One of my visitors sent me note pointing out, that whatever the Financial Services Act says; company B owes me a duty of care. He is quite right.

I will be interested to see if the Ombudsman takes up my case or drops it, as the policy was bought pre 1988.

I received an unsigned acknowledgement letter (dated 20 November) from the Financial Ombudsman service this morning. This has prompted me to ponder on the timescales and workload involved in processing claims.

On the assumption that The Times estimate is correct, there are between 5 million to 6 million underperforming endowment policies. Let us make the following assumptions (drawn from thin air, I admit):

 Take the lower figure, 5 million.

 10% of endowment holders bother to lodge a claim with the Ombudsman, that is a very conservative estimate; this would give rise to 500000 claims. Which no doubt, human nature being what it is, will be lodged at the last minute.

 The processing of the claim by the Ombudsman would include in my opinion (as a professional accountant), the following steps as a minimum:

- Opening the letter

- Opening a claims file

- Registering the file on a control log

- Reading the claim form and attached contents

- Entering pertinent details into a database

- Verifying key details to supporting evidence

- Contacting the life assurance company

- Contacting the financial adviser who sold the policy

- Reviewing the validity of the claim

- Making a decision as to whether the claim is justified

- Calculating the award

- Authorising the award

- Quality control/review the decision making process

- Informing the relevant parties

- Enforcing the decision etc…need I go on?

It is my very conservative estimate that in total the above steps would take 1 man day per claim, from start to finish, or 500000 man days in total.

There are 365 days in a year, of which 104 are weekends, 8 are bank holidays and 25 (or so) are holidays. That leaves approximately 228 working days a year.

So, 500000 divided by 228 gives us 2193 man years to process these claims.

I would suspect that by then we, and our loved ones, have all died; and the homes, on which the mortgages, are secured have crumbled to dust.

Of course these are just figures plucked from the air, maybe the Ombudsman is much faster at processing claims than I have suggested!

I sent the form and copies of other relevant documents off on Monday..we shall see what happens.

One visitor has made a post on The Forum which makes some very good points.

I have posted a public reply on The Forum which I would appreciate to hear your views on.

To me this whole sorry saga shines an uncomfortable "light of truth" (am I being a little too melodramatic?) on some of the key problems, facing individuals trying to make the best of their finances in "modern well regulated" Britain:

1 The inadequate compensation offered by those firms who mis-sold policies.

2 The fact that the FSA appears to be sitting idly by and taking no action to force Life Assurance firms to underwrite the endowments.

3 The lack of sensible options offered to an individual who is facing a shortfall.

4 The lousy rate of returns on savings being offered by banks; higher rate tax payers in many cases receiving negative returns.

5 Dare I mention pensions?

Is it any wonder that we as a nation are berated (by our "ever popular" government) as being poor at saving and hungry for credit...a financial system in which people have no faith is treated with contempt, as are the people who regulate it. See my related article on corporate governance (In Place of Strife) on my "In Your Face" site.

This is a very dangerous situation, I fear for the future. I know, this is a truism!

If the above contains spelling and other errors I apologise, I am writing with fire in my heart (how hackneyed!); straight into the diary rather than first putting it through Word.

I finished filling in the form from company A today, and will post it off to them tomorrow together with other documents; such as their promotional literature which states that "the product is deisigned to produce a surplus over and above the mortgage"!!!!

It occurs to me that the questions being asked on the form; eg attitude to risk, income and expenditure at the time of purchase, other investments held etc are exactly the questions that should have been asked at the time of purchase.

It does not take Rumpole of the Bailey to point out that the fact that they ask me these now, proves conclusively that they did not ask them in 1991 (otherwise they would have the answers in their records).

Therefore they mis-sold the policy..."case proven m'lud".

QED

Am I right or am I right?

No rest for the wicked!

Today I received a response from the Sales Complaints Administrator of company A, dated 13 November, relating to my complaint concerning my other endowment sold in 1991.

Brief extracts being:

“…I am sorry to learn of your dissatisfaction…

..You have raised a number of issues, which we will answer when replying with the results of our investigation…..

..I would be grateful if you could send copies of any relevant documentation in relation to your mortgage, including the application form and mortgage offer you may hold. This will enable us to deal with your case as efficiently and quickly as possible..

…Please complete the enclosed Endowment Questionnaire as fully as you possibly can. Without this information the process may be prolonged….

….This will be important if you complaint is successful to enable us to calculate the correct compensation if this is due to you…

..I am required by our regulators…to send you a letter within four weeks after receiving a complaint…In view of the late receipt in my department this letter serves to provide you with the four week update…”

The attached questionnaire they mention is similar to the Ombudsman’s one; except more complicated, eg details are required on my:

 Attitude to risk

 Existing plans and investments

 Mortgage details before, during and after the endowment.

I will dig through more dusty files and fill this in over the next few days.

I have just finished drafting my letter to the Financial Ombudsman Service, and will pop it in the post tonight on the way to the pub.

Let's see what happens now!

The edited text is as follows:

"...Dear Sir/Madam,

I wish to make a claim for financial redress in respect of an endowment policy sold to me, in August 1987, by company B the estate agents.

The basis of my claim is as follows:

 The Mortgage Services Partner of B advised me that the endowment would produce a surplus in excess of the mortgage which would be tax free.

 The Partner did not explain that there was a risk.

 There was no mention of the funds that my endowment would be invested in.

 The Partner did not enquire as to my attitude to risk.

 The Partner did not discuss the fees and charges on the policy.

 There was no fact find completed during the sales process.

 Other options for paying off the mortgage were not discussed.

Please be advised that I have already written to B along these lines. They reject the claim citing, amongst others, the fact that the Financial Services Act had not yet come into force at this stage. I reject their reasoning on a number of grounds; including, but not limited to, the following:

 Whether the FSA has jurisdiction, or not, over policies purchased before April 1988 is irrelevant. I was told that there would be a tax free surplus over and above the mortgage sum borrowed. There is now a projected shortfall, as advised by Company A, of £10500 assuming a 4% growth rate.

I draw your attention to the case summarised in The Times (26 October); whereby David Barker cited a 1965 Court of Appeal judgement by Lord Denning which ruled that a verbal statement which induced someone to take out a contract could be considered to be a warranty. Mr Barker was successful in obtaining compensation from the Halifax for the shortfall in his policy.

 The fact that the Financial Services Act came into force eight months after B sold me the endowment does not alter the key question as to whether best practice, from both an ethical and industry-wide perspective, was followed when the policy was sold.

 A well regulated ethical company would have been aware of the forthcoming legislation, and would have ensured best practice procedures were in place prior to its implementation; to ensure that the key issues raised by the legislation were addressed.

 As to whether the under-performance of the endowment policy could have been foreseen, or not, is irrelevant. The issue is whether the policy was mis-sold, or not, it is my contention that it was mis-sold.

I have completed the Endowment Mortgage Questionnaire, which I have enclosed together with the following:

 My letter to B raising the complaint (dated 11 October 2002).

 B's acknowledgement of receipt (dated 21 October 2002).

 The rejection from B´s Compliance and Quality Control Director (dated 28 October 2002).

 My response to their rejection (dated 4 November 2002).

 B's acknowledgement of this (dated 7 November 2002).

Please feel free to contact me if you require further information.

Thank you in advance for your time and assistance in this matter.

Yours faithfully,


K. Frost..."

As a further thought to my earlier post of today, I quote from the letter I received from company B (dated 28 October):

"..The Regulator has imposed a responsibility on companies that they keep their documentation for a minimum of six years before it is securely destroyed. You will appreciate therefore that after some fifteen years we will no longer have a file relating to this matter..."

OK then why does the FSA, in requesting details of my income and expenditure 15 years ago, obviously expect me (an ordinary citizen) to have kept the records going back 15 years?

Double standards?...what do you fellow endowment holders think?

After much hunting I found my records and have completed the form. I will draft the covering letter tomorrow.

Many thanks to "Dodo" who is enjoying the site and feels that it has inspired him to raise 3 complaints to the companies that sold him his policies, good luck!

I printed off the endowment mortgage questionnaire, used by the Financial Ombudsman Service, last night; in relation to my claim against company B.

This morning I started to fill it in. Most questions are, in my opinion, relatively straightforward; so long as you have your paperwork eg endowment number, company who sold it to you etc.

However, two questions require some detailed research through some very dusty files:

1 What was my income when I purchased the endowment? (for me this was 1987)

2 What was my expenditure in the same year (excluding mortgage)?

Fortunately I do have these details; being a squirrel I tend to hoard things.

I wonder though how many non squirrels (ie normal humans) out there in cyberspace have such records going back 10-20 years?

Straw poll please ladies and gents...have you got these details?

I have received a number of emails from visitors with similar problems. One I highlight below (I have taken out personal details so as not to predjudice the case):

"...my endowment is projected to shortfall max £XK. I complained
to the provider ( .... - same reasons as you,
promised it would pay off, plus a surplus etc) and have been offered a miserly
£YK once and for all ex gratia offer of redress. I contactd the FSA who
agreed with the basis of the offer ( to put me back where I would have been if
I'd taken out a repayment mortgage - no calculation of the cost of raising the
rest of the capital sum!)I replied citing the Halifax case and asked for £ZK
( based on 6% growth). They replied no way. I have 10 days to accept or
decline the offer. I need legal advice!....."

I am not a lawyer, but it seems to me setting a 10 day take it or leave it deadline smacks of bully boy tactics.

What do others think?

I see in today's Times Money section they have printed a letter about my website.

Rather amusingly, on the back page, they refer to it again describing me as "a retired accountant"; well at 40 I am too young and not yet wealthy enough to retire!

The Consumers' Association wrote to me yesterday saying that they can't help yet, but that they are monitoring the situation.

Additionally, I received an email today from a fellow endowment holder, seemingly in much the same situation as myself. I present edited extracts below:

".....I also sent off my endowment complain after constructing the www.endowmentaction.co.uk letter, and received a letter back.....saying "sorry you are unhappy with us".

I also have two policies ....... either side of the 1988 watershed. Both sold thru the same "former building society" and both with the same endowment company....I filled in an FSA form, that was pretty daft - eg "fifteen years ago, what was your disposable income per month excluding mortgage repayments" as if I can remember back that far.

I got a letter back today saying "still investigating".....Good luck..."

It occurs to me that maybe if readers want to give fuller details of their situations they could do so by starting a thread on my message board on The Forum.

Good luck to all, I will keep this up to date mith my actions and progress or lack of it.

Company B sent me a short response to my letter of the 4th today. Dated the 7th, the Compliance Director says:

"...Thank you for your letter dated 4 November and I note your comments.

While I empathise with the concerns being raised in this matter I regret at present it does not alter the stance being adopted by the Company although naturally we do respect your right to take this matter to any third party..."

I have decided to send a response to company B first, before making a submission to the relevant regulatory body. I have copied the body of the text below. The letter has been sent out today:

"...Thank you for your letter dated 28 October.

I have a number of observations regarding the points raised in your letter; including, but not limited to, the following:

 The fact that the Financial Services Act came into force eight months after B sold me the endowment does not alter the key question as to whether best practice, from both an ethical and industry-wide perspective, was followed when the policy was sold.

 A well regulated ethical company would have been aware of the forthcoming legislation, and would have ensured best practice procedures were in place prior to its implementation; to ensure that the key issues raised by the legislation were addressed.

 Whether the FSA has jurisdiction, or not, over policies purchased before April 1988 is irrelevant. I draw you attention to the case summarised in The Times (26 October); whereby David Barker cited a 1965 Court of Appeal judgement by Lord Denning which ruled that a verbal statement which induced someone to take out a contract could be considered to be a warranty. Mr Barker was successful in obtaining compensation from the Halifax for the shortfall in his policy.

 As to whether the under-performance of the endowment policy could have been foreseen, or not, is irrelevant. The issue is whether the policy was mis-sold, or not, as per my earlier letter it is my contention that it was mis-sold.

In view of the above, please be advised of the following:

 I intend to pursue my case for financial redress.

 I have copied this letter, and pertinent details of my situation, to The Times and the Consumers’ Association.

 I am drafting a submission to the relevant regulatory authority...."