There is a particularly good article on "This is Money", about the endowment policy mis-selling scandal.
It covers the activities of the Prudential during the 80's and 90's. It seems that in 1993, internal investigations carried out by Prudential uncovered "evidence of widespread activity intended to deceive customers".
To my view it makes damming reading; not just in terms of the activities of the Prudential, but also in terms of highlighting the aggressive selling policy adopted by the life assurance industry at that time.
The article can be read in full at "This is Money".
Monday, June 21, 2004
Thursday, June 17, 2004
There's a Storm Coming
Those of you holding endowment mortgages, who think that things are bad now, are going to have to steel yourselves for matters to get worse.
It is reported that about 50% of all endowments maturing this year will fail to pay off mortgage debts; this appears to be the straw in the wind of a very unpleasant storm coming our way.
It seems that, according to experts, matters will get worse.
The current estimate is that there will be a shortfall on mis-sold endowment policies of around £40BN.
However, it is reported that Ned Cazalet an insurance analyst at Cazalet Consulting, is predicting that nearly all all mortgage endowment policies that mature after 2008 will miss their targets.
Here are some stats (source Life Insurance Association):
Is it any wonder that people have lost confidence in the financial system in this country?
Those of you holding endowment mortgages, who think that things are bad now, are going to have to steel yourselves for matters to get worse.
It is reported that about 50% of all endowments maturing this year will fail to pay off mortgage debts; this appears to be the straw in the wind of a very unpleasant storm coming our way.
It seems that, according to experts, matters will get worse.
The current estimate is that there will be a shortfall on mis-sold endowment policies of around £40BN.
However, it is reported that Ned Cazalet an insurance analyst at Cazalet Consulting, is predicting that nearly all all mortgage endowment policies that mature after 2008 will miss their targets.
Here are some stats (source Life Insurance Association):
- Norwich Union expects 45% of its 38000 policies maturing this year will not meet target.
- Standard Life expects 47% of its 57000 policies not to meet target this year.
- Scottish Amicable expects 22% of its 18000 policies maturing this year not to meet target.
- Legal and General expects that 25% of its 25000 policies maturing this year not to meet target.
- Scottish Widows expects 67% of its 9000 policies maturing this year not to meet target.
- Abbey Life expects 98% of its 1500 policies maturing this year not to meet target.
Is it any wonder that people have lost confidence in the financial system in this country?
Friday, June 11, 2004
It is reported that the Royal & Sun Alliance has imposed a time limit, preventing customers who may have been mis-sold a mortgage endowment policy from complaining.
They claim that they are reconsidering their approach.
I understand that the other main endowment companies claim that they do not apply time limits.
However, the Financial Ombudsman Service (FOS) believes that the majority of companies do apply time limits.
There seems to be a "confusion of facts" here!
It is reported that the Select Treasury committee will investigate this, when it sits in the next fortnight.
I would say that the reputation of the Financial Services industry must be pretty well in tatters now. There is a report circulating that people are not saving enough for their retirement.
Given the endowment policy mis-selling scandal, why on earth would anyone trust these guys again with their pensions?
Would you?
They claim that they are reconsidering their approach.
I understand that the other main endowment companies claim that they do not apply time limits.
However, the Financial Ombudsman Service (FOS) believes that the majority of companies do apply time limits.
There seems to be a "confusion of facts" here!
It is reported that the Select Treasury committee will investigate this, when it sits in the next fortnight.
I would say that the reputation of the Financial Services industry must be pretty well in tatters now. There is a report circulating that people are not saving enough for their retirement.
Given the endowment policy mis-selling scandal, why on earth would anyone trust these guys again with their pensions?
Would you?
Wednesday, June 09, 2004
Missed The Boat
It seems that about 700000 people, out of the total of 8.5M who hold endowment policies, may have missed the deadline to lodge a complaint for mis-selling.
These figures come from the Treasury, so they are probably reasonably accurate.
The chairman of the Select Committee, John MacFall, is reported to have described the fact that so many people didn't know of the time bar as "inexcusable".
The Financial Services Authority (FSA) is understood to be trying to persuade companies operating a time bar to reconsider their approach. Some of the endowment companies have agreed to waive the time bar.
The committee has also raised the issue of people sold endowment mortgages before 1988. As we all know, the ombudsman cannot consider these complaints because there was no voluntary code or scheme covering their activities before 1988.
The Select Committee is worried that this lack of action wrt pre 1988 policies will harm the reputation of the financial services industry.
I would suggest that the 8 million people facing shortfalls on their endowment policies already think that the financial services industry is pretty poor, whether the FSA deals with the complaints or not.
It seems that there are no stats available on the number of people turned away by the Ombudsman for trying to complain about pre 1988 endowments. The estimate is 1.2M, that's a lot of unhappy people!
Let's give them some stats!
Write to the Select Committee, if you were turned away because your policy was sold pre 1988.
There is a small crumb of comfort, the FSA and government are exploring options for voluntary help for people with pre 1988 policies.
However, don't hold your breath folks, that is a "cop out" in my view.
It seems that about 700000 people, out of the total of 8.5M who hold endowment policies, may have missed the deadline to lodge a complaint for mis-selling.
These figures come from the Treasury, so they are probably reasonably accurate.
The chairman of the Select Committee, John MacFall, is reported to have described the fact that so many people didn't know of the time bar as "inexcusable".
The Financial Services Authority (FSA) is understood to be trying to persuade companies operating a time bar to reconsider their approach. Some of the endowment companies have agreed to waive the time bar.
The committee has also raised the issue of people sold endowment mortgages before 1988. As we all know, the ombudsman cannot consider these complaints because there was no voluntary code or scheme covering their activities before 1988.
The Select Committee is worried that this lack of action wrt pre 1988 policies will harm the reputation of the financial services industry.
I would suggest that the 8 million people facing shortfalls on their endowment policies already think that the financial services industry is pretty poor, whether the FSA deals with the complaints or not.
It seems that there are no stats available on the number of people turned away by the Ombudsman for trying to complain about pre 1988 endowments. The estimate is 1.2M, that's a lot of unhappy people!
Let's give them some stats!
Write to the Select Committee, if you were turned away because your policy was sold pre 1988.
There is a small crumb of comfort, the FSA and government are exploring options for voluntary help for people with pre 1988 policies.
However, don't hold your breath folks, that is a "cop out" in my view.
Friday, June 04, 2004
Alright For Some
The complaints company, which is handling the claim for compensation on one of my mis-sold endowment polices, wrote to me today.
The letter proudly informed me that they are expanding, and moving to larger premises.
Although I am pleased to see that they are doing well, it does seem that the misery of 8 million endowment policy holders is being used to supply the revenue stream for others.
The complaints company, which is handling the claim for compensation on one of my mis-sold endowment polices, wrote to me today.
The letter proudly informed me that they are expanding, and moving to larger premises.
Although I am pleased to see that they are doing well, it does seem that the misery of 8 million endowment policy holders is being used to supply the revenue stream for others.
Wednesday, June 02, 2004
New Rules, Same Problem
New rules came into force yesterday with regard to the information that life assurers must supply endowment policy holders with, concerning their underperforming endowment mortgages.
The rules require that policy providers must warn consumers of approaching deadlines for complaints about failing endowment policies. The policy provider must remind the holder when they have six months left to complain.
This of course does not address the actual problem, namely attaining compensation for the policy shortfall.
New rules came into force yesterday with regard to the information that life assurers must supply endowment policy holders with, concerning their underperforming endowment mortgages.
The rules require that policy providers must warn consumers of approaching deadlines for complaints about failing endowment policies. The policy provider must remind the holder when they have six months left to complain.
This of course does not address the actual problem, namely attaining compensation for the policy shortfall.
Wednesday, May 26, 2004
FSA Gets Tough
It seems that the FSA is getting tough with the rather "laid back" life assurance companies.
They have requested that the life assurance companies provide holders of underperforming endowment policies with more information about how to make a complaint.
Additionally, from June 1st, all insurers who apply the 3 year time limit on complaints have to write to policy holders 6 months before the end of the complaint window; to remind them to complain.
The question is, will they accept yopur complaint once you have made it?
What a mess!
It seems that the FSA is getting tough with the rather "laid back" life assurance companies.
They have requested that the life assurance companies provide holders of underperforming endowment policies with more information about how to make a complaint.
Additionally, from June 1st, all insurers who apply the 3 year time limit on complaints have to write to policy holders 6 months before the end of the complaint window; to remind them to complain.
The question is, will they accept yopur complaint once you have made it?
What a mess!
Monday, May 24, 2004
Tardy Payments
Not content with using all the excuses under the sun to avoid paying compensation, to those of us lumbered with an underperforming endowment policy, it seems that one major life assurer also delays paying compensation; even when it has agreed to pay the compensation.
The life assurer promises to pay within 28 days of compensation being agreed. Yet it appears that it breaches its own promises on a regular basis; keeping people waiting for over 10 weeks.
I understand that the FSA has put a warning shot across their bows, telling them to speed up; or face another fine.
The company claims that the delays are due to the sheer number of complaints.
Well, if it is bad now, wait and see how bad it will get over the coming year; as the penny finally drops that around 6 million people will face a shortfall and the claims flood in.
Not content with using all the excuses under the sun to avoid paying compensation, to those of us lumbered with an underperforming endowment policy, it seems that one major life assurer also delays paying compensation; even when it has agreed to pay the compensation.
The life assurer promises to pay within 28 days of compensation being agreed. Yet it appears that it breaches its own promises on a regular basis; keeping people waiting for over 10 weeks.
I understand that the FSA has put a warning shot across their bows, telling them to speed up; or face another fine.
The company claims that the delays are due to the sheer number of complaints.
Well, if it is bad now, wait and see how bad it will get over the coming year; as the penny finally drops that around 6 million people will face a shortfall and the claims flood in.
Thursday, May 20, 2004
Reuters report that Legal & General will contest the £1M fine from the FSA.
L&G accuse the FSA of having to seek extra evidence, because its original case was not strong enough.
The FSA had accused L&G, in November, of selling risky savings products to risk-averse customers; and mis-selling endowment policies between 1997 and 1999.
Those of you anxiously waiting to hear the outcome of the case, will have to hold your collective breaths; the tribunal will not begin until September.
L&G accuse the FSA of having to seek extra evidence, because its original case was not strong enough.
The FSA had accused L&G, in November, of selling risky savings products to risk-averse customers; and mis-selling endowment policies between 1997 and 1999.
Those of you anxiously waiting to hear the outcome of the case, will have to hold your collective breaths; the tribunal will not begin until September.
The Scandal That Won't Go Away
Despite hoping that the endowment mis-selling scandal will go away, life assurers are now having to face the same financial misery that the 6 million of us who bought these non performing white elephants have been enduring for the last few years.
Evidence of this emerged yesterday, as Nationwide has announced that it has tripled its provisions for compensating endowment mortgage customers; as complaints of mis-selling continue to escalate.
Fortunately for Nationwide, they do have a 21% increase in profits to cushion the effect.
Nationwide has raised its provision from £11M to £34M.
They admit that it is "possible that the value of some investment policies will not be sufficient to fully repay mortgages on maturity".
Quite!
Don't fear for Nationwide's future, its pre tax profits for year end April 2004 were £426M.
Despite hoping that the endowment mis-selling scandal will go away, life assurers are now having to face the same financial misery that the 6 million of us who bought these non performing white elephants have been enduring for the last few years.
Evidence of this emerged yesterday, as Nationwide has announced that it has tripled its provisions for compensating endowment mortgage customers; as complaints of mis-selling continue to escalate.
Fortunately for Nationwide, they do have a 21% increase in profits to cushion the effect.
Nationwide has raised its provision from £11M to £34M.
They admit that it is "possible that the value of some investment policies will not be sufficient to fully repay mortgages on maturity".
Quite!
Don't fear for Nationwide's future, its pre tax profits for year end April 2004 were £426M.
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