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….”
Monday, August 04, 2003
Thursday, July 24, 2003
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.
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.
Saturday, July 19, 2003
Tuesday, July 15, 2003
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..."
"...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..."
Monday, June 30, 2003
Sunday, June 15, 2003
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...."
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...."
Saturday, June 14, 2003
Wednesday, June 11, 2003
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?
......."
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?
......."
Tuesday, June 03, 2003
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..."
"...
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..."
Monday, June 02, 2003
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.
..."
"...
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.
..."
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