Lautro 19 To Remain "Secret"
Any hope of naming and shaming the Lautro 19 is now "dead and buried", according to former IFA Defence Union chief Evan Owen.
The Information Commissioner's office has stated that the High Court has ruled that the information falls under absolute exemption rules under the Freedom of Information Act, and therefore does not have to be disclosed.
The Information Commission ruled in August 2007 that the FSA had to name the mortgage endowment providers which misused Lautro projections in setting premiums, which lead to clients being given unrealistically high maturity figures (cynics might say that they were conned).
The hapless FSA, ever keen to protect the financial services industry from the consumer, appealed against the decision. In October 2008 the Information Tribunal rejected the FSA's appeal.
The FSA then took the appeal to the High Court, which upheld the appeal.
If only the FSA were as zealous when protecting the consumer!
Showing posts with label Lautro. Show all posts
Showing posts with label Lautro. Show all posts
Thursday, July 09, 2009
Tuesday, November 11, 2008
FSA Fights Lautro Ruling
FSA Fights Lautro Ruling
The Financial Services Authority (FSA) has appealed to the High Court over the Information Tribunals' decision to make them name and shame the Lautro 19.
The FSA argues that the information provided to it by the "Lautro 19" was confidential, and that it can't be disclosed.
The "Lautro 19" are endowment mortgage providers who misused Lautro projections to set unrealistically high maturity figures when selling their useless products to the unsuspecting public.
It is estimated that the number of policies affected by this number in the hundreds of thousands.
The FSA, by opposing the naming and shaming of the "Lautro 19", are failing in their duty to maintain an orderly and honest financial system; in other words the FSA is not fit for purpose.
The Financial Services Authority (FSA) has appealed to the High Court over the Information Tribunals' decision to make them name and shame the Lautro 19.
The FSA argues that the information provided to it by the "Lautro 19" was confidential, and that it can't be disclosed.
The "Lautro 19" are endowment mortgage providers who misused Lautro projections to set unrealistically high maturity figures when selling their useless products to the unsuspecting public.
It is estimated that the number of policies affected by this number in the hundreds of thousands.
The FSA, by opposing the naming and shaming of the "Lautro 19", are failing in their duty to maintain an orderly and honest financial system; in other words the FSA is not fit for purpose.
Friday, August 31, 2007
The Lautro 12
The Lautro 12
The recently published shameful case of the so called "Lautro 12", appears to be causing more than a few ripples in the financial services industry.
It seems that the knock on effect of the "Lautro 12" is that many Independent Financial Advisers (IFAs) may have paid out too much compensation for mortgage endowment complaints.
Needless to say, if this were to be the case, they may themselves be entitled to financial compensation from the endowment providers.
The Lautro 12 were found to have mispriced Lautro premiums, which lead them to give their hapless customers unrealistically high maturity figures between 1988 and 1994.
Other providers have also mispriced projections but, unlike the 12, have not necessarily paid any consumer redress.
OAC Actuaries and Consultants chief executive, Roger Grenville-Jones, said:
"Where compensation for misselling has been paid, the amount of compensation is automatically increased to adjust for the policy being too small, at the expense of the firm paying the compensation, but only up to the present time."
Whilst the extra sums that advisers have had to pay out due to mispricing by providers is difficult to estimate, it is estimated that approximately £83M has been paid out in compensation for endowment misselling.
Compliance expert Adam Samuel said:
"Under-pricing will have reduced surrender values which are deducted from the amount required to repay the loan and other extra costs to produce the compensation amount.
If the insurers had set the premiums correctly, the surrender value would be higher and this would have brought down the compensation."
Shakespeare Putsman LLP partner Gareth Fatchett said:
"We have had a positive opinion from specialist counsel about taking action on behalf of advisers. It is arguable that redress by IFAs could be reclaimed against providers who are shown to have used incorrect charging assumptions. Potentially, this creates a whole raft of claims from IFA firms who have paid redress needlessly."
IFA Defence Union chairman Evan Owen sums this disgraceful farce very neatly:
"IFAs should not have had to waste time defending complaints, paying case fees triggered by false shortfalls and forking out compensation that others were responsible for. The providers must be held to account."
As this site has noted many times, the failure of these useless policies is down to their bad design; ie they were not fit for purpose. On that basis alone, it is most assuredly the endowment providers' responsibility to clear this mess up.
As I have noted many times before, were they to agree to underwrite these failed products that they foisted on an unsuspecting generation of house buyers, much of the distress being endured by their hapless customers and IFAs (unfairly caught in the middle) could have been avoided.
Anyone care to take any bets as to whether the endowment providers will "step up to the plate" and admit their responsibility?
The recently published shameful case of the so called "Lautro 12", appears to be causing more than a few ripples in the financial services industry.
It seems that the knock on effect of the "Lautro 12" is that many Independent Financial Advisers (IFAs) may have paid out too much compensation for mortgage endowment complaints.
Needless to say, if this were to be the case, they may themselves be entitled to financial compensation from the endowment providers.
The Lautro 12 were found to have mispriced Lautro premiums, which lead them to give their hapless customers unrealistically high maturity figures between 1988 and 1994.
Other providers have also mispriced projections but, unlike the 12, have not necessarily paid any consumer redress.
OAC Actuaries and Consultants chief executive, Roger Grenville-Jones, said:
"Where compensation for misselling has been paid, the amount of compensation is automatically increased to adjust for the policy being too small, at the expense of the firm paying the compensation, but only up to the present time."
Whilst the extra sums that advisers have had to pay out due to mispricing by providers is difficult to estimate, it is estimated that approximately £83M has been paid out in compensation for endowment misselling.
Compliance expert Adam Samuel said:
"Under-pricing will have reduced surrender values which are deducted from the amount required to repay the loan and other extra costs to produce the compensation amount.
If the insurers had set the premiums correctly, the surrender value would be higher and this would have brought down the compensation."
Shakespeare Putsman LLP partner Gareth Fatchett said:
"We have had a positive opinion from specialist counsel about taking action on behalf of advisers. It is arguable that redress by IFAs could be reclaimed against providers who are shown to have used incorrect charging assumptions. Potentially, this creates a whole raft of claims from IFA firms who have paid redress needlessly."
IFA Defence Union chairman Evan Owen sums this disgraceful farce very neatly:
"IFAs should not have had to waste time defending complaints, paying case fees triggered by false shortfalls and forking out compensation that others were responsible for. The providers must be held to account."
As this site has noted many times, the failure of these useless policies is down to their bad design; ie they were not fit for purpose. On that basis alone, it is most assuredly the endowment providers' responsibility to clear this mess up.
As I have noted many times before, were they to agree to underwrite these failed products that they foisted on an unsuspecting generation of house buyers, much of the distress being endured by their hapless customers and IFAs (unfairly caught in the middle) could have been avoided.
Anyone care to take any bets as to whether the endowment providers will "step up to the plate" and admit their responsibility?
Friday, August 24, 2007
The List of Shame
The List of Shame
Congratulations to Money Management magazine for naming and shaming the insurance companies and endowment providers, who tired to hoodwink their customers, that the Financial Services Authority (FSA) tried to cover up.
When these shamed companies sold their products to their unsuspecting customers they used industry standard charges laid down by Lautro, the industry regulator at the time, to show the returns etc that would be expected on the policies..
However, their actual charges levied by these shamed companies were often much higher sometimes double the Lautro rate. Needless to say, they chose not to tell their customers this. This shoddy practice took place between 1988 and 1995.
It is estimated that around 200,000 policyholders, with low-cost mortgage endowments, could be owed up to £200m by these companies as a result of this practice.
The list of shame includes:
-Standard Life
-Pearl
-Axa
-Scottish Widows
-Prudential, owned Scottish Amicable
-Scottish Mutual
-Scottish Provident, now owned by Resolution.
Companies were taking up to 0.75% a year in charges from the fund. However, their customers were given the impression that the charge was only 0.3% (ie less than half).
Some companies, including Axa, Legal & General and Clerical Medical, have set aside money to make good these shortfalls. Others, such as Standard Life, have so far refused.
Shoddy practice by a very shoddy industry, and a disgraceful attempted cover up by a toothless partisan FSA.
It is hardly surprising that the British consumer has lost all faith in the financial services industry.
Congratulations to Money Management magazine for naming and shaming the insurance companies and endowment providers, who tired to hoodwink their customers, that the Financial Services Authority (FSA) tried to cover up.
When these shamed companies sold their products to their unsuspecting customers they used industry standard charges laid down by Lautro, the industry regulator at the time, to show the returns etc that would be expected on the policies..
However, their actual charges levied by these shamed companies were often much higher sometimes double the Lautro rate. Needless to say, they chose not to tell their customers this. This shoddy practice took place between 1988 and 1995.
It is estimated that around 200,000 policyholders, with low-cost mortgage endowments, could be owed up to £200m by these companies as a result of this practice.
The list of shame includes:
-Standard Life
-Pearl
-Axa
-Scottish Widows
-Prudential, owned Scottish Amicable
-Scottish Mutual
-Scottish Provident, now owned by Resolution.
Companies were taking up to 0.75% a year in charges from the fund. However, their customers were given the impression that the charge was only 0.3% (ie less than half).
Some companies, including Axa, Legal & General and Clerical Medical, have set aside money to make good these shortfalls. Others, such as Standard Life, have so far refused.
Shoddy practice by a very shoddy industry, and a disgraceful attempted cover up by a toothless partisan FSA.
It is hardly surprising that the British consumer has lost all faith in the financial services industry.
Monday, August 20, 2007
Named and Shamed
Named and Shamed
The Financial Services Authority (FSA) is to be forced to name and shame the 12 endowment mortgage providers which misused Lautro projections in setting premiums.
Their misuse of the Lautro projections meant that customers were given unrealistically high maturity figures.
The FSA have been forced into the embarrassing climbdown by the Information Commissioner's Office, which has upheld a freedom of information request to name the 12 firms.
It is estimated that several hundred thousand policies could be affected by this ruling.
The FSA had stubbornly refused to name the firms, claiming that it would affect future informal reviews, damage market confidence and infringe the providers' rights. Proving once again that the FSA is an ineffectual body, that does not stand up for the consumer when faced with a conflict of interest.
The FSA conducted an informal mortgage endowment review in 2001 which found that between 1988 and 1994, 12 providers used standard Lautro charges to set premiums without informing consumers that their actual charges were higher. This meant consumers would need to pay higher premiums to meet their expected maturity figures.
The FSA said that the providers had "breached a contractual warranty and/or of material pre-contractual misrepresentation in the sale of endowment mortgages".
The FSA has been of little help to the victims of the endowment scandal. One has to ask, what is the point of the FSA?
The Financial Services Authority (FSA) is to be forced to name and shame the 12 endowment mortgage providers which misused Lautro projections in setting premiums.
Their misuse of the Lautro projections meant that customers were given unrealistically high maturity figures.
The FSA have been forced into the embarrassing climbdown by the Information Commissioner's Office, which has upheld a freedom of information request to name the 12 firms.
It is estimated that several hundred thousand policies could be affected by this ruling.
The FSA had stubbornly refused to name the firms, claiming that it would affect future informal reviews, damage market confidence and infringe the providers' rights. Proving once again that the FSA is an ineffectual body, that does not stand up for the consumer when faced with a conflict of interest.
The FSA conducted an informal mortgage endowment review in 2001 which found that between 1988 and 1994, 12 providers used standard Lautro charges to set premiums without informing consumers that their actual charges were higher. This meant consumers would need to pay higher premiums to meet their expected maturity figures.
The FSA said that the providers had "breached a contractual warranty and/or of material pre-contractual misrepresentation in the sale of endowment mortgages".
The FSA has been of little help to the victims of the endowment scandal. One has to ask, what is the point of the FSA?
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.
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