The Endowment Diary

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..."