Public Censure
The Financial Services Authority (FSA) has publicly censured Mandrake Associates Limited (MAL) for serious failings in the way it handled mortgage endowment complaints.
The FSA has also prohibited William John Pirie, the firm's sole director, from carrying out any customer functions in regulated financial services due to his mishandling of endowment mortgage complaints received by MAL.
The FSA claimed that as a result of MAL's failings, there was an enhanced risk that endowment mis-selling complaints were either wrongly rejected or delayed.
MAL was found to have failed to ensure its complaints handling procedures were operating effectively, failed to provide adequate resources for the handling of mortgage endowment complaints and failed to ensure that complaint handling personnel were trained to carry out fair investigations.
In addition it failed to finalise the complaints that were dealt with, within a reasonable time and failed to provide complainants with updates about the progress of investigation in a timely fashion, while it also failed to co-operate fully and promptly with the directions of the Financial Ombudsman Service.
Margaret Cole, director of enforcement at the FSA, said:
"Firms must have in place and operate an effective complaints handling system as a key part of treating customers fairly. MAL's endowment complaints handling failings were systemic, lasting for four years and meant consumers who had been mis-sold endowments were at risk of not receiving compensation at all or only after long delay.
Firms who fail their customers in this way will face enforcement action. MAL would have faced a fine of £400,000 if it had not been for its current financial position."
Showing posts with label fines. Show all posts
Showing posts with label fines. Show all posts
Tuesday, July 29, 2008
Sunday, January 20, 2008
FSA Bends In The Wind
FSA Bends in The Wind
The Financial Services Authority (FSA), has given discounts of £4M on fines imposed on banks, building societies, mortgage firms and stockbrokers over the past year.
The firms (eg Nationwide, Capital One and Norwich Union) had been found guilty of serious rule breaches ranging from mis-selling of payment protection insurance (PPI) to failing to adequately safeguard the personal details of customers.
The discounts offered are in the region of 30%, in return for promising to co-operate and not challenging the FSA's findings at tribunal.
Which? is far from impressed, and accuses the FSA of "putting the interests of the industry over those of consumers".
The FSA has decided to bend in the wind as a result of the fight it had with Legal & General in 2005, over its endowments mis-selling case.
L&G successfully appealed against the size of the fine imposed on it.
The FSA is showing excessive weakness, it neglects the fact that were a firm to complain about the size of a fine it would receive an enormous amount of negative publicity during the tribunal.
By offering such large discounts, the FSA has let the insurance and banking industry have its cake and eat it.
The Financial Services Authority (FSA), has given discounts of £4M on fines imposed on banks, building societies, mortgage firms and stockbrokers over the past year.
The firms (eg Nationwide, Capital One and Norwich Union) had been found guilty of serious rule breaches ranging from mis-selling of payment protection insurance (PPI) to failing to adequately safeguard the personal details of customers.
The discounts offered are in the region of 30%, in return for promising to co-operate and not challenging the FSA's findings at tribunal.
Which? is far from impressed, and accuses the FSA of "putting the interests of the industry over those of consumers".
The FSA has decided to bend in the wind as a result of the fight it had with Legal & General in 2005, over its endowments mis-selling case.
L&G successfully appealed against the size of the fine imposed on it.
The FSA is showing excessive weakness, it neglects the fact that were a firm to complain about the size of a fine it would receive an enormous amount of negative publicity during the tribunal.
By offering such large discounts, the FSA has let the insurance and banking industry have its cake and eat it.
Monday, October 16, 2006
Secret Payments
Secret Payments
It appears that some major financial institutions, that sold the hapless British home owners their useless and underperforming endowment policies, are conducting a secret "payoff" exercise.
Fearful that their already tarnished reputations will be further dragged through the muck and mire, some of Britain's leading financial institutions are paying off endowment holders, so as to avoid fines from the FSA and further reputational damage.
Included on the list of shame are; Barclays, Halifax, Friends Provident and Legal & General. They are reportedly secretly contacting customers, and offering to "review" the way business has been handled.
Pretty pathetic isn't it?
Hardly surprising that people long ago lost faith in the financial services industry in Britain.
It appears that some major financial institutions, that sold the hapless British home owners their useless and underperforming endowment policies, are conducting a secret "payoff" exercise.
Fearful that their already tarnished reputations will be further dragged through the muck and mire, some of Britain's leading financial institutions are paying off endowment holders, so as to avoid fines from the FSA and further reputational damage.
Included on the list of shame are; Barclays, Halifax, Friends Provident and Legal & General. They are reportedly secretly contacting customers, and offering to "review" the way business has been handled.
Pretty pathetic isn't it?
Hardly surprising that people long ago lost faith in the financial services industry in Britain.
Wednesday, June 28, 2006
FSA Apologises For Failures
FSA Apologises For Failures
The chairman of the Financial Services Authority (FSA), Callum McCarthy, has apologised over its heavy handed approach to regulation.
McCarthy said that he accepted that the FSA had been dogged by "failures", but claimed it had now made reforms.
Quote:
"The review of the FSA's enforcement procedures we completed last year shows that when we recognise failures in our processes we will seek to remedy them.
I regret that it took us so long to recognise the legitimacy of concerns expressed to us that these processes were not fair to those subject to them."
The apology comes in the wake of the fiasco with Legal & General, which took the FSA to the Financial Services & Markets Tribunal after it was fined £1.1m for mis-selling endowment mortgages. The tribunal ruled the fine had been twice as high as was justified.
Meanwhile, the holders of these useless underperforming products continue to face shortfalls.
The chairman of the Financial Services Authority (FSA), Callum McCarthy, has apologised over its heavy handed approach to regulation.
McCarthy said that he accepted that the FSA had been dogged by "failures", but claimed it had now made reforms.
Quote:
"The review of the FSA's enforcement procedures we completed last year shows that when we recognise failures in our processes we will seek to remedy them.
I regret that it took us so long to recognise the legitimacy of concerns expressed to us that these processes were not fair to those subject to them."
The apology comes in the wake of the fiasco with Legal & General, which took the FSA to the Financial Services & Markets Tribunal after it was fined £1.1m for mis-selling endowment mortgages. The tribunal ruled the fine had been twice as high as was justified.
Meanwhile, the holders of these useless underperforming products continue to face shortfalls.
Monday, September 05, 2005
Higher Fines Urged
Higher Fines Urged
Which?, the consumer group, is urging the Financial Services Authority (FSA) to significantly increase the fines it imposes on companies found guilty of mis-selling; in an attempt to crack down on the financial services industry.
Which? says that it wants the Financial Services Authority to levy penalties that are big enough to alarm institutional investors that own shares in the companies facing fines.
Which? believes large penalties would persuade investors to put pressure on financial services companies to prevent mis-selling.
Not a moment too soon in my view.
Which?, the consumer group, is urging the Financial Services Authority (FSA) to significantly increase the fines it imposes on companies found guilty of mis-selling; in an attempt to crack down on the financial services industry.
Which? says that it wants the Financial Services Authority to levy penalties that are big enough to alarm institutional investors that own shares in the companies facing fines.
Which? believes large penalties would persuade investors to put pressure on financial services companies to prevent mis-selling.
Not a moment too soon in my view.
Friday, May 27, 2005
Legal and General Have Fine Cut
Legal and General Have Fine Cut
Legal & General Group (L&G) have had their fine for misselling mortgage endowments cut in half in a ruling that criticised the FSA.
L&G will now pay a £575K, the Financial Services and Markets Tribunal said in a decision posted on its Web site.
The original fine was £1.1M.
The ruling said that the insurer was "justified in feeling aggrieved" about the FSA's probe. The watchdog used a report from PricewaterhouseCoopers LLP as the basis of its case when it should have used its own evidence, the ruling said.
L&G was the first life assurance company to appeal against an FSA penalty, this may encourage other companies to challenge the regulator's decisions.
Abbey National was fined £800K by the regulator for mishandling complaints from endowment clients.
Maybe they could employ one of these endowment compensation firms to help them?
Legal & General Group (L&G) have had their fine for misselling mortgage endowments cut in half in a ruling that criticised the FSA.
L&G will now pay a £575K, the Financial Services and Markets Tribunal said in a decision posted on its Web site.
The original fine was £1.1M.
The ruling said that the insurer was "justified in feeling aggrieved" about the FSA's probe. The watchdog used a report from PricewaterhouseCoopers LLP as the basis of its case when it should have used its own evidence, the ruling said.
L&G was the first life assurance company to appeal against an FSA penalty, this may encourage other companies to challenge the regulator's decisions.
Abbey National was fined £800K by the regulator for mishandling complaints from endowment clients.
Maybe they could employ one of these endowment compensation firms to help them?
Tuesday, April 26, 2005
Fines All Round
Fines All Round
The Financial Services Authority (FSA) has issued a warning that up to 10 endowment firms face disciplinary action, for refusing to pay adequate compensation to customers who were mis-sold policies.
It seems that these 10 firms are still flouting FSA guidelines, which were drawn up 4 years ago, on the handling of endowment complaints.
The FSA is quoted as saying:
"In January we warned the small number of firms that were still not handling mortgage endowment complaints adequately to improve the standard of their work or risk enforcement action. Intensive work is ongoing and the time for these recalcitrant firms to lift their game is certainly short."
It is reported that Abbey National is on the list.
The FSA has already fined Friends Provident £675K and Allied Dunbar £725K for mishandling complaints, in the last 18 months.
Is it any wonder that people have lost confidence in the providers of these worthless products?
The Financial Services Authority (FSA) has issued a warning that up to 10 endowment firms face disciplinary action, for refusing to pay adequate compensation to customers who were mis-sold policies.
It seems that these 10 firms are still flouting FSA guidelines, which were drawn up 4 years ago, on the handling of endowment complaints.
The FSA is quoted as saying:
"In January we warned the small number of firms that were still not handling mortgage endowment complaints adequately to improve the standard of their work or risk enforcement action. Intensive work is ongoing and the time for these recalcitrant firms to lift their game is certainly short."
It is reported that Abbey National is on the list.
The FSA has already fined Friends Provident £675K and Allied Dunbar £725K for mishandling complaints, in the last 18 months.
Is it any wonder that people have lost confidence in the providers of these worthless products?
Monday, April 25, 2005
Insurers Bite Back
Insurers Bite Back
Following on from the drubbing that the Financial Services authority (FSA) received from the Financial Services and Markets Tribunal, in its case against L&G, insurers have been quick off the mark to bite back.
Insurers have demanded that the FSA "improve" its investigation and enforcement procedures.
The Association of British Insurers (ABI) have accused FSA staff of building cases against insurers, to send a tough message to the market.
The FSA is reviewing its investigation procedures, after Legal & General had a fine for mis-selling cut on appeal.
The FSA said it would "consider" the ABI's views and respond in July.
The ABI said that the FSA's Regulatory Decisions Committee (RDC), the body which oversees enforcement, needed to be more open with firms under investigation.
The ABI said:
"There is a perception that FSA enforcement staff are often intent on delivering a particular message to the market and seek to build a case... to support that message..".
Needless to say, whatever the outcome of this spat, it will not be benefit the holders of worthless endowment policies.
Following on from the drubbing that the Financial Services authority (FSA) received from the Financial Services and Markets Tribunal, in its case against L&G, insurers have been quick off the mark to bite back.
Insurers have demanded that the FSA "improve" its investigation and enforcement procedures.
The Association of British Insurers (ABI) have accused FSA staff of building cases against insurers, to send a tough message to the market.
The FSA is reviewing its investigation procedures, after Legal & General had a fine for mis-selling cut on appeal.
The FSA said it would "consider" the ABI's views and respond in July.
The ABI said that the FSA's Regulatory Decisions Committee (RDC), the body which oversees enforcement, needed to be more open with firms under investigation.
The ABI said:
"There is a perception that FSA enforcement staff are often intent on delivering a particular message to the market and seek to build a case... to support that message..".
Needless to say, whatever the outcome of this spat, it will not be benefit the holders of worthless endowment policies.
Saturday, March 12, 2005
Comment On FSA Procedures
Comment On FSA Procedures
The Financial Services Authority (FSA) has asked the City to comment on its review of enforcement procedures, specifically it has asked as to whether its regulatory decisions committee is the "right model" for making contentious decisions.
The committee's Chairman, Christopher Fitzgerald, was forced to resign following him being seen talking with a lawyer who was sitting on a panel hearing an appeal against one of its decisions.
The FSA has put out a series of questions about its enforcement process, but indicated that it will not ask for changes in the legislation that sets the terms under which it operates.
The FSA was forced to review its procedures, after the financial services markets tribunal ruled against its £1.1m fine on Legal & General for endowment mis-selling could not be justified.
The Financial Services Authority (FSA) has asked the City to comment on its review of enforcement procedures, specifically it has asked as to whether its regulatory decisions committee is the "right model" for making contentious decisions.
The committee's Chairman, Christopher Fitzgerald, was forced to resign following him being seen talking with a lawyer who was sitting on a panel hearing an appeal against one of its decisions.
The FSA has put out a series of questions about its enforcement process, but indicated that it will not ask for changes in the legislation that sets the terms under which it operates.
The FSA was forced to review its procedures, after the financial services markets tribunal ruled against its £1.1m fine on Legal & General for endowment mis-selling could not be justified.
Thursday, January 27, 2005
Fallout
Fallout
The Financial Services Authority (FSA) is reported to be conducting an internal review of its investigations and enforcement operations, after the financial services and markets tribunal overturned its £1.1M fine on Legal & General (L&G) for endowment mis-selling.
The FSA is expected to appoint one of its top officials to lead the review.
The Financial Services Authority (FSA) is reported to be conducting an internal review of its investigations and enforcement operations, after the financial services and markets tribunal overturned its £1.1M fine on Legal & General (L&G) for endowment mis-selling.
The FSA is expected to appoint one of its top officials to lead the review.
Friday, January 21, 2005
L&G Puts The Boot In
L&G Puts The Boot In
It is reported that David Prosser, CEO of Legal & General (L&G), has demanded changes to the Financial Services Authority's (FSA) disciplinary procedures.
This is in the wake of the partly successful appeal by L&G, against the FSA fine of £1.1M for endowment policy mis-selling by L&G.
Prosser asked for greater independence in the FSA's regulatory decisions committee (RDC), that is the body that considers recommendations made by the regulator's enforcement staff.
Currently the chair of the RDC is an FSA employee.
It is reported that L&G may ask the Financial Services and Markets Tribunal to enforce these changes.
It is reported that David Prosser, CEO of Legal & General (L&G), has demanded changes to the Financial Services Authority's (FSA) disciplinary procedures.
This is in the wake of the partly successful appeal by L&G, against the FSA fine of £1.1M for endowment policy mis-selling by L&G.
Prosser asked for greater independence in the FSA's regulatory decisions committee (RDC), that is the body that considers recommendations made by the regulator's enforcement staff.
Currently the chair of the RDC is an FSA employee.
It is reported that L&G may ask the Financial Services and Markets Tribunal to enforce these changes.
Wednesday, January 19, 2005
Score Draw
Score Draw
The Financial Services and Markets Tribunal (FSMT) issued its judgement in the Legal & General (L&G) vs Financial Services Authority (FSA) case.
The FSMT yesterday cleared L&G of wide-spread mis-selling of endowments, it noted that only 8 out of the 152 sales reviewed could be proven to be mis-sold.
The Tribunal also noted that the £1.1m fine imposed by the FSA should be reduced, and said a further hearing will be held on this issue.
It noted that ruled that the FSA had been "in error in its approach to the mis-selling case", adding that its conclusions were "not justified by the material before it".
The case has ended up costing L&G more in legal fees, than it will save through a lowering of its fine.
Needless to say both L&G and the FSA are claiming victory.
Whether this ruling helps the 8 million hapless holders of these underperforming, and useless, products remains to be seen.
The Financial Services and Markets Tribunal (FSMT) issued its judgement in the Legal & General (L&G) vs Financial Services Authority (FSA) case.
The FSMT yesterday cleared L&G of wide-spread mis-selling of endowments, it noted that only 8 out of the 152 sales reviewed could be proven to be mis-sold.
The Tribunal also noted that the £1.1m fine imposed by the FSA should be reduced, and said a further hearing will be held on this issue.
It noted that ruled that the FSA had been "in error in its approach to the mis-selling case", adding that its conclusions were "not justified by the material before it".
The case has ended up costing L&G more in legal fees, than it will save through a lowering of its fine.
Needless to say both L&G and the FSA are claiming victory.
Whether this ruling helps the 8 million hapless holders of these underperforming, and useless, products remains to be seen.
Tuesday, January 18, 2005
Judgement Day
Judgement Day
Today is judgement day in the battle between the Financial Services Authority (FSA) and Legal and General (L&G).
The Financial Services and Markets Tribunal will rule in the appeal made by L&G, over the FSA's fine of £1.1M for mis-selling endowment mortgages.
Smart money in the City is on the tribunal giving the FSA a "drubbing" over it's role in this case, and in the manner in which it decided on the fine.
A partial victory for L&G would severely damage the FSA, and open the gates for others to appeal their fines.
Today is judgement day in the battle between the Financial Services Authority (FSA) and Legal and General (L&G).
The Financial Services and Markets Tribunal will rule in the appeal made by L&G, over the FSA's fine of £1.1M for mis-selling endowment mortgages.
Smart money in the City is on the tribunal giving the FSA a "drubbing" over it's role in this case, and in the manner in which it decided on the fine.
A partial victory for L&G would severely damage the FSA, and open the gates for others to appeal their fines.
Monday, January 17, 2005
Backlog Developing
Backlog Developing
It seems that there is quite a backlog of endowment mis-selling cases piling up, at the Financial Ombudsman Service (FOS).
These cases are now likely to take a year or more to resolve. The FOS had budgeted for around 35000 cases, but now believes that it will be dealing with 67000.
The FOS has hired 200 new adjudicators in 2004, but that does not seem to be enough to cope with the increased number of complaints from people holding useless and underperforming endowment policies.
The FOS is pretty "pissed off" with the endowment providers, and believes that they are not co-operating with the FOS adjudicators.
It seems that there are 10 well known trouble making life assurance companies, who simply reject consumer complaints out of hand. These rejected complaints then land on the desk of the FOS.
It seems that these 10 naughty companies don't even bother to investigate the complaints, but are happy to let the poor consumer wait in limbo for 8 weeks (the FSA time limit) before telling them that their complaint is rejected.
Nice trick guys!
I am pleased to note that the names of these 10 companies have been passed on to the FSA, for fines.
It would be even better, if the names were released to the media; thus "naming and shaming" these companies as well.
It seems that there is quite a backlog of endowment mis-selling cases piling up, at the Financial Ombudsman Service (FOS).
These cases are now likely to take a year or more to resolve. The FOS had budgeted for around 35000 cases, but now believes that it will be dealing with 67000.
The FOS has hired 200 new adjudicators in 2004, but that does not seem to be enough to cope with the increased number of complaints from people holding useless and underperforming endowment policies.
The FOS is pretty "pissed off" with the endowment providers, and believes that they are not co-operating with the FOS adjudicators.
It seems that there are 10 well known trouble making life assurance companies, who simply reject consumer complaints out of hand. These rejected complaints then land on the desk of the FOS.
It seems that these 10 naughty companies don't even bother to investigate the complaints, but are happy to let the poor consumer wait in limbo for 8 weeks (the FSA time limit) before telling them that their complaint is rejected.
Nice trick guys!
I am pleased to note that the names of these 10 companies have been passed on to the FSA, for fines.
It would be even better, if the names were released to the media; thus "naming and shaming" these companies as well.
Sunday, January 09, 2005
Procter Jumps Ship
Procter Jumps Ship
Andrew Procter, head of enforcement at the Financial Services Authority (FSA), is leaving to join Deutsche Bank; as head of compliance for Britain and Western Europe.
Procter was involved in the investigation into endowment mis-selling at Legal & General (L&G), which is currently appealing the £1.1m fine at the financial services and markets tribunal.
The result of their appeal is expected to be announced this week; and it was assumed, by some, that if L&G won then Procter would have to resign.
Andrew Procter, head of enforcement at the Financial Services Authority (FSA), is leaving to join Deutsche Bank; as head of compliance for Britain and Western Europe.
Procter was involved in the investigation into endowment mis-selling at Legal & General (L&G), which is currently appealing the £1.1m fine at the financial services and markets tribunal.
The result of their appeal is expected to be announced this week; and it was assumed, by some, that if L&G won then Procter would have to resign.
Wednesday, January 05, 2005
A Straw in The Wind
A Straw in The Wind
The Financial Services authority (FSA) has decided that it is now time to "get tough" with the life assurance industry, in respect of the underperforming and useless endowment policies that some 8 million people hold in the UK.
The FSA have written to the chief executives of all companies that sell endowment policies; the letter warns them that, in the opinion of the FSA, they (the life assurance companies) are dismissing complaints from customers without proper investigation.
To date, 500,000 people have complained to insurers and banks; and have received compensation for endowment mortgage mis-selling.
The FSA notes that the Financial Ombudsman Service (FOS) is upholding a large proportion of complaints, that were originally dismissed by the companies that sold the policies; this gives rise to the conclusion that the life assurance companies are not handling the complaints properly.
The FOS now employs 1000 people to handle endowment complaints.
Clive Briault, managing director of retail markets at the FSA, says:
"firms may not be handling complaints properly...Firms should not manage their own caseloads by allowing an excessive number of complaints to flow through to the FOS...".
The FSA has also identified "inconsistencies" in the decisions of some life assurance companies, relating to certain types of complaint.
To date the FSA has fined two companies, for their failure to handle complaints about endowment mortgages properly.
-Allied Dunbar Assurance was fined £725K for serious flaws in March 2004
-Friends Provident was fined £675K for failures in its procedures.
The FSA states that it wants firms to review their policies and procedures for the handling of complaints, and confirm that they are appropriate or take any necessary action.
The FSA will continue to monitor progress and outcomes to assure itself and the public that complaints are being handled fairly, and to act in any cases where it finds weaknesses that put consumers' interests at risk.
There is reportedly a straw in the wind, albeit a rather small one, that indicates that the mood at FSA headquarters is shifting in favour of the hapless endowment policy holder. Namely, that the majority of policies were not mis-bought but mis-sold.
Which? goes one better.
Which? wants the FSA to order a wholesale re-investigation of all rejected complaints, to ensure that people have been dealt with fairly.
Louise Hanson, head of campaigns at Which?, said:
"The FSA must continue to take these bad apples to task by immediately naming and shaming them, and then implementing significant fines where rules have been broken.."
This site fully endorses this suggestion.
The Financial Services authority (FSA) has decided that it is now time to "get tough" with the life assurance industry, in respect of the underperforming and useless endowment policies that some 8 million people hold in the UK.
The FSA have written to the chief executives of all companies that sell endowment policies; the letter warns them that, in the opinion of the FSA, they (the life assurance companies) are dismissing complaints from customers without proper investigation.
To date, 500,000 people have complained to insurers and banks; and have received compensation for endowment mortgage mis-selling.
The FSA notes that the Financial Ombudsman Service (FOS) is upholding a large proportion of complaints, that were originally dismissed by the companies that sold the policies; this gives rise to the conclusion that the life assurance companies are not handling the complaints properly.
The FOS now employs 1000 people to handle endowment complaints.
Clive Briault, managing director of retail markets at the FSA, says:
"firms may not be handling complaints properly...Firms should not manage their own caseloads by allowing an excessive number of complaints to flow through to the FOS...".
The FSA has also identified "inconsistencies" in the decisions of some life assurance companies, relating to certain types of complaint.
To date the FSA has fined two companies, for their failure to handle complaints about endowment mortgages properly.
-Allied Dunbar Assurance was fined £725K for serious flaws in March 2004
-Friends Provident was fined £675K for failures in its procedures.
The FSA states that it wants firms to review their policies and procedures for the handling of complaints, and confirm that they are appropriate or take any necessary action.
The FSA will continue to monitor progress and outcomes to assure itself and the public that complaints are being handled fairly, and to act in any cases where it finds weaknesses that put consumers' interests at risk.
There is reportedly a straw in the wind, albeit a rather small one, that indicates that the mood at FSA headquarters is shifting in favour of the hapless endowment policy holder. Namely, that the majority of policies were not mis-bought but mis-sold.
Which? goes one better.
Which? wants the FSA to order a wholesale re-investigation of all rejected complaints, to ensure that people have been dealt with fairly.
Louise Hanson, head of campaigns at Which?, said:
"The FSA must continue to take these bad apples to task by immediately naming and shaming them, and then implementing significant fines where rules have been broken.."
This site fully endorses this suggestion.
Tuesday, January 04, 2005
Judgement Day
Judgement Day
The long awaited judgement, in the case of the FSA vs Legal and General (L&G) will be announced around the 10th of January.
The Financial Services and Markets Tribunal said that the delay in announcing their judgement, was due to sickness and holidays.
L&G went to the tribunal in 2004, in the hope of overturning the £1.1M fine imposed on it by the FSA for endowment mis-selling.
The FSA claimed that there were "fundamental deficiencies" in the way that L&G sold mortgage endowments to low-risk customers, between 1997 and 1999; specifically, their sales and compliance procedures were found to be wanting.
It is reported that customers were given unsuitable recommendations by sales people.
An internal memo at L&G admitted, that the policies had "a very real risk of shortfall at maturity". The FSA also detailed how L&G had failed its own mock regulatory inspections.
The 5 week hearing ended in October, the FSA and insurance industry having been holding their breath ever since.
Should L&G win the case, then the credibility of the FSA would take a severe "hammering". It would also act as the green light for other insurance companies to challenge decisions, and fines imposed upon them by the FSA.
However, should the FSA win it would provide a boost for its reputation and provide a firm underpinning of John Tiner's position as CEO. Whereas the CEO of L&G, David Prosser, may well have to resign.
We, the hapless holders of these underperforming and useless endowment policies, wait with baited breath.
The long awaited judgement, in the case of the FSA vs Legal and General (L&G) will be announced around the 10th of January.
The Financial Services and Markets Tribunal said that the delay in announcing their judgement, was due to sickness and holidays.
L&G went to the tribunal in 2004, in the hope of overturning the £1.1M fine imposed on it by the FSA for endowment mis-selling.
The FSA claimed that there were "fundamental deficiencies" in the way that L&G sold mortgage endowments to low-risk customers, between 1997 and 1999; specifically, their sales and compliance procedures were found to be wanting.
It is reported that customers were given unsuitable recommendations by sales people.
An internal memo at L&G admitted, that the policies had "a very real risk of shortfall at maturity". The FSA also detailed how L&G had failed its own mock regulatory inspections.
The 5 week hearing ended in October, the FSA and insurance industry having been holding their breath ever since.
Should L&G win the case, then the credibility of the FSA would take a severe "hammering". It would also act as the green light for other insurance companies to challenge decisions, and fines imposed upon them by the FSA.
However, should the FSA win it would provide a boost for its reputation and provide a firm underpinning of John Tiner's position as CEO. Whereas the CEO of L&G, David Prosser, may well have to resign.
We, the hapless holders of these underperforming and useless endowment policies, wait with baited breath.
Friday, November 26, 2004
Obstructive Unhelpful Delaying Tactics
You will recall that, on the 12th of November, I sent my life assurance company a letter asking about commission payments made from my two endowment policies.
Here is the letter that I sent:
"Dear Sir/Madam,
Endowment Policies (numbers **** and ****)
I have a number of queries concerning my two endowment policies (numbers **** and ***), which you manage on my behalf.
Please can you answer the following queries in respect of the above policies:
1. Please can you advise me as to how much commission has been paid to any third party, or connected party, at the time the policies were taken out?
2. Please can you advise me of the names of the companies to which commission payments have been made, in respect of these policies?
3. Please can you advise me if commission payments have been made, at dates other than at the commencement of the policies?
4. If so please can you quantify the amounts, the frequency and the organisations to which these additional commission payments have been/are being made?
5. Please can you advise me if the commission payments referred to in questions 1- 4 above were deducted directly from my policy payments, or have been charged indirectly?
6. If commission payments are still being made on my policies, please can you advise me as to why?
7. Do I have the right to stop these ongoing commission payments?
8. If I have the right to stop these ongoing commission payments, please can you explain as to why you have not drawn this to my attention before?
9. Please can you provide me with an estimate as to negative impact, on the final expected maturity value of my policies, which these payments have had?
Please feel free to contact me if you need clarification of the above.
Thank you in advance for your prompt co-operation.
Yours faithfully..."
Today I received their response; which, not to put too fine a point on it, I regard as obstructive and unhelpful.
Here is their response:
"Thanks you for your letter of 11 November, asking how much commission is being paid monthly to the adviser.
The policy *** was sold by **, direct sales office, South London branch. If you have any queries concerning the sale of these policies please contact us at the above address (note they do not supply the address in the letter, they are the same company why not just pass my letter on?).
You took out plan (**) before 1 January 1995, when the current commission disclosure rules came into force. I cannot give you details of the commission paid to the selling agent without the agent's permission in writing. In order to obtain the commission information therefore, we suggest that you contact your adviser direct (it is my money, yet they will not tell me how much they are taking!).
...."
I will follow this up.
I do not consider that their response has been at all helpful; it leaves me to wonder precisely what they are hiding.
You will recall that, on the 12th of November, I sent my life assurance company a letter asking about commission payments made from my two endowment policies.
Here is the letter that I sent:
"Dear Sir/Madam,
Endowment Policies (numbers **** and ****)
I have a number of queries concerning my two endowment policies (numbers **** and ***), which you manage on my behalf.
Please can you answer the following queries in respect of the above policies:
1. Please can you advise me as to how much commission has been paid to any third party, or connected party, at the time the policies were taken out?
2. Please can you advise me of the names of the companies to which commission payments have been made, in respect of these policies?
3. Please can you advise me if commission payments have been made, at dates other than at the commencement of the policies?
4. If so please can you quantify the amounts, the frequency and the organisations to which these additional commission payments have been/are being made?
5. Please can you advise me if the commission payments referred to in questions 1- 4 above were deducted directly from my policy payments, or have been charged indirectly?
6. If commission payments are still being made on my policies, please can you advise me as to why?
7. Do I have the right to stop these ongoing commission payments?
8. If I have the right to stop these ongoing commission payments, please can you explain as to why you have not drawn this to my attention before?
9. Please can you provide me with an estimate as to negative impact, on the final expected maturity value of my policies, which these payments have had?
Please feel free to contact me if you need clarification of the above.
Thank you in advance for your prompt co-operation.
Yours faithfully..."
Today I received their response; which, not to put too fine a point on it, I regard as obstructive and unhelpful.
Here is their response:
"Thanks you for your letter of 11 November, asking how much commission is being paid monthly to the adviser.
The policy *** was sold by **, direct sales office, South London branch. If you have any queries concerning the sale of these policies please contact us at the above address (note they do not supply the address in the letter, they are the same company why not just pass my letter on?).
You took out plan (**) before 1 January 1995, when the current commission disclosure rules came into force. I cannot give you details of the commission paid to the selling agent without the agent's permission in writing. In order to obtain the commission information therefore, we suggest that you contact your adviser direct (it is my money, yet they will not tell me how much they are taking!).
...."
I will follow this up.
I do not consider that their response has been at all helpful; it leaves me to wonder precisely what they are hiding.
Wednesday, October 20, 2004
FOS Gets Tough
It seems that the Financial Ombudsman Service (FOS) is now thoroughly fed up with the tactics used by the life assurance companies, in trying to evade paying for their lousy underperforming endowment polices that 8 million UK households are saddled with.
The FOS has warned the life assurers that they will face large fines if they don't clean up their act.
The FOS is reportedly to be of the opinion that some endowment providers routinely rejected complaints, that they knew would be upheld if they were referred to the FOS.
I understand that at the end of March 2004, life assurance companies had handled 452,201 endowment complaints while the FOS had dealt with around 125,000.
Large fines are all very well and good, but the life assurance companies are wealthy enough to weather those; and indeed will probably just pass the costs on to the hapless policy holders.
What is needed is for the life assurance companies to underwrite these underperforming, poorly designed, polices.
It seems that the Financial Ombudsman Service (FOS) is now thoroughly fed up with the tactics used by the life assurance companies, in trying to evade paying for their lousy underperforming endowment polices that 8 million UK households are saddled with.
The FOS has warned the life assurers that they will face large fines if they don't clean up their act.
The FOS is reportedly to be of the opinion that some endowment providers routinely rejected complaints, that they knew would be upheld if they were referred to the FOS.
I understand that at the end of March 2004, life assurance companies had handled 452,201 endowment complaints while the FOS had dealt with around 125,000.
Large fines are all very well and good, but the life assurance companies are wealthy enough to weather those; and indeed will probably just pass the costs on to the hapless policy holders.
What is needed is for the life assurance companies to underwrite these underperforming, poorly designed, polices.
Wednesday, October 13, 2004
Diversionary Tactics
It is reported that Legal and General (L&G) brought in a "memory expert" yesterday, to support their case against the £1M fine imposed on them by the Financial Services Authority (FSA).
The expert noted that customers' memories were likely to be distorted over the passage of time.
L&G are trying to undermine the customer survey, that was used by the FSA in their case against L&G for endowment mis-selling.
L&G allege that the survey of 152 customers was not large enough, and that the recollections of those questioned must be called into question.
Let us not get sidetracked by these courtroom games.
The real issue here is that people bought these useless polices, in the expectation that they would pay off the mortgage.
These policies are not going to pay off the mortgages. As a result of a combination of:
-Mis-selling
-Passing the entire risk of holding the policy onto the customer, whilst taking a fat commission
-Excessive commission payments
-Diabolical mismanagement of the funds in which the policies are invested
endowment policies are going to dramatically undershoot their targets.
In other words, they are not fit for purpose.
The FSA and the life assurance companies should stop messing around with these diversionary tactics. The issue is simply this, the policies were not fit for purpose; as such the life assurance industry, which has made some very large profits out of creating, selling and "managing" these useless products, must agree to underwrite them.
It is reported that Legal and General (L&G) brought in a "memory expert" yesterday, to support their case against the £1M fine imposed on them by the Financial Services Authority (FSA).
The expert noted that customers' memories were likely to be distorted over the passage of time.
L&G are trying to undermine the customer survey, that was used by the FSA in their case against L&G for endowment mis-selling.
L&G allege that the survey of 152 customers was not large enough, and that the recollections of those questioned must be called into question.
Let us not get sidetracked by these courtroom games.
The real issue here is that people bought these useless polices, in the expectation that they would pay off the mortgage.
These policies are not going to pay off the mortgages. As a result of a combination of:
-Mis-selling
-Passing the entire risk of holding the policy onto the customer, whilst taking a fat commission
-Excessive commission payments
-Diabolical mismanagement of the funds in which the policies are invested
endowment policies are going to dramatically undershoot their targets.
In other words, they are not fit for purpose.
The FSA and the life assurance companies should stop messing around with these diversionary tactics. The issue is simply this, the policies were not fit for purpose; as such the life assurance industry, which has made some very large profits out of creating, selling and "managing" these useless products, must agree to underwrite them.
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