that appeared in the FT on the 7th of May.
"The most successful blogs appear to be first and foremost exercises in 'personal branding'. One such blogger is self-styled 'living brand' Ken Frost, who has a huge personal blog and an equally lengthy one (some 205 pages) detailing every twist and turn of the mis-sold endowments debacle and his claim for compensation."
My thanks to Ben for forwarding me this article, that appeared in the FT on the 7th of May.
"The most successful blogs appear to be first and foremost exercises in 'personal branding'. One such blogger is self-styled 'living brand' Ken Frost, who has a huge personal blog and an equally lengthy one (some 205 pages) detailing every twist and turn of the mis-sold endowments debacle and his claim for compensation."
Monday, June 06, 2005
Standards Life's Endowment Debacle
Standard Life's Endowment Debacle
Further to my earlier article about Standard Life's failing Homeplan endowment policy, it seems that the shortfalls on this useless product will be more than previously thought.
It seems that the value of many of the company's Homeplan policies, sold in the early 1990s, could be as much as 12% lower than the amount originally estimated.
It is estimated that the losses could exceed £250M.
The reason?
Standard Life set its premiums at an artificially low level in order to attract new business.
Standard Life are continuing to reject demands that the company compensate those who face shortfalls.
Well they would, wouldn't they?
A Standard Life are quoted as saying:
"At the time it was launched, Homeplan was an innovative and popular product. The innovative flexibility offered by Homeplan meant it was an immediate success and helped tens of thousands of people onto the property ladder."
Not much comfort to those facing a shortfall now though is it?
As I have repeated, time and time again, what is the point of an endowment policy if it is not going to pay off the mortgage?
People would not have taken these useless policies out if they didn't think that they would work.
In other words, it is the duty of the life assurance companies to underwrite these policies.
Standard Life are keen to blame the independent financial advisers (IFAS) for their mess. They are reportedly saying that the way the product was designed meant that IFAS, who were responsible for selling Homeplan policies at the time, could themselves decide the level of premiums that their clients should pay.
Janet Walford, editor of Money Management, politely says that this is of course bollocks:
"This just does not seem logical to me. Life offices price their policies on complex actuarial assumptions, including underwriting risk, assumed performance and charges. How would an IFA know what to charge? It's madness."
Other life insurers, have realised the error of their ways and have quietly paid compensation to their policyholders in a similar position.
The list of recalcitrants includes; Scottish Widows, Axa, Clerical Medical, Legal & General, Norwich Union and Canada Life.
Further to my earlier article about Standard Life's failing Homeplan endowment policy, it seems that the shortfalls on this useless product will be more than previously thought.
It seems that the value of many of the company's Homeplan policies, sold in the early 1990s, could be as much as 12% lower than the amount originally estimated.
It is estimated that the losses could exceed £250M.
The reason?
Standard Life set its premiums at an artificially low level in order to attract new business.
Standard Life are continuing to reject demands that the company compensate those who face shortfalls.
Well they would, wouldn't they?
A Standard Life are quoted as saying:
"At the time it was launched, Homeplan was an innovative and popular product. The innovative flexibility offered by Homeplan meant it was an immediate success and helped tens of thousands of people onto the property ladder."
Not much comfort to those facing a shortfall now though is it?
As I have repeated, time and time again, what is the point of an endowment policy if it is not going to pay off the mortgage?
People would not have taken these useless policies out if they didn't think that they would work.
In other words, it is the duty of the life assurance companies to underwrite these policies.
Standard Life are keen to blame the independent financial advisers (IFAS) for their mess. They are reportedly saying that the way the product was designed meant that IFAS, who were responsible for selling Homeplan policies at the time, could themselves decide the level of premiums that their clients should pay.
Janet Walford, editor of Money Management, politely says that this is of course bollocks:
"This just does not seem logical to me. Life offices price their policies on complex actuarial assumptions, including underwriting risk, assumed performance and charges. How would an IFA know what to charge? It's madness."
Other life insurers, have realised the error of their ways and have quietly paid compensation to their policyholders in a similar position.
The list of recalcitrants includes; Scottish Widows, Axa, Clerical Medical, Legal & General, Norwich Union and Canada Life.
Tuesday, May 31, 2005
Standard Life Faces £50M Compensation Claims
Standard Life Faces £50M Compensation Claims
Standard Life is facing calls to compensate up to 100,000 mortgage endowment customers, whose charges are much higher than those they were quoted at the time and who are likely to face shortfalls when their policies mature.
The shortfall, for those who took out Homeplan endowments between 1991 and 1994, could be £50M.
Which? made the call for compensation. It seems that up to 11 other companies, which sold policies with similar charging structures to that of Standard Life have been topping up their own clients' investments.
The Financial Services Authority (FSA) is reported to have carried out a review in 2001, that found that a number of companies had been engaged in "pre-contractual mis representation and in some a breach of contractual warranty".
The companies that have admitted they have paid redress to tens of thousands of their customers include Norwich Union and Legal & General.
Which? contend that Standard Life were doing the same thing, and as such should compensate their customers.
Standard Life, which intends to float on the FTSE in 2006/7, has 2.6M with-profits policyholders.
During 1988 and 1994 Lautro, the insurers' watchdog, required its members to give "standard charge projections" in their product literature; based on an industry-wide "average" of how much a product might cost and how much it might pay out, based on presumed level of growth.
The figures turned out to be garbage, in fact they were misleading, like everything else concerned with these endowment products.
The charges levied were higher than those set out, ie the customer was not being given the facts.
The insurers, like the Nazis, argue that they were simply following the regulator's orders!
Standard Life claim that the figures "in no way formed a part of the contract [and] charges could change over the term of the policy".
Pathetic!
So what on earth was the point of them then?
Insruance companies used the misleading figures to charge customers. Hence they could pretend to be more competitve than others.
Following talks with the FSA, L&G agreed to top up its policies. Norwich Union says it did the same with 10,000 policies it inherited, when it took over Provident Mutual.
Am I the only person to think that endowment policies were the biggest con trick perpetrated on the British public in the 20th cetury?
To my view, people should be going to jail over this scandal.
Standard Life is facing calls to compensate up to 100,000 mortgage endowment customers, whose charges are much higher than those they were quoted at the time and who are likely to face shortfalls when their policies mature.
The shortfall, for those who took out Homeplan endowments between 1991 and 1994, could be £50M.
Which? made the call for compensation. It seems that up to 11 other companies, which sold policies with similar charging structures to that of Standard Life have been topping up their own clients' investments.
The Financial Services Authority (FSA) is reported to have carried out a review in 2001, that found that a number of companies had been engaged in "pre-contractual mis representation and in some a breach of contractual warranty".
The companies that have admitted they have paid redress to tens of thousands of their customers include Norwich Union and Legal & General.
Which? contend that Standard Life were doing the same thing, and as such should compensate their customers.
Standard Life, which intends to float on the FTSE in 2006/7, has 2.6M with-profits policyholders.
During 1988 and 1994 Lautro, the insurers' watchdog, required its members to give "standard charge projections" in their product literature; based on an industry-wide "average" of how much a product might cost and how much it might pay out, based on presumed level of growth.
The figures turned out to be garbage, in fact they were misleading, like everything else concerned with these endowment products.
The charges levied were higher than those set out, ie the customer was not being given the facts.
The insurers, like the Nazis, argue that they were simply following the regulator's orders!
Standard Life claim that the figures "in no way formed a part of the contract [and] charges could change over the term of the policy".
Pathetic!
So what on earth was the point of them then?
Insruance companies used the misleading figures to charge customers. Hence they could pretend to be more competitve than others.
Following talks with the FSA, L&G agreed to top up its policies. Norwich Union says it did the same with 10,000 policies it inherited, when it took over Provident Mutual.
Am I the only person to think that endowment policies were the biggest con trick perpetrated on the British public in the 20th cetury?
To my view, people should be going to jail over this scandal.
Friday, May 27, 2005
Legal and General Have Fine Cut
Legal and General Have Fine Cut
Legal & General Group (L&G) have had their fine for misselling mortgage endowments cut in half in a ruling that criticised the FSA.
L&G will now pay a £575K, the Financial Services and Markets Tribunal said in a decision posted on its Web site.
The original fine was £1.1M.
The ruling said that the insurer was "justified in feeling aggrieved" about the FSA's probe. The watchdog used a report from PricewaterhouseCoopers LLP as the basis of its case when it should have used its own evidence, the ruling said.
L&G was the first life assurance company to appeal against an FSA penalty, this may encourage other companies to challenge the regulator's decisions.
Abbey National was fined £800K by the regulator for mishandling complaints from endowment clients.
Maybe they could employ one of these endowment compensation firms to help them?
Legal & General Group (L&G) have had their fine for misselling mortgage endowments cut in half in a ruling that criticised the FSA.
L&G will now pay a £575K, the Financial Services and Markets Tribunal said in a decision posted on its Web site.
The original fine was £1.1M.
The ruling said that the insurer was "justified in feeling aggrieved" about the FSA's probe. The watchdog used a report from PricewaterhouseCoopers LLP as the basis of its case when it should have used its own evidence, the ruling said.
L&G was the first life assurance company to appeal against an FSA penalty, this may encourage other companies to challenge the regulator's decisions.
Abbey National was fined £800K by the regulator for mishandling complaints from endowment clients.
Maybe they could employ one of these endowment compensation firms to help them?
Thursday, May 26, 2005
The Shabby Habit
The Shabby Habit
Abbey, the mortgage lender, has been fined £800K by the Financial Services Authority (FSA) for mishandling complaints from its customers over endowment policies.
The FSA also accused Abbey of giving it inaccurate information, while failing to treat its customers fairly.
The FSA said Abbey mishandled about 5,000 complaints between October 2001 and September 2003.
Seemingly Abbey rejected 3,500 complaints that should have in fact been upheld.
The FSA are quoted as saying:
"By putting its own interests ahead of those of its customers with a mortgage endowment complaint, Abbey has singularly failed to treat its customers fairly,"
Abbey said it accepted that its complaint procedures for endowment products were inadequate, and said it was reviewing all complaints from the period and would pay compensation where appropriate.
Quote:
"Abbey takes this extremely seriously and continues to fully review its complaints handling policies and procedures,".
Abbey said it was re-evaluating about 50,000 complaints made over the past five years, and would be writing to the customers affected by 22 June.
So there you have a nice example of a leading brand name, not treating its customers fairly.
I wonder how many others have acted in the same way?
Abbey, the mortgage lender, has been fined £800K by the Financial Services Authority (FSA) for mishandling complaints from its customers over endowment policies.
The FSA also accused Abbey of giving it inaccurate information, while failing to treat its customers fairly.
The FSA said Abbey mishandled about 5,000 complaints between October 2001 and September 2003.
Seemingly Abbey rejected 3,500 complaints that should have in fact been upheld.
The FSA are quoted as saying:
"By putting its own interests ahead of those of its customers with a mortgage endowment complaint, Abbey has singularly failed to treat its customers fairly,"
Abbey said it accepted that its complaint procedures for endowment products were inadequate, and said it was reviewing all complaints from the period and would pay compensation where appropriate.
Quote:
"Abbey takes this extremely seriously and continues to fully review its complaints handling policies and procedures,".
Abbey said it was re-evaluating about 50,000 complaints made over the past five years, and would be writing to the customers affected by 22 June.
So there you have a nice example of a leading brand name, not treating its customers fairly.
I wonder how many others have acted in the same way?
Monday, May 23, 2005
Standard Life's Secrecy
Standard Life's Secrecy
It seems that some life assurance companies, despite happily trumpeting their endowment payouts a few years ago, now try to keep their hapless policy holders in the dark.
Maybe it is something to do with the fact that these policies are useless?
One firm that has employed this "Orwellian" technique of information management is Standard Life.
Its with-profits policyholders have been receiving annual statements which do not disclose the policy's estimated terminal bonuses.
This information restriction was introduced in 2003. Seemingly, Standard Life believe that too much information will confuse policy holders.
Sorry, but what utter nonsense!
How stupid do they think we are to fall for that excuse?
However, after pressure from financial advisers, Standard Life finally relented; they are now "allowing" their policy holders the opportunity to find out how badly their policy is performing.
Unfortunately this "generous" release of information is not as "generous" as it may seem. The hapless policy holders will only be able to find out about the failings of their policies, if they ask an independent financial adviser.
Standard Life won't give the policy holders the information directly!
It seems that the life assurance industry is still treating us, the hapless policy holders, with contempt.
It seems that some life assurance companies, despite happily trumpeting their endowment payouts a few years ago, now try to keep their hapless policy holders in the dark.
Maybe it is something to do with the fact that these policies are useless?
One firm that has employed this "Orwellian" technique of information management is Standard Life.
Its with-profits policyholders have been receiving annual statements which do not disclose the policy's estimated terminal bonuses.
This information restriction was introduced in 2003. Seemingly, Standard Life believe that too much information will confuse policy holders.
Sorry, but what utter nonsense!
How stupid do they think we are to fall for that excuse?
However, after pressure from financial advisers, Standard Life finally relented; they are now "allowing" their policy holders the opportunity to find out how badly their policy is performing.
Unfortunately this "generous" release of information is not as "generous" as it may seem. The hapless policy holders will only be able to find out about the failings of their policies, if they ask an independent financial adviser.
Standard Life won't give the policy holders the information directly!
It seems that the life assurance industry is still treating us, the hapless policy holders, with contempt.
Wednesday, May 18, 2005
Traded Endowment Policies
Traded Endowment Policies
There is quite an interesting article in The Telegraph, about traded endowment polices (TEPS).
TEPS is the market for buying and selling second endowment polices.
There is quite an interesting article in The Telegraph, about traded endowment polices (TEPS).
TEPS is the market for buying and selling second endowment polices.
Tuesday, May 10, 2005
Money For Old Rope
Money For Old Rope
The third party complaint handlers, that do the work that endowment complainees are well able to do themselves, managed to rake in £12M in fees last year.
These companies can charge up to 50% of the compensation awarded, just for filling in the same paperwork that the endowment policy holder should complete himself.
This "easy money" scheme is now being put under pressure by the life assurance companies.
Prudential and Norwich Union have stopped paying compensation for endowment mis-selling to unregulated claims-handling firms.
The Prudential will no longer pay compensation directly to these firms. Instead it will send payments to their clients, who can chose whether or not to pay the intermediary. Norwich Union is understood to have taken a similar stand.
Consumers claiming they were mis-sold an endowment policy by the direct sales forces of the Prudential and Norwich Union are instead being urged to go directly to them.
The third party complaint handlers, that do the work that endowment complainees are well able to do themselves, managed to rake in £12M in fees last year.
These companies can charge up to 50% of the compensation awarded, just for filling in the same paperwork that the endowment policy holder should complete himself.
This "easy money" scheme is now being put under pressure by the life assurance companies.
Prudential and Norwich Union have stopped paying compensation for endowment mis-selling to unregulated claims-handling firms.
The Prudential will no longer pay compensation directly to these firms. Instead it will send payments to their clients, who can chose whether or not to pay the intermediary. Norwich Union is understood to have taken a similar stand.
Consumers claiming they were mis-sold an endowment policy by the direct sales forces of the Prudential and Norwich Union are instead being urged to go directly to them.
Sunday, May 08, 2005
Endowment Crisis Worsening
Endowment Crisis Worsening
It seems that things are lurching from bad to worse in respect of the performance of the underperforming and useless endowment policies, held by 10 million people in the UK.
It is reported that over 50% of all policies, due to mature this year, will not meet their targets.
Norwich Union said that 19,000, or 58%, of its 33,000 policies will fall short this year.
Standard Life said that over 14,000, or 47%, of its 30,000 policies maturing this year will fall short.
That did not prevent Sir Brian Stewart, chairman of Standard Life, from deluding himself and others last week by saying that endowments were "not all bad"; in fact he was even predicting that they would make a comeback!
Scottish Widows is expecting that 2/3rds will not meet their targets this year.
L&G didn't seem to have any figures, they were not "readily available", how reassuring!
However, Prudential said that none of its 8,376 policies due to mature this year would fall short.
Maybe Prudential has something to teach the other life assurance companies, as to how to manage an endowment fund?
It seems that things are lurching from bad to worse in respect of the performance of the underperforming and useless endowment policies, held by 10 million people in the UK.
It is reported that over 50% of all policies, due to mature this year, will not meet their targets.
Norwich Union said that 19,000, or 58%, of its 33,000 policies will fall short this year.
Standard Life said that over 14,000, or 47%, of its 30,000 policies maturing this year will fall short.
That did not prevent Sir Brian Stewart, chairman of Standard Life, from deluding himself and others last week by saying that endowments were "not all bad"; in fact he was even predicting that they would make a comeback!
Scottish Widows is expecting that 2/3rds will not meet their targets this year.
L&G didn't seem to have any figures, they were not "readily available", how reassuring!
However, Prudential said that none of its 8,376 policies due to mature this year would fall short.
Maybe Prudential has something to teach the other life assurance companies, as to how to manage an endowment fund?
Wednesday, May 04, 2005
Time Bar To Bring Chaos
Time Bar To Bring Chaos
Life assurance companies, who sold underperforming and useless endowment policies to 8 million home owners, are using a number of methods to reduce the claims being made against them for compensation.
One such method is the time bar, whereby claimants are given a deadline to complain or lose their right to do so for ever.
This neat little trick is allowed by the Financial Services Authority (FSA), which said that an insurer may disregard a case for mis-selling three years after a policyholder receives the first "red" letter warning that an endowment has a high risk of not meeting its target.
Needless to say, there is now a deluge of complaints swamping the system.
Many hundreds of thousands of red letters were sent out in early 2003, this means that the deadline is now fast approaching for these people to make a claim.
The deluge has been further exacerbated by the fact that the FSA has told the life assurance companies that they must remind people 6 months before the final deadline, as to their right to make a claim.
Needless to say the life assurance companies and the Ombudsman will be hard pressed to cope with this deluge of complaints.
It has taken me over two years to reach the final stage of my claims which, for the record, were both rejected.
Simply put, the system can't cope!
This problem is exacerbated by the fact that, according to Chief Ombudsman Walter Merricks, 45% of endowment mis-selling cases were upheld by his office after being turned down by life companies.
These companies are reportedly issuing time bars:
Norwich Union - it has 1M endowment policyholders. It began warning of a time bar last October, giving 12 months' notice.
Standard Life - it has 1.2M endowment policyholders. It will write to customers in coming weeks to remind them about its deadline, giving 12 months' notice.
Royal & SunAlliance - it has 450K policyholders. It began reminding policyholders about time-barring last May and gives policyholders six months to complain after a second red warning letter.
Allied Dunbar/Eagle Star - it has 100K policyholders. Policyholders have 12 months to complain after receiving second letter.
Friends Provident - it has 450K policyholders. They have imposed a three-year time bar after policyholders receive their first red letter.
Pearl/NPI/London Life - it has 100K policyholders. Time barring applies three years after the first red letter.
Axa - it has 160K endowment policyholders. It introduced time-barring last month and is writing to customers giving 12 months' notice.
Scottish Widows - it has 165K endowment policyholders. It introduced time-barring in February, giving customers 12 months to complain after receiving their second red letter.
Good luck!
Life assurance companies, who sold underperforming and useless endowment policies to 8 million home owners, are using a number of methods to reduce the claims being made against them for compensation.
One such method is the time bar, whereby claimants are given a deadline to complain or lose their right to do so for ever.
This neat little trick is allowed by the Financial Services Authority (FSA), which said that an insurer may disregard a case for mis-selling three years after a policyholder receives the first "red" letter warning that an endowment has a high risk of not meeting its target.
Needless to say, there is now a deluge of complaints swamping the system.
Many hundreds of thousands of red letters were sent out in early 2003, this means that the deadline is now fast approaching for these people to make a claim.
The deluge has been further exacerbated by the fact that the FSA has told the life assurance companies that they must remind people 6 months before the final deadline, as to their right to make a claim.
Needless to say the life assurance companies and the Ombudsman will be hard pressed to cope with this deluge of complaints.
It has taken me over two years to reach the final stage of my claims which, for the record, were both rejected.
Simply put, the system can't cope!
This problem is exacerbated by the fact that, according to Chief Ombudsman Walter Merricks, 45% of endowment mis-selling cases were upheld by his office after being turned down by life companies.
These companies are reportedly issuing time bars:
Norwich Union - it has 1M endowment policyholders. It began warning of a time bar last October, giving 12 months' notice.
Standard Life - it has 1.2M endowment policyholders. It will write to customers in coming weeks to remind them about its deadline, giving 12 months' notice.
Royal & SunAlliance - it has 450K policyholders. It began reminding policyholders about time-barring last May and gives policyholders six months to complain after a second red warning letter.
Allied Dunbar/Eagle Star - it has 100K policyholders. Policyholders have 12 months to complain after receiving second letter.
Friends Provident - it has 450K policyholders. They have imposed a three-year time bar after policyholders receive their first red letter.
Pearl/NPI/London Life - it has 100K policyholders. Time barring applies three years after the first red letter.
Axa - it has 160K endowment policyholders. It introduced time-barring last month and is writing to customers giving 12 months' notice.
Scottish Widows - it has 165K endowment policyholders. It introduced time-barring in February, giving customers 12 months to complain after receiving their second red letter.
Good luck!
Tuesday, May 03, 2005
Lazy Claims
Lazy Claims
Prudential, one of the UK's biggest sellers of endowment policies, is to refuse to pay "claims handlers".
These companies, which are unregulated, take on customers' mis-selling claims in return for up to 50% of the compensation payouts.
The market for claims handlers has grown rapidly over the past year, as many of the 7m endowment holders realise they may be entitled to compensation.
The simple truth is, people are using these companies because they are lazy.
Make the claim yourself, and save the fee!
Prudential, one of the UK's biggest sellers of endowment policies, is to refuse to pay "claims handlers".
These companies, which are unregulated, take on customers' mis-selling claims in return for up to 50% of the compensation payouts.
The market for claims handlers has grown rapidly over the past year, as many of the 7m endowment holders realise they may be entitled to compensation.
The simple truth is, people are using these companies because they are lazy.
Make the claim yourself, and save the fee!
Wednesday, April 27, 2005
Sir Brian Stewart's Deluded View of Reality
Sir Brian Stewart's Deluded View of Reality
Sir Brain Stewart, chairman of Standard Life, gave an interview recently in which he expressed the desire to bring back the endowment policy.
He went on to say that endowment policies "weren't all bad news", and that they had "worked for a lot of people".
I have to ask, I wonder on which planet Sir Brian is exactly residing?
There are currently 8 million people facing a shortfall on their useless and underperforming endowment policies.
Does he seriously think that this shows that these unloved and useless products work?
Let us remind ourselves of some of the problems with these products:
1 They don't work
2 The commissions being charged by the life assurance companies further reduce their value
3 Many of the life assurance companies mismanaged them, so that their returns are even worse than the norm
4 Many life assurance companies paid out too much in the way of bonuses in the late 80's and early 90's, in order to attract new customers and to prop up their share price.
The result?
The funds were stripped bare of reserves, for the leaner times ahead.
5 Many of the life assurance companies are doing their level best to hinder the compensation process, hardly a sign of integrity or honesty
6 There are very strong rumours that many life assurance companies knew, as early as the late 80's, that the policies would fail. Yet they sat on their hands and did nothing!
The above points, and they are not exhaustive by any means, clearly show that the reputation of the products and the companies that sold them have been irreversibly shot to pieces.
The above should give any level headed individual good cause to think twice before re-inventing these useless products.
Sir Brian please take note.
Sir Brain Stewart, chairman of Standard Life, gave an interview recently in which he expressed the desire to bring back the endowment policy.
He went on to say that endowment policies "weren't all bad news", and that they had "worked for a lot of people".
I have to ask, I wonder on which planet Sir Brian is exactly residing?
There are currently 8 million people facing a shortfall on their useless and underperforming endowment policies.
Does he seriously think that this shows that these unloved and useless products work?
Let us remind ourselves of some of the problems with these products:
1 They don't work
2 The commissions being charged by the life assurance companies further reduce their value
3 Many of the life assurance companies mismanaged them, so that their returns are even worse than the norm
4 Many life assurance companies paid out too much in the way of bonuses in the late 80's and early 90's, in order to attract new customers and to prop up their share price.
The result?
The funds were stripped bare of reserves, for the leaner times ahead.
5 Many of the life assurance companies are doing their level best to hinder the compensation process, hardly a sign of integrity or honesty
6 There are very strong rumours that many life assurance companies knew, as early as the late 80's, that the policies would fail. Yet they sat on their hands and did nothing!
The above points, and they are not exhaustive by any means, clearly show that the reputation of the products and the companies that sold them have been irreversibly shot to pieces.
The above should give any level headed individual good cause to think twice before re-inventing these useless products.
Sir Brian please take note.
Tuesday, April 26, 2005
Fines All Round
Fines All Round
The Financial Services Authority (FSA) has issued a warning that up to 10 endowment firms face disciplinary action, for refusing to pay adequate compensation to customers who were mis-sold policies.
It seems that these 10 firms are still flouting FSA guidelines, which were drawn up 4 years ago, on the handling of endowment complaints.
The FSA is quoted as saying:
"In January we warned the small number of firms that were still not handling mortgage endowment complaints adequately to improve the standard of their work or risk enforcement action. Intensive work is ongoing and the time for these recalcitrant firms to lift their game is certainly short."
It is reported that Abbey National is on the list.
The FSA has already fined Friends Provident £675K and Allied Dunbar £725K for mishandling complaints, in the last 18 months.
Is it any wonder that people have lost confidence in the providers of these worthless products?
The Financial Services Authority (FSA) has issued a warning that up to 10 endowment firms face disciplinary action, for refusing to pay adequate compensation to customers who were mis-sold policies.
It seems that these 10 firms are still flouting FSA guidelines, which were drawn up 4 years ago, on the handling of endowment complaints.
The FSA is quoted as saying:
"In January we warned the small number of firms that were still not handling mortgage endowment complaints adequately to improve the standard of their work or risk enforcement action. Intensive work is ongoing and the time for these recalcitrant firms to lift their game is certainly short."
It is reported that Abbey National is on the list.
The FSA has already fined Friends Provident £675K and Allied Dunbar £725K for mishandling complaints, in the last 18 months.
Is it any wonder that people have lost confidence in the providers of these worthless products?
Monday, April 25, 2005
Insurers Bite Back
Insurers Bite Back
Following on from the drubbing that the Financial Services authority (FSA) received from the Financial Services and Markets Tribunal, in its case against L&G, insurers have been quick off the mark to bite back.
Insurers have demanded that the FSA "improve" its investigation and enforcement procedures.
The Association of British Insurers (ABI) have accused FSA staff of building cases against insurers, to send a tough message to the market.
The FSA is reviewing its investigation procedures, after Legal & General had a fine for mis-selling cut on appeal.
The FSA said it would "consider" the ABI's views and respond in July.
The ABI said that the FSA's Regulatory Decisions Committee (RDC), the body which oversees enforcement, needed to be more open with firms under investigation.
The ABI said:
"There is a perception that FSA enforcement staff are often intent on delivering a particular message to the market and seek to build a case... to support that message..".
Needless to say, whatever the outcome of this spat, it will not be benefit the holders of worthless endowment policies.
Following on from the drubbing that the Financial Services authority (FSA) received from the Financial Services and Markets Tribunal, in its case against L&G, insurers have been quick off the mark to bite back.
Insurers have demanded that the FSA "improve" its investigation and enforcement procedures.
The Association of British Insurers (ABI) have accused FSA staff of building cases against insurers, to send a tough message to the market.
The FSA is reviewing its investigation procedures, after Legal & General had a fine for mis-selling cut on appeal.
The FSA said it would "consider" the ABI's views and respond in July.
The ABI said that the FSA's Regulatory Decisions Committee (RDC), the body which oversees enforcement, needed to be more open with firms under investigation.
The ABI said:
"There is a perception that FSA enforcement staff are often intent on delivering a particular message to the market and seek to build a case... to support that message..".
Needless to say, whatever the outcome of this spat, it will not be benefit the holders of worthless endowment policies.
Wednesday, April 20, 2005
News From The Pru
News From The Pru
The Life insurer Prudential reported an 11% increase in first-quarter sales today.
This is in line with forecasts, and hence allowed it to reiterate its positive outlook for its organisations based in Asia, the United States and Britain.
Revenues for the first three months of the year were £478M vs £433M in 2004.
The consensus forecast sales had been £477M.
Will this help those with endowment policies?
No!
The Life insurer Prudential reported an 11% increase in first-quarter sales today.
This is in line with forecasts, and hence allowed it to reiterate its positive outlook for its organisations based in Asia, the United States and Britain.
Revenues for the first three months of the year were £478M vs £433M in 2004.
The consensus forecast sales had been £477M.
Will this help those with endowment policies?
No!
Wednesday, April 13, 2005
Abbey To Be Fined
Abbey To Be Fined
It seems that Abbey, owned by Banco Santander, is to be fined by the Financial Services Authority (FSA) over its endowment mortgage complaint procedures.
The FSA are now punishing providers for not only mis-selling endowment products, but also for failing to handle the complaints properly.
There have been two firms fined to date for mishandling complaints, Allied Dunbar and Friends Provident, both of which were fined £700K.
Despite warnings from the FSA it seems that a number of providers are content to ignore their duty to investors.
In other words, some life assurance companies don't "give a stuff" about the policy holders.
Complaints to the Financial Services Ombudsman are expected to pass 65,000 in the year to April 2005, and more than 700,000 policies are surrendered short of maturity each year.
It seems that Abbey, owned by Banco Santander, is to be fined by the Financial Services Authority (FSA) over its endowment mortgage complaint procedures.
The FSA are now punishing providers for not only mis-selling endowment products, but also for failing to handle the complaints properly.
There have been two firms fined to date for mishandling complaints, Allied Dunbar and Friends Provident, both of which were fined £700K.
Despite warnings from the FSA it seems that a number of providers are content to ignore their duty to investors.
In other words, some life assurance companies don't "give a stuff" about the policy holders.
Complaints to the Financial Services Ombudsman are expected to pass 65,000 in the year to April 2005, and more than 700,000 policies are surrendered short of maturity each year.
Sunday, April 10, 2005
The Gestation Period of An elephant
The Gestation Period of An Elephant
Taking, what I can only describe as, the gestation period of an elephant; my "professional" claims handling firm has finally come back to me on the complaint that I raised around a year ago, in relation to the mis-selling of my first endowment policy.
They state that they have received notification from my policy provider that it was sold to me by an IFA, they knew this already, and "due to the current rate of success in this type of complaint (it was sold pre 1988) we do not feel that we can help you".
This response, in a nut shell, shows you why complaint handling firms are in general a waste of space.
In effect the service that they are really only prepared to offer is that of filling in paperwork, that you could well do yourself, and raise the matter with the life assurance provider and the FOS.
They are then happy to take 30% of any compensation that you receive, for their "endevours" on your behalf.
The bottom line is that you can save yourself this 30% fee, by doing precisely the same work for yourself.
The only way that they can conceivably add value is where you have already taken these actions yourself, and got nowhere, just as I did.
Unfortunately, as we can see, they are not prepared to help.
I am of course more than happy to hear from any complaint handling company that would actually like to do some real work to earn its fee.
Taking, what I can only describe as, the gestation period of an elephant; my "professional" claims handling firm has finally come back to me on the complaint that I raised around a year ago, in relation to the mis-selling of my first endowment policy.
They state that they have received notification from my policy provider that it was sold to me by an IFA, they knew this already, and "due to the current rate of success in this type of complaint (it was sold pre 1988) we do not feel that we can help you".
This response, in a nut shell, shows you why complaint handling firms are in general a waste of space.
In effect the service that they are really only prepared to offer is that of filling in paperwork, that you could well do yourself, and raise the matter with the life assurance provider and the FOS.
They are then happy to take 30% of any compensation that you receive, for their "endevours" on your behalf.
The bottom line is that you can save yourself this 30% fee, by doing precisely the same work for yourself.
The only way that they can conceivably add value is where you have already taken these actions yourself, and got nowhere, just as I did.
Unfortunately, as we can see, they are not prepared to help.
I am of course more than happy to hear from any complaint handling company that would actually like to do some real work to earn its fee.
Tuesday, March 29, 2005
Sweeping It Under The Carpet
Sweeping It Under The Carpet
Walter Merricks, chief of the Financial Ombudsman Service (FOS), is reported to have said that complaints about mis-sold mortgage endowments occupy most of his time.
They received 70000 last year.
He is predicting that this level of complaints will continue at least for another 18 months. However, they will then decline as the FSA six month time limit for complaints kicks in.
Some cynics might argue that this time limit was the FSA's method of getting the life assurance companies off the hook, in respect of their obligations to provide a product that actually works.
I have a feeling that this problem will not so easily be swept under the carpet.
Walter Merricks, chief of the Financial Ombudsman Service (FOS), is reported to have said that complaints about mis-sold mortgage endowments occupy most of his time.
They received 70000 last year.
He is predicting that this level of complaints will continue at least for another 18 months. However, they will then decline as the FSA six month time limit for complaints kicks in.
Some cynics might argue that this time limit was the FSA's method of getting the life assurance companies off the hook, in respect of their obligations to provide a product that actually works.
I have a feeling that this problem will not so easily be swept under the carpet.
Wednesday, March 23, 2005
Abbey's Curate's Easter Egg
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!
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!
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.
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