I see that the FSA has fined Friends Provident £675K, for unfairly rejecting 5500 complaints about mis-selling of endowment policies.

That is good news for all of us who have had their complaints rejected by other firms.

The FSA have released some stats relating to the complaints they received during 2003.

They received 26000 complaints, each one of which took around 6-8 months to process.

They upheld about a 1/3rd of them.

As I have noted many times before on this blog, given the fact that there are about 5M people who may be in a position to claim; there is going to be an almighty backlog soon!

I received an email from a fellow endowment holder, who has a policy dating back before 1988.

His initial complaint was rejected by the major building society who sold him the policy, as it was pre 1988.

However, he received a letter from them recently which said that they have been passed details of his appeal against their decison by the FOS.

They have again reviewed the case, and they will now uphold the complaint after all.

It seems that the 1988 rule is flexible after all; just as the claims company that is handling my pre 1988 case have indicated to me.

Maybe we will get somewhere.

I see that John Tiner, Chief Executive of the FSA, has admitted that there was "very widespread mis-selling of endowment mortgages".

No kidding?

Now the flood gates of claims will really open.

I have sent the following email to Angela Eagle MP, who is on the Treasury Select Committee; they have lambasted the insurance industry this week, as it is estimated that there will be a £100M shortfall on endowment policies.

"..Dear Ms Eagle,

I read with interest your views on endowment policies, expressed in the Treasury Select Committee.

I agree; to my view there are two issues that the FSA, and the insurance industry, seem to be neglecting wrt compensation claims:

1 The policies were sold like TV's and cars; ie as products with a defined purpose, to pay off the mortgage debt, not as investments.

When a car or TV breaks down, and is shown not to be "fit for purpose", the consumer is entitled to a replacemnt or money back.

The endowment policies, whose sole purpose was to pay off a mortgage debt, have been shown to be "not fit for purpose".

2 Why would any rational individual buy an endowment if it were not going to pay off the mortgage?

Taking the above into account, I believe that the industry should compensate the 5 million of us who face a shortfall.

You may be interested to know that I have been keeping a web diary for the last year charting my progress, or lack of it, in claiming redress.

This can be viewed by going to my website http://www.kenfrost.com and going to the "Endowment Diary" section.

Additionally, you may be interested to know that I have registered with the BBC iCan site to express an interest in starting a campaign to claim compensation; it will be interesting to see if others join in.

Please feel free to contact me if you have any queries..."

I have placed my complaint, re my second policy, in the hands of the company who are handling my 1987 policy; nothing ventured, nothing gained!

I have also registered my interest in starting a web campaign for compensation, for the 5 million people who are estimated to be at risk of a shortfall; on the BBC iCan site .

It will be interesting to see if people join in.

I received a reply today from the Ombudsman, in response to my letter dated 28 September (see post 29 September).

In brief, the key points are:

 They apologise for taking so long to respond, and assure me that everything that I have told them has been considered.

 The six week gap, in 1991, between enquiring about the policy and completing the paperwork could have been used for considering the policy (rather than, as it was, being used to negotiate a purchase price reduction for my new apartment).

 The fact that the investment attitude section of A’s application form was not completed does not constitute a mis-sale.

 The fixed mortgage I took out precluded me from using a repayment mortgage; therefore I had to have an endowment.

 They acknowledge that I did indeed make a complaint to them about the first endowment policy I took out. However, as this was before April 1988 there is nothing they can do. Note, their original argument was that they had no record of me complaining to them about the first policy; and so they questioned why I was complaining about the second policy. They have ignored their error, and hidden behind the fact that they do not handle claims pre April 1988.

 They note that, in their mortgage questionnaire, I have assessed my attitude to risk (on a scale of 1-10) as 2-cautious. They consider this to be not “entirely risk averse”; therefore the sale of an endowment is justified (in other words only those who score 1 can complain; a bizarre method of rating, why offer such a wide range of 1-10? Tip to all of you filling these in, score yourselves as 1).

 They repeat the fact that my current modest portfolio of shares, is indicative of my risk attitude in 1991; when I didn’t hold these shares. They also note that in 1991 I held the princely sum of £900 of shares, this indicates that I am prepared to risk my money. To compare my current investment and risk attitude, with my investment and risk attitude of 12 or more years ago is akin to comparing apples to bananas; it is not a valid line of reasoning.

 They have carefully considered the wording of A’s brochure, and note that it is positively worded (the word “assured” appears in the brochure, I would say that is more than just “positive”). They do not consider that it constitutes a guarantee.

 They will not uphold my complaint.

 I will need to provide new evidence/arguments for their opinion to change.

I note that the following paragraphs from my letter of September have been entirely ignored:

“..In conclusion, there would be little point (for any rational individual) in taking out an endowment policy if it were not going to pay off the mortgage.

L&G marketed these polices like cars and TV’s; ie a product with a defined function, namely, to pay off the mortgage. L&G by selling them as a product with a defined function, not as an investment, have by definition mis-sold them. The policy has been shown to be not “fit for purpose” as it will not cover the mortgage; and as with any product, not “fit for purpose”, the supplier should compensate the consumer for defects in manufacture….”

As entertaining as it may be to exchange a further series of letters rebutting their points, akin to a protracted game of tennis, it is clear to me that I can go no further with the Ombudsman service. Therefore having exhausted all routes that I can take by myself, it is time (as Mr Burns of Simpsons fame would say) to “release the hounds”.

I will place this case in the hands of the agency who are handling my other complaint; let’s see if they can get further.

I received an interesting letter today from the company that pursues claims for mis-selling, on a no win no fee basis, as mentioned in my post of 12 September. Their link appears in the advert box on the left.

They initially said that they could not handle a complaint for polcies sold pre April 1998. However, they now believe that "in the light of the change in regulatory attitude" they may now be able to pursue cases pre April 1988.

They have enclosed a form for me to sign to agree to them pursuing this. Since I have nothing to lose, I will fill it in.

I will keep you posted.

In case you are worried that I, or the Ombudsman, have dozed off; fear not.

The Ombudsman has been away on a brief holiday; given the number of people complaining, I am not surprised!

Whilst waiting, I have added some useful links to the menu bar on the left.

Please let me know if there are any other organisations that you would like me to add.

Extract of an email received from the Ombudsman today:

"...Thank you for you letter of 28 September 2003.

I am in the process of reviewing your comments and I have been unable to trace your file relating to your complaint about the policy taken out in 1987. I would be grateful if you could let me have our file reference for this complaint if you have a record of this. Was this complaint actually against A or an Independent Advisor?...."

I dropped them a note with the relevant info.

I received an e mail today from a visitor, who has spent almost two years pursuing a claim for redress.

By all accounts the complaint was turned down a number of times before being upheld.

It then took half a year to receive an offer of compensation.

Those of you who are pursuing your own cases, and feel that it is taking forever, should take heart from the fact that you are not alone. However, it does seem to be a lengthy process; and you need exceptional patience.

Here is an extract of the letter I have sent to the Ombudsman today, in response to their letter received on Saturday:

"Thank you for your letter (dated 26 September) in respect of my complaint against A (Ref ****).

I note the contents, and have the following observations; which I will make in the same order as the points raised in your letter:

 You note that there was a 6 week gap between my enquiry about the policy and completing the paperwork. The inference being, that this delay was due to me taking time to consider the arrangement. The delay was in fact due to a number of problems arising with the sale of my apartment, and the purchase of a new apartment. My time and effort was being devoted to resolving these problems.

 A proceeding with the sale of the endowment despite the non completion of part of the fact find, whether legally mandatory or not, was a breach of their own internal procedures. They have admitted this; as such it constitutes a mis-sale by their own rules and procedures.

 You note that I was already in the process of setting up an interest only mortgage, and that section 19 of the *** form shows that methods of repayment were discussed. I would draw your attention to the fact that I already held an endowment mortgage, which was set up in 1987. The endowment policy taken out in 1991 was to increase the size of my mortgage to finance my apartment move. Section 19 shows that I was offering my existing endowment policy as part of the financing of the increased mortgage, I was not discussing alternatives with a ***.

 You note that I had already held an A policy taken out in 1987. However, A have stated to you that I have not complained about this; and that, based on this statement you question why I am complaining about the 1991 policy. A’s statement to you is incorrect. I have complained to both A and your own organisation about the 1987 policy; the complaint was rejected because the policy was taken out pre 1988. I am at a loss understand why A have “forgotten” this, and have told you that I have not complained. I have copies of all correspondence with both A and yourselves; I am happy to provide you with these should you require them.

 You note that I currently hold shares, and that this indicates that I am an investor who is prepared to take some risk. I would note that when I took out the endowment polices in 1987 and 1991 I did not hold shares. To compare my current investment and risk attitude, with my investment and risk attitude of 12 or more years ago is akin to comparing apples to bananas; it is not a valid line of reasoning.

 You note that there is no guarantee in the A sales brochure that the mortgage will be paid off, and as such the “Denning judgement” is not applicable. I draw your attention to the following paragraph in the brochure:

“By taking out an A Build Up Mortgage plan you can be assured that you are making the right decision…investment into an endowment life assurance policy offers you the prospect of a substantial surplus cash sum after the mortgage has been repaid”.

The use of the word “assured” and phrase “after the mortgage has been repaid” makes it clear that the mortgage will be repaid. I contend that this constitutes a warranty, and that the “Denning judgement” applies.

In conclusion, there would be little point (for any rational individual) in taking out an endowment policy if it were not going to pay off the mortgage.

A marketed these polices like cars and TV’s; ie a product with a defined function, namely, to pay off the mortgage. A by selling them as a product with a defined function, not as an investment, have by definition mis-sold them. The policy has been shown to be not “fit for purpose” as it will not cover the mortgage; and as with any product, not “fit for purpose”, the supplier should compensate the consumer for defects in manufacture.

In view of the above points, I would like to ask you to re-evaluate your conclusion. Please feel free to contact me should you require further information.

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

I received a 3 page letter from the Financial Ombudsman Adjudicator today, regarding my complaint about the mis-selling of my second endowment.

It states that they will not uphold my complaint, and lays out the reasons why.

Their reasoning, I have to say, is somewhat lacking in intellectual rigour (indeed one point they make could not be more factually incorrect). Their reasons include the following:

 The fact that I took 6 weeks from first starting to arrange the mortgage to actually completing it (the house purchase took longer than expected).

 The incomplete fact find performed by A is not evidence of mis-selling (it does represent a breach of A’s procedures).

 As I now hold shares I am an individual who takes risks (to compare my investment and risk position now with my investment and risk position 12 years ago, when I took the policy out, is absurd).

One particular paragraph of the letter made my jaw drop in amazement:

“I have noted that in 1992, you already held an A endowment policy for a target of ** which had been taken out in 1987. I understand that this was also a “With Profits, Build Up” policy and yet I have been informed by A that you have not complained about this policy. In particular you don’t appear to have questioned the suitability of this product. In view of this, I would question why you have complained that the endowment taken out in 1991 was not suitable for you.”

As those of you who regularly read this diary know, nothing could be further form the truth. I have complained:

 to B who sold me the policy

 to A with whom the policy resides

 and to the Ombudsman.

All 3 stated that, as it was sold in 1987, the current law does not apply; and I have no grounds for redress.

I am at a loss to understand how both A and the Ombudsman could forget this lengthy, and detailed, correspondence.

I will compose a detailed point by point rebuttal over the next few days; and post it to the Ombudsman, and to this site.

Evidently the Ombudsman is so overwhelmed by complaints, that fatigue is setting in; and serious errors are being made.

According to the recent survey carried out by the Consumers' Association; less than half of those people, who complained to the companies who sold them an endowment, bothered to raise the matter further with the FSA if their original claim was rejected.

Come on guys!

If you don't complain you won't get compensation; the companies who sold you the policies, more often than not, need a little "push" from a third party.

It costs nothing, other than a little of your time, to raise the matter with the FSA.

The clock is ticking!

I received a letter from the Ombudsman yesterday, in respect of my complaint about my second endowment.

The letter advised me that my complaint has now been passed on to the Adjudicator, who will act to try to mediate between myself and A in order to reach a satisfactory solution.

I clicked on one of the services for claiming redress for mis-selling (advertised on the left of this diary), and filled in their brief form wrt the endoment sold pre 1988.

They came back to me today, saying that at the moment they cannot claim for endowments sold pre April 1988.

However, they are looking into the possibility of bringing legal action on behalf of people who were sold policies pre April 1988.

As such they will hold my details, and contact me when they have further information.

I had a letter from the Financial Services Compensation Scheme today, in relation to my claim for compensation against B.

The FSCS said that as I bought the mortgage before 28 August 1988, they were unable to help me. However, if B had given me further advice after that date they might be able to help.

Nil desperandum!

I will now explore other options.

I completed the form from the Ombudsman, and sent it off to them.

Let's see how this goes.

Extract of letter sent to the Financial Services Compensation Scheme today, in respect of first endowment:

"Dear Sir/Madam,

I am writing to ask for your assistance in obtaining financial redress for the mis-selling of an endowment policy by B.

The FSA have advised me that this organisation is no longer authorised to provide investment advice. Please be advised that I have written to B; their compliance and quality control director advised me that they were not authorised, or registered, to carry out a review of my complaint.

I understand from the FSA that, under these circumstances, I should present my case to the FSCS.

The details, by way of a brief overview, are as follows:
- Endowment policy number ...
- Mortgage reference number ...

An adviser from B sold me a A endowment policy in August 1987. The target amount was £35000. The policy is not expected to meet this target.

The basis of my complaint is as follows:

 Other options for repaying the mortgage were not discussed fully with me

 The adviser did not explain there was a risk that the endowment would not meet the target amount

 The adviser did not discuss in full the funds my endowment was to be invested in

 The adviser did not properly establish my attitude to risk

 The adviser didn't fully explain the fees and charges on the policy

 The adviser said the policy was guaranteed to pay off the mortgage

 The adviser said there would be a lump sum in addition at the end of the term.

Please feel free to contact me should you require additional information.
Thank you in advance for your assistance...."

Received a letter today from the Ombudsman, relating to my complaint about the mis-selling of my second endowment.

The complaint has been passed on to their casework area for further consideration.

They also enclosed a detailed questionnaire, which I will fill out and return in the next few days.

I received a rather unhelpful response from the FSA, a few days ago, in connection with my enquiry as to the relationship between A & B that existed at the time I was sold my first endowment.

The FSA stated that they could not respond to all queries individually. They then went on to answer a question that I didn’t raise; namely providing me with the contact details of B, and noting that B was no longer authorised to provide investment advice (both of which I knew already).

Clearly no one at the FSA had bothered to read my letter!

Then for good measure, they enclosed a number of leaflets and an expensive booklet; about the role of the FSA, and how to complain.

I wouldn’t mind, but it was the Financial Ombudsman Service (not entirely unconnected to the FSA) that advised me to write to the FSA in the first place.

This sorry performance begs the question; if the FSA cannot provide answers to questions raised by members of the public, with respect to the activities of organisations operating under the remit of the FSA, then precisely what is the FSA there for?

I think that I may give the FSA one of my “Worse Than Worthless” awards.

I will be passing my complaint about B on to the Financial Services Compensation Scheme; which handles issues relating to companies which are no longer authorised to give investment advice.

I finally finished filling in the Ombudsman's form, and collated all my letters relating to my claim against A for endowment number 2.

Sent it off this evening.

Let's see how that goes.

Letter from the Ombudsman, enclosing a complaint form for me to fill in wrt my complaint against A.

The Ombudsman also replied in the letter to my email:

"Regarding your other complaint and recent email. I can only suggest that if you wish to pursue the matter further, you may wish to consider taking legal advice."

Extract of email to the Ombudsman:

"...Thank for your response regarding my complaint against A/B.

I have taken your advice, and have written to the FSA.

However, I would like to ask one further question.

Since this endowment was sold prior to 29 April 1988, which means you are unable to assist me. What am I meant to do to claim redress, given the fact that both B and A stand behind the letter of the law on this?

I would be grateful for any advice that you can offer me.

Thank you in advance.

Kind regards..."

Extract of letter to the FSA:

"...Dear Sir/Madam,

I am currently seeking financial redress from A/B, for the mis-selling of an A endowment policy by B in 1987.

A key part of my case rests on the relationship (agency/“quasi agency”) between B and A.

I have raised this matter with the Financial Ombudsman Service. Unfortunately, they state that they are unable to help; as the policy was sold prior to 29 April 1988.

However, they have advised me to address the matter to you; as you have a superior database.

I would therefore be very grateful if you could check you records, and advise me as to the relationship that existed between B and A in 1987.

Thank you in advance for your help.

Yours faithfully..."

Extract of letter sent to the Ombudsman:

"...I wish to make a claim for financial redress in respect of an endowment policy sold to me by A in December 1991. The policy number is ***, the target amount being £39700.

The basis of my claim is as follows:

 Other options for repaying the mortgage were not discussed with me.

 The adviser did not explain there was a risk the endowment would not meet the target amount.

 The adviser did not discuss the funds my endowment would be invested in.

 The adviser did not establish my attitude to risk.

 The adviser did not explain the fees and charges on the policy.

 The adviser said that there would be a lump sum in addition at the end of the term.

 The L&G fact find, which dealt with my investment attitude, was not completed; showing that A breached their own procedures.

 Despite the incomplete fact find A assessed that I had a low attitude to risk; yet sold me a product with a high risk profile.

 The written financial quote provided by A at the time stated:

“..A regular investment is made into an endowment life assurance policy, which is designed to repay your mortgage at the end of the mortgage term….

A’s range of build up mortgage plans is designed not only to repay your mortgage at the end of the mortgage term but also to provide you with an additional cash sum….

By taking out an A build up mortgage plan you can be assured that you are making the right decision for 3 important reasons…

1 Investing into an endowment assurance policy offers you the prospect of a substantial surplus cash sum after the mortgage has been repaid..”.

The above constitutes a guarantee.

 I draw your attention to the case (summarised in The Times 26 October 2002) where 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 won his case. The guarantee quoted above was in writing.

 I first raised my complaint with A on 11 October 2002. Since then I have exchanged a number of letters enquiring as to the progress. I was promised a final response by January 2003, one of several deadlines that was missed. They finally rejected my complaint in a letter dated 29 July 2003. I regard this delay as excessive and unacceptable.

 Finally, why would I have opted for an endowment if it were not going to pay off the mortgage? What would have been the point of finding myself at the end of the term with a shortfall?

I would be grateful for your assistance in claiming redress with regard to this matter.

Please do not hesitate to contact me if you require further details.

Thank you in advance...."

Extract of letter from A dated 29 July 2003 (relating to complaint about mortgage sold by A):

“I refer to my letter dated 13 June 2003. I have now investigated the issues raised in your letter dated 2 June. Please accept my apologies for the delay in replying, however, I was awaiting technical guidance.

I would like to address each issue you have raised one by one.

You state that you believe that your policy was mis-sold as you feel that A procedures should have investigated the incomplete fact find. The fact find is used as a tool to document client details and it was not mandatory for all questions to be completed. Therefore, omission of the section that deals with investment attitude does not constitute evidence of a mis-sale.

You state that it is a contradiction in my assessment of your attitude to risk as being low as I state that there is a risk with your policy. Low risk means that you are prepared to take some risk, this does not mean that you are risk avers (no risk).

It was not a regulatory requirement for insurance companies to state what commission the advisor would receive from the sale of your policy. However, the fees an charges applicable to your policy would have been outlined in the policy literature that was sent with our illustration.

From our records, it appears that you were already in the process of setting up your interest only mortgage directly with ***. From the application form that *** have provided us with, it appears that methods of repayment were already discussed under section 19. As you mortgage had already been set up, you had a deficit in cover that needed to be replaced as ** have confirmed that they required an endowment policy to cover the whole mortgage amount.

You have quoted a A financial quote at the time. You have stated that an endowment policy is designed to repay your mortgage and also provide an additional cash sum. This is what it is designed to do but it is not guaranteed and I can not find any evidence of a guarantee in the quotes provided. The fact that your previous employment was a chartered accountant also leads me to conclude that you had a substantial knowledge of the financial industry and would have understood the literature and the illustration provided at the time of sale.

You have quoted a court case where David Barker cited a 1965 Court of Appeal judgement by Lord Denning, which rules that a verbal statement could be considered a warranty. Verbal and oral evidence can be used as evidence when investigating complaints but we must take into consideration the written evidence on our records. Our file holds an illustration that was sent to you (at your request) which confirms the possibility of a shortfall at maturity and does not give any guarantees. The policy literature that was also sent to you at your request also does not give any guarantees with endowment policies.

You state that you were told in a letter dates 30 April 2003 from my colleague that a consultant would explain the reasons for the delaying completing your case. However, the letter states (your case has now been passed for investigation. A customer relations consultant will be in contact shortly”. This does not state that we would explain the delay but after our investigation into your complaint, we would be contacting you shortly in response to your complaint. I apologise if this letter caused some confusion.

I apologise that your endowment file was not enclosed with my letter dated 15 May 2003. Please find enclosed the application form dated 10 November 1991 etc..

Finally, you have queried why you would have opted for an endowment policy if it were not going to repay your mortgage. I have assessed you as having a low attitude to risk, this means that you are prepared to take a risk with your investment for the possibility of a cash surplus at maturity.…”

Extract of letter from A dated 31 July 2003 (relating to complaint about mortgage sold by B):

“..I apologise on behalf of A for the delay in replying.

I can confirm that at the time of sale there was no relationship between ourselves and B, they were an independent financial broker. The reason they were not acting as an agent for the society was, as stated previously, they ere independent and therefore not acting on behalf of us as a provider.

I note from your letter dated 15 July that you have registered a formal complaint with the Financial Ombudsman.

With regard to your reference to the law of agency, the independent financial broker was acting for the client and not for ourselves….”

I received a response from the Ombudsman today. They cannot help me with my complaint, as the policy was sold pre 29 April 1988.

However, they advise me to check with the FSA to see if they can help prove A's connection to B.

Address

25 The North Colonnade
Canary Wharf
London
E14 5HS

0845 606 1234

I will drop them a line in the next day or so.

The Ombudsman confirmed receipt of my complaint against A today.

Extract of a letter I sent to A today:

"...I refer to my letter to you, dated 23 March 2003, concerning my claim against A for the mis-selling by B of one of your endowment products.

In the letter, copy attached, I raised a number of issues with you regarding the agency relationship between B and A that existed at that time. I requested, in my letter, that L&G address these issues. Additionally, I reiterated my claim against A on the basis of that agent/principal relationship.

Four months have elapsed, and I have yet to receive any answer from A. I am concerned about L&G’s failure to address this matter.

In view of your company’s failure to address these issues, or even have the courtesy to acknowledge receipt of the letter, please be advised that I am registering a formal complaint against A with the Financial Ombudsman..."

Filled in the Consumers' Association questionnaire about my experiences and opinions of the complaint handling process wrt the mis-selling scandal.

Naming and shaming companies A and B.

Suggest those of you who have not yet done so, do so.

Extract of emails between myself and a site visitor who sent me a note yesterday:

His note:

"..Hi Ken

Read the blog.

Sorry to be a drain on you, but Id like to benefit from your experience if at possible.

On what grounds did company B reject your pre-1988 policy claim?

On what grounds did the FSA suggest you raise with Company A?

What does agency relationship mean? If they had have had one, would they have accepted the claim?

One tack I am planning to take is.......... "determining a client's attitude to risk was not a requirement at the time" - isnt that what the duty of care meant?

Also, did you try quoting the "Alan Barker" case which Halifax settled out of court......he argued that under a 1965 ruling in the appeals court a verbal promise amounted to a warranty...."

My reply:
".....

Please tho remember that when making investment decisions take independent legal and financial advice....

B rejected on the grounds that the relevant legislation was not in place then to cover their selling of endowments (nice excuse eh!). Somewhere in the bowels of the blog is the letter in full.

FSA suggested I try A because (I think) there may be some duty of care owed by A as B was selling their product.

Agency is where, eg, Fred Bloggs sells you a policy with eg A; and he earns commission. Altho not directly employed by them, because he earns a commission he is in effect holding himself out to be working on their behalf; and as such his actions reflect for good or bad on them. (Remember to double check precise definition with appropriate legal or financial advisor).

Therefore if he does something illegal they are responsible, in my opinion anyway.

B to my view had an agency relationship with A, and indeed A still owe me an answer to this point (see blog of a month or so ago). Sorry it may be a trawl, but as you know the process of claiming is not quick or simple!

I would have thought that duty of care is exactly what you mean.

I quote the Barker case ad nauseam!!!

Try my favourite tack (which has yet to work) but is epostulated in a blog post I made this week, in response to another letter from a visitor....fitness for purpose.

The endowments were sold like TV's or cars with a single purpose...to pay the mortgage. They have failed.

When a TV breaks down due to shoddy workmanship the consumer legislation ensures you get a replacement or money back..to my view because these products were sold like TV's, they should not be treated as investemnts at all.

The more people who take that up as an argument the more likely we, as a group, may get somewhere!

I hope this helps a bit, please stay in contact...."

Extract of letter received today from A:

"...I refer to your letter dated 2 June 2003. I can confirm that the comments raised are being investigated and we will be contacting you in due course..."

Extract of emails between myself and a site visitor who dropped me a note yesterday:

Note that this is his opinion:

"Dear Ken:

On the 'new letter' about your endowment, you say - This “product” has been
shown to be not “fit for purpose”

I came to the same conclusion a long time ago - about ALL endowments.

I have been in contact with the authorities about this so-called "mis-selling"
of endowments, both the Financial Services Authority
and Serious Fraud Office.

I honestly believe myself defrauded and I want those responsible to answer for
their crimes in court. But only pay with time in
jail - fines are passed on to innocent shareholders - most unjust.

I kept the documentation from my mortgage lender - shown on WoolwichSucks.co.uk
(please visit). It very clear to me that I was
defrauded.

But it is equally clear that everybody else was conned - so I asked the FSA
three very basic questions, number 2 was:

With regard to the basic principle of endowment mortgages: Is it good or bad
financial advice to be told to gamble your house - your
major future fiscal well-being in old age - to bet all this on the stock market?

They would not answer that - instead they used spin to answer with their own
phrase "suitable product" rather than "good advice".

Could the FSA honestly say, under oath in a court of law, that a gamble is the
"suitable product" (in their words) to REPAY the
largest of loans you are ever likely to make in your life?

Fact: You get a mortgage to REPAY your loan. Repayment mortgage does this, it is
fit for this purpose. Endowment is a nothing but a
GAMBLE in the HOPE of repaying loan - you could lose big time - all your
payments and home.

That is reason why everybody was mis-sold endowments - it was NOT FIT FOR
PURPOSE.

I asked the FSA if I had been defrauded (knowing I was). They refused to answer
- so I made official complaint for their "lack of
integrity". Even though the case was decided in my favour - they still refused
to answer.

I asked the Serious Fraud Office if I had been defrauded. They would not answer
- so I got in touch with the Director of SFO and
accused them of covering up major fraud. Despite a couple of communications back
and to - they still refuse to tell me if I have
been defrauded.

It is my belief that if refuse to answer these simple questions and so actively
assist offenders to escape the law, then they are
perverting the course of justice. The authorities are covering up a major fraud
on the British public purely to protect market
confidence. They are corrupt.

This is my personal informed opinion – I believe it to be the truth. Please let
me know where this differs from your opinion.
Obviously fraud and perversion of justice has yet to be proved in a court of
law..."


".....

Many thanks for your note.

The “fit for purpose” argument, to my view, is the heart of the matter.

These products were sold like a TV set or a car, with one main function; to repay the mortgage, and maybe provide a cash surplus as well.

When a car or TV fails (due to substandard workmanship) you get a free replacement or your money back. Consumer legislation, such as the sale of goods act, backs up the rights of the consumer.

In my opinion, since endowments were sold as “products” not “investments” consumer legislation should apply. The question “was the product fit for purpose?” (ie will it pay off the mortgage?) should be applied; the fact that many endowment policies are failing to pay off the mortgages clearly demonstrates that it was not fit for purpose.

In my opinion, as long as endowments are regarded by the regulatory authorities as investments, the endowment holders only course of action is to seek redress through the mis-selling route.

Therefore, the case needs to be made by all endowment holders that endowments were sold as products not investments; this is prima facie mis-selling.

With respect to your complaints to the SFO etc, have you tried taking it to the European Court?

......."

Extract of emails sent and received today to/from a site visitor:

"...
Sorry to hear about your compensation, but at least you have more than I have got so far!

The method that is meant to be used, as I understand it, is that the ombudsman or life assurance company compare your situation if you had taken out a repayment mortgage to the endowment; then the difference, if in your favour, is the compensation.

I have heard of more than £200. The case that springs to mind is mentioned in my letter posted 2 June (to The Endowment Diary) where Lord Denning was quoted; I believe (but you will need to check with The Times) the claimant got around £3K.

As with anything to do with money please take independant legal and financial advice before making any decision.

Please keep visiting the site, and keep in touch.

....
Best regards,

Ken

Dear Ken,
I too am in the process of trying to get some redress into being missold endowment policy, how stupid was I on a repayment mortgage to be sold an endowment? A blatant case of misselling. Anyway, I am in the final stages of negotiations with the Ombudsman & have been offered a payment of £200 for 'distress & inconvenience'. No mention of compensation. Have been now worn down with it all, have you heard of any awards being made greater than this? My original claim was for £20,000! Ha ha..."

Extract of letter sent to company A today:

"...

Dear ...,

Thank you for your letter dated 15 May 2003 (ref ..), in which you reject my claim for compensation for the mis-selling of the endowment mortgage.

I have noted the contents of your letter, and have the following observations:

 You state that I omitted to complete the section in the fact find in 1991, which dealt with my investment attitude. This formed part of your own procedures at the time, the fact that it was not completed, yet A proceeded with the endowment indicates that A breached their own procedures; ie the policy was mis-sold.

 You state that I have a low attitude to risk, yet you state that there was a risk (as is evidenced by the projected shortfall) that the policy would not pay off the mortgage. This contradiction indicates that the policy was unsuitable to my risk attitude, and should not have been sold to me.

 You state that the fees and charges were not explained to me at the time, as it was not a legal requirement. Legal requirement or not, these fees have a negative impact on the performance of the policy. An ethical company, following best practice, would have openly disclosed them.

 You state that I was already in the process of arranging an interest only loan through Barclays, and that the sale of the endowment was therefore justified. That should not have precluded your representative from discussing other options for repaying the mortgage; he did not.

 You state that you can find no evidence to support my complaint that a guarantee was given. I refer you to the financial quote provided by A at the time which stated:

“..A regular investment is made into an endowment life assurance policy, which is designed to repay your mortgage at the end of the mortgage term….

A's range of build up mortgage plans is designed not only to repay your mortgage at the end of the mortgage term but also to provide you with an additional cash sum….

By taking out an A build up mortgage plan you can be assured that you are making the right decision for 3 important reasons…

1 Investing into an endowment assurance policy offers you the prospect of a substantial surplus cash sum after the mortgage has been repaid..”.

The above, to my view, constitutes a guarantee.

 I draw your attention to the case (summarised in The Times 26 October 2002) where 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 won his case.

 I first raised my complaint with A on 11 October 2002. Since then I have exchanged a number of letters enquiring as to the progress. I was promised a final response by January 2003, one of several deadlines that was missed. In a letter from Mr... (30 April 2003) I was assured that the reasons for the delays would be answered by A. Your letter does not address these issues.

 My letter of 11 October 2002 requested a copy of my endowment file. This request has been ignored.

 Finally, why would I have opted for an endowment if it were not going to pay off the mortgage? What would have been the point of finding myself at the end of the term with a shortfall?

Based on the above I disagree with your conclusion, and reiterate my contention that I was mis-sold the endowment policy.

Additionally, I am of the opinion that my complaint about the mis-selling and the delays in responding to my original complaint and subsequent letters have not been handled satisfactorily.

To this end, I therefore give you the opportunity to address the points I have raised above; and reconsider you assessment of my claim.

Dependent on your response, I will raise a formal complaint with the Ombudsman and FSA.

As with all other correspondence relating to this matter, this will be posted on my public blog “The Endowment Diary” on www.kenfrost.com

Thank you in advance.

..."

Company A finally wrote back to me in a letter dated 15 May, as per my previous posting.

Very briefly I will summarise:

 They apologise for the delay.

 They explain their decision process.

 They note their key findings.

 They reject my claim.

I will of course not let the matter drop; and will draft a detailed rebuttal of their points, over the next 10 days or so. This will be sent to the Ombudsman and posted on this site.

Good morning everybody,

I received a response from company A today. The letter is signed by yet another member of the Customer Relations Team (the manager this time).

In brief:

1 They state that my letter of the 25th raises a number of issues that will be answered by a Complaints Consultant.

2 They apologise (again!) for the delay.

3 My case has been passed for investigation.

4 A Customer Relations Consultant will be in contact shortly.

And so it continues!

I am 40, so I expect to still be alive when this is resolved.

However, what about those who are approaching retirement; will they be fit and healthy enough to continue to fight for their rights, if companies such as A continue to drag this out?

FYI I have added another section to my website, "Worse Than Worthless", where I name, shame, and award organisations my "WTW" award.

I will await the final outcome of this before naming company A.

I am getting rather "pissed off" with the delay in hearing from company A about my mis-selling complaint relating to my second endowment.

So I fired this off to them today:

"..
Customer Relations Admin Manager

Dear Mr ,

I refer to your letter dated 21 February 2003 (ref ...), in which you state that you are doing everything to resolve my complaint about mis-selling as soon as possible.

I have heard nothing since then, and am very dissatisfied with your handling of this matter; I would appreciate clarification on the following:

 My complaint was lodged with you on 10 October 2002. What is causing this excessive delay?

 I was promised a resolution to my complaint by 31 January 2003; this deadline has been ignored, why?

 When will you resolve my complaint?

I would appreciate a prompt, and non equivocal, response to the above points. Depending on the nature of your response I will consider referring:

 my complaint against you for mis-selling, and

 an additional complaint against you for the excessive delay and poor handling of my mis-selling complaint

to the FSA.

As with all other correspondence, this will be posted to my public blog “The Endowment Diary” on www.kenfrost.com.

Thank you in advance.

Yours sincerely.."

I apologise for being a little quiet recently. I have been putting the finishing touches to my book, and this has taken up a lot of time. However, I am pleased to say I have finished it now and can address other issues.

I received a note on The Forum the other day from a couple who are having trouble claiming compensation for mis-selling. In my opinion the mantra that the endowments were investments is mistaken.

My view is this, as repeated till I am blue in the face, the polices were sold like cars or washing machines; namely as products with a defined purpose to pay off the mortgage. These products have failed to meet this purpose and, as such, like a car that doesn't work should be replaced with something that does; at the expense of the company that sold the product.

This is the point that must be hammered home at every available opportunity. Forcing the "legal eagles" to recognise this as a point of consumer law rather than investment law is, in my view, the only way that people are going to get adequate compensation.

Extract of letter sent today to company A, and copied to The Times:

"..Thank you for your letter dated 14 March (ref OUT). I note its contents.

However, I have the following observations:

 You state that B were not acting as agents of A. However, when I took out my endowment (on the advice of B) they offered only A as an endowment provider, no other companies or products were offered. This to me indicates, at the very least, a “quasi” agency relationship between B and A.

 I assume that B received commission for the sale. Again this indicates to me a “quasi” agency relationship between B and A. Please can you clarify your reasoning for stating that they were not acting as an agent for you.

 You recommend that I contact the Financial Services Ombudsman. This surprises me, as you will have seen from my original letter (dated 23 January) that I have already written to the Ombudsman. In fact, the letter I sent you included a copy of their questionnaire relating to the policy. Their response noted that they could not act, as the endowment was taken out pre 1988.

 Additionally, my letter of 23 January noted the following; quote:

“I completed the Financial Ombudsman Endowment Mortgage Questionnaire, which I despatched in November. They have advised me that I should raise this matter with the product provider; ie yourselves.”

Please can you clarify why you feel I should raise this matter with them again?

It is my understanding of the law of agency, that the principal is liable for the actions of the agent. The Consumers’ Association advise that where:

 the endowment policy was sold pre 1988, and

 the agent (B) refuses to take responsibility for mis-selling;

the principal (A) should be approached, and redress claimed from them.

I contend that B were acting as agents for you, and as such, I reiterate my claim for redress on the basis of mis-selling.

Your letter states that you would like to assist me in progressing my complaint. In addition to clarifying the above queries, I would appreciate the return of the attachments that I sent to you on 23 January, namely:

 The Endowment Questionnaire.

 My letter to B's 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).

Thank you in advance...."

I received a letter today from company A, in respect of my complaint about the mis-selling of my first endowment policy. Extracts as follows:

“…I am sorry to inform you that A are unable to investigate your complaint, as the advice you were given on the sale of the above plan was by an Independent Financial Broker (editorial note this was company B)…

B were not acting, as agents of A but were your own chosen Financial broker…we had no control over the advice that they gave you…

If you feel that you have received an unsatisfactory reply from B, please contact the Financial services Ombudsman service…”

I have the following initial observations:

1. I am sure, but will check my records, that B would have been receiving commission payment for selling A’s policies. This, at the very least, would place them in a quasi agency role.

2. The advice re contacting the Ombudsman is spurious, I have already done so and was told that as the policy was sold in 1987 the legislation does not cover my claim. Indeed the Ombudsman recommended that I contact A!

3. I detailed the last point in my original letter to A, even including the correspondence between myself and the Ombudsman together with the detailed endowment complaint questionnaire. The fact that A now recommends me to contact the Ombudsman indicates to me that they have not read my letter.

This is not the end of the matter as far as I am concerned. I will go through my records and decide what to do next.

Extract of a note sent in response to one received from a surfer yesterday:

"...

Thanks for the note.

Securing compensation, or indeed a response, from these companies is a very very long process...as you know, and as you can see from my own experiences.

Let us hope we are still young enough, and fit enough, to enjoy it when they finally come up with some compensation!

best of luck.

Ken"

I think more butt kicking will be required, given this protracted delay. I will take action during the coming week.

I received a letter from company A today, in response to my butt kick, extract as follows:

"..I refer to our previous correspondence in which we explained that we expected we would be able to provide a final response to your complaint.

I apologise for the further delay but assure you that we are continuing to investigate your case and do everything to resolve your complaint as soon as possible.

we are very sorry about the continual delay.."

pp'ed by the customer relations manager.

Well my thoughts are as follows:

1 Apologies are very nice but achieve nothing, ie fine words butter no parsnips.

2 Their letter of Dec siad that I would have an answer by 31 Jan, now they do not even give a deadline.

3 I predicted some time ago (see earlier posts) that the sheer volume of complaints would overload the system..sad to be proved right.

I will give them a little more time then kick harder by telling them that I will reveal their name on my website.

I received this today from one of our fellow endowment holders, edited extract...

"Hello Ken

Re: Endowment Mortgage Action Group

Great news - Today, after letters, faxes, emails and phonecalls, the £375 fee that I paid to ***(edited out) in August 2000, plus the documents I had supplied , was returned minus £2.16 postage!!! So they get to keep the interest for 2 years plus. Is this what is called sharp practice?

When your newspaper (edited) contact rang some months ago she was told that the scheme was being suspended because they were unable to obtain legal expenses insurance. The paper (edited) was advised that people would get their money back. When I rang yesterday to enquire about the delay the secretary first asked me if I was a new member of the group, so it looks as if the game continues. Curiouser and curiouser.

Now that I am back where I started two and a half years ago, I am pursuing my claim with the lender and of course, as you know, it is a slow grind.

Best wishes.."

My reply, edited extract..

"Hi ...,

Bit of a curate's egg really isn't it?

You get your money back but have wasted 2 years time and effort, plus lost interest income.

I agree it is a very slow grind....

best regards,

Ken"

Extract of the letter sent today to company A to remind them that they have fallen behind schedule...

".....I refer to your letter dated 6 December (ref 62648), in which you advised me that you would have a final response to my complaint by 31 January.

I have heard nothing since then; please can you advise me as to the status of that response, and clarify the reasons for the delay.

Thank you.

Yours sincerely...."

You will see from my post of 8 Dec that company A had promised to give me a final judgement by 31 Jan. That date has come and gone!

No letter, or communciation, from them.

Time to "kick butt!".

I will draft an appropriate "butt kicker" over the next 24 hours.

My new letter as promised:

"Dear Sir/Madam,

I wish to make a claim for financial redress in respect of a ***(edited out) endowment policy sold to me, in August 1987, by ***(edited out) the estate agents.

The basis of my claim is as follows:

 The Mortgage Services Partner of *** 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 *** 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 ***, of £10500 assuming a 4% growth rate.

I draw your attention to the case summarised in The Times (26 October 2002); 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 **** 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 believe that the Sale of Goods act also applies, namely that the policy was sold as a “product” that would cover my mortgage debt, not as an investment. This “product” has been shown to be not “fit for purpose”; and as such the shortfall should be compensated by the agent (****) or the product “manufacturer” ****.

I completed the Financial Ombudsman Endowment Mortgage Questionnaire, which I despatched in November. They have advised me that I should raise this matter with the product provider; ie yourselves. To this end please be advised that I have enclosed the following:

 The Endowment Questionnaire.

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

 **** acknowledgement of receipt (dated 21 October 2002).

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

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

 ***** acknowledgement of this (dated 7 November 2002).

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

Please be advised that since September I have maintained a public diary of my efforts to obtain redress, on my website http://www.kenfrost.com. Additionally, I have copied this letter to The Times.

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

Yours faithfully,


K. Frost"

Isn't this fun!

I received a suggestion; by all accounts, if the sales company (company B) and Ombudsman rejects the claim as it was pre 1988, I can try to raise the issue with the company which provided the endowment (which by coincidence is company A).

So I will fire off a letter in the next few days to see if they will do the decent thing.

Which wrote to me yesterday; saying as the advice they gave me was specific they did not want the letter posted on the web. So in summary their advice was that in their opinion the Sale of Goods Act does not apply as these are investments not products (I would say that they have been sold as products not investments so by default it does)...However, I am not a lawyer!

Bored with waiting for The Times to reply I have fired off one more letter:

"regarding your article published in yesterday's Times; please could you advise me what are the options for claiming redress for an underperforming policy sold to me by ****(edited out) prior to 1988.

As you can see from my website http://www.kenfrost.com they (identified on the site as company B) will not compensate me, and the Ombudsman has rejected my claim (details on the website).

"Which" do not think I can use the Sale of Goods act (also detailed on the website), and my earlier query about this sent to Anne Ashworth of The Times has not been answered.

Any views?

Thanks for your help.

Kind regards,

Ken Frost"

I received a response from Which today, in respect of my query concerning what I can do to claim compensation for the endowment sold prior to 1988.

The response was very detailed, and I think would be of interest to others. However, the bottom line of the note indicates I should not copy it on to others; so I have written to them asking permission to post it to this website.

I am still waiting for The Times to respond.

Watch this space!

Happy New Year everyone.

Whilst I sort out my paperwork, in readiness for another chapter in the continuing struggle against the "forces of darkness" (the comapnies who sold me these policies), why not read about our New Year in Auld Reekie by clicking here.