Endowment Crisis Spreads
It seems that it is not only the hapless home owners in the UK, who are suffering from being mis-sold non performing endowment polices.
The cancer of this financial scandal has spread to the Republic of Ireland.
It is reported by RTE that the Irish Financial Services Regulatory Authority, has strongly urged anyone who believes that they were mis-sold an endowment mortgage to complain to the companies who sold them these white elephants.
It seems that out of the 90000 polices sold in Ireland, most endowment mortgage holders have been told that their policies will have shortfalls.
Well, I wish them luck.
Doubtless they will encounter the same instrasigence, and evasion, that the UK holders have encountered as they try to claim redress.
Friday, October 01, 2004
Wednesday, September 29, 2004
Heads You Lose, Tails You Lose
It seems that those of us who are trying to get compensation for mis-sold endowment policies, are having even more obstacles placed in our way.
The Herald reports the case of one of their readers who managed to obtain a judgement in his favour from the Ombudsman service. However, there was a small problem, the company against which the judgement was made no longer was in business; as it had wound itself up.
The Ombudsman can only enforce orders against companies that are in existence, and the Financial Services Compensation Scheme (FSCS) can only help where the firm has gone out of business; not where the firm has voluntarily ceased trading.
The result being that the hapless policy holder is no nearer gaining compensation.
This is just one of many stories, in the progressively worsening endowment policy scandal, that shows how the system is weighted against the individual who tries to claim redress.
To use a technical term here, it "Sucks, big time!"
It seems that those of us who are trying to get compensation for mis-sold endowment policies, are having even more obstacles placed in our way.
The Herald reports the case of one of their readers who managed to obtain a judgement in his favour from the Ombudsman service. However, there was a small problem, the company against which the judgement was made no longer was in business; as it had wound itself up.
The Ombudsman can only enforce orders against companies that are in existence, and the Financial Services Compensation Scheme (FSCS) can only help where the firm has gone out of business; not where the firm has voluntarily ceased trading.
The result being that the hapless policy holder is no nearer gaining compensation.
This is just one of many stories, in the progressively worsening endowment policy scandal, that shows how the system is weighted against the individual who tries to claim redress.
To use a technical term here, it "Sucks, big time!"
Monday, September 27, 2004
What the Life Assurance Firms Don't Want to Tell You
The real reason that the endowment polices have failed, in my view, is that when they were designed by the bright boys in the life assurance industry they had a number of fatal flaws built into them.
Life assurance firms are "experts", so they would have us believe, in risk management. They try to ensure that risks are accounted for, minimised and spread.
What the "bright boys" did when they designed these non performing endowment white elephants, was to spread the risk around the hapless purchasers. They were safe in the knowledge that with 8 million sales, they could spread the risk with little collateral damage to themselves.
They assumed that, in the "unlikely event" that the polices did not perform as well as expected, no one individual would be so out of pocket that they could afford to, or be bothered to complain.
The trouble is, they never bothered telling the hapless endowment policy holder that they were spreading the risk in this manner; nor indeed will they admit to it today.
The other problem is that the polices were very poorly designed; and that the extortionate commission payments extracted from them at the begining, effectively killed the product at birth.
Again, something that they will not admit to.
The final flaw in their great design was the fact that, having spread the risk, with a £40BN shortfall being faced by 8 million people; they know that there is now a massive incentive to complain, yet there is no way that they can ever admit to 8 million people that they were sold "a pup".
Now it is up to the 8 million of us to make them face the consequences.
The real reason that the endowment polices have failed, in my view, is that when they were designed by the bright boys in the life assurance industry they had a number of fatal flaws built into them.
Life assurance firms are "experts", so they would have us believe, in risk management. They try to ensure that risks are accounted for, minimised and spread.
What the "bright boys" did when they designed these non performing endowment white elephants, was to spread the risk around the hapless purchasers. They were safe in the knowledge that with 8 million sales, they could spread the risk with little collateral damage to themselves.
They assumed that, in the "unlikely event" that the polices did not perform as well as expected, no one individual would be so out of pocket that they could afford to, or be bothered to complain.
The trouble is, they never bothered telling the hapless endowment policy holder that they were spreading the risk in this manner; nor indeed will they admit to it today.
The other problem is that the polices were very poorly designed; and that the extortionate commission payments extracted from them at the begining, effectively killed the product at birth.
Again, something that they will not admit to.
The final flaw in their great design was the fact that, having spread the risk, with a £40BN shortfall being faced by 8 million people; they know that there is now a massive incentive to complain, yet there is no way that they can ever admit to 8 million people that they were sold "a pup".
Now it is up to the 8 million of us to make them face the consequences.
Friday, September 24, 2004
On The Ropes?
Legal and General (L&G) continue to be kicked around the courtroom, in their appeal against the FSA £1.1M fine for endowment mis-selling.
In the latest spat it is reported that Ian Malcolmson, an L&G customer, told the hearing it was never explained to him that the endowment policy might not pay off the mortgage in full.
Mr Malcolmson felt that, despite being given a booklet outlining some of the risks, he would have expected the sales adviser to give him a verbal explanation of the risk of a shortfall; rather than putting the warning in "small print".
This seems to have been the normal practice with the sales of these underperforming white elephants, the salesmen never could quite bring themselves to speak of the risks involved; or indeed the sizable chunk being taken out of the profits by the commission payments.
Legal and General (L&G) continue to be kicked around the courtroom, in their appeal against the FSA £1.1M fine for endowment mis-selling.
In the latest spat it is reported that Ian Malcolmson, an L&G customer, told the hearing it was never explained to him that the endowment policy might not pay off the mortgage in full.
Mr Malcolmson felt that, despite being given a booklet outlining some of the risks, he would have expected the sales adviser to give him a verbal explanation of the risk of a shortfall; rather than putting the warning in "small print".
This seems to have been the normal practice with the sales of these underperforming white elephants, the salesmen never could quite bring themselves to speak of the risks involved; or indeed the sizable chunk being taken out of the profits by the commission payments.
Tuesday, September 21, 2004
About Time!
It is reported that the Financial Services Authority (FSA) has been asked to investigate the reward schemes of financial advisers; apparently there are concerns that the commissions and bonuses could affect the advice given, and encourage the mis-selling of financial products.
Now it seems to me that the hapless holders of the splendidly underperforming, and useless, endowment products sold some 10 or more years ago could have told them that.
The Consumers Association has asked the FSA to investigate how products are sold, and the level of commissions paid.
It has also requested that senior directors of financial firms be held accountable for the actions of their employees, and lose their own annual bonus if the firm is fined by the FSA for malpractice.
Now that is a good idea!
In other news, it is reported that a few hundred advisers at Bradford & Bingley are about to quit; as a protest against their new commission policy, which requires them to sell a set number of policies every year.
If they don't hit the target, they don't get a commission.
Bradford & Bingley (B&B) claim that B&B would never encourage staff to give misleading information.
It is certainly long overdue, that the FSA investigates the commission structure of the life assurance companies.
It is reported that the Financial Services Authority (FSA) has been asked to investigate the reward schemes of financial advisers; apparently there are concerns that the commissions and bonuses could affect the advice given, and encourage the mis-selling of financial products.
Now it seems to me that the hapless holders of the splendidly underperforming, and useless, endowment products sold some 10 or more years ago could have told them that.
The Consumers Association has asked the FSA to investigate how products are sold, and the level of commissions paid.
It has also requested that senior directors of financial firms be held accountable for the actions of their employees, and lose their own annual bonus if the firm is fined by the FSA for malpractice.
Now that is a good idea!
In other news, it is reported that a few hundred advisers at Bradford & Bingley are about to quit; as a protest against their new commission policy, which requires them to sell a set number of policies every year.
If they don't hit the target, they don't get a commission.
Bradford & Bingley (B&B) claim that B&B would never encourage staff to give misleading information.
It is certainly long overdue, that the FSA investigates the commission structure of the life assurance companies.
Sunday, September 19, 2004
More Misery
The 350,000 of you who hold endowment policies with Scottish Life, will be feeling even worse about your underperforming policies.
Scottish Life have cut their payouts on their "with profits" polices, for the second time this year.
The polices are now so, I will use an accounting term here, "crappy" that they are not even keeping pace with inflation.
The returns on the Scottish Life polices are a "staggering" 1.1% (inflation is around 2.5%), the FTSE has grown by 6% since January 2004.
Well done lads, are you proud of your product?
Now, Scottish Life (and indeed all the other "professional" life assurance companies) claim that the cuts are to "smooth" the returns on the policies; as a result of the falls in the FTSE between 2000 and 2001.
I would like to ask the following:
Aside from those two years, the FTSE has performed quite well over the past decade (allegedly the longest "bull run" in living memory); where the hell has the money gone?????
The 350,000 of you who hold endowment policies with Scottish Life, will be feeling even worse about your underperforming policies.
Scottish Life have cut their payouts on their "with profits" polices, for the second time this year.
The polices are now so, I will use an accounting term here, "crappy" that they are not even keeping pace with inflation.
The returns on the Scottish Life polices are a "staggering" 1.1% (inflation is around 2.5%), the FTSE has grown by 6% since January 2004.
Well done lads, are you proud of your product?
Now, Scottish Life (and indeed all the other "professional" life assurance companies) claim that the cuts are to "smooth" the returns on the policies; as a result of the falls in the FTSE between 2000 and 2001.
I would like to ask the following:
Aside from those two years, the FTSE has performed quite well over the past decade (allegedly the longest "bull run" in living memory); where the hell has the money gone?????
Saturday, September 18, 2004
A Nice Legal Spat
The Financial Services Authority (FSA) had a splendid courtroom "bust up" with Legal and General (L&G) yesterday; as the hearing about the £1.1M fine, imposed by the FSA on L&G for mis-selling endwoment policies, continued.
The QC for the FSA, Hodge Malek, noted that the the charge by L&G that the FSA broke the law was "wholly spurious"; he then went on the label the L&G case as "kamikaze defence."
I love a good punch up!
It is clear that, whoever wins this case, the relationship between the FSA and L&G will be irreparably damaged.
Insiders in the FSA are, according to reports, suggesting that the L&G tactic is purely a publicity gimmick.
The Financial Services Authority (FSA) had a splendid courtroom "bust up" with Legal and General (L&G) yesterday; as the hearing about the £1.1M fine, imposed by the FSA on L&G for mis-selling endwoment policies, continued.
The QC for the FSA, Hodge Malek, noted that the the charge by L&G that the FSA broke the law was "wholly spurious"; he then went on the label the L&G case as "kamikaze defence."
I love a good punch up!
It is clear that, whoever wins this case, the relationship between the FSA and L&G will be irreparably damaged.
Insiders in the FSA are, according to reports, suggesting that the L&G tactic is purely a publicity gimmick.
Friday, September 17, 2004
Legal and General in The Dock
It seems that Legal and General (L&G) may find that their appeal against the £1.1M fine imposed on it by the Financial Services Authority (FSA), for mis-selling endowment mortgages, has brought some of their "dirty laundry" into the public arena.
Yesterday the appeal heard from two homeowners that L&G did not explain the risks of endowment mortgages.
The FSA have now brought in five of L&G's customers to take the stand at the hearing. This hearing is scheduled to last six weeks, so it is not unreasonable to expect to hear from a few more unhappy endowment policy holders.
The essence of the questioning of the hapless borrowers was, how clearly L&G's salesmen warned them that endowment policies could not be guaranteed to pay off mortgages.
The crux of their response was that they were not warned, and had they known of the risk they would not have taken the policy on.
This is precisely what I have been saying for these past two years; why on earth would you take on a something that is not going to pay off the mortgage?
The endowment policies were designed to pay off the mortgages of those who took them out, they have failed to work; therefore the holders are entitled to recompense.
It seems that Legal and General (L&G) may find that their appeal against the £1.1M fine imposed on it by the Financial Services Authority (FSA), for mis-selling endowment mortgages, has brought some of their "dirty laundry" into the public arena.
Yesterday the appeal heard from two homeowners that L&G did not explain the risks of endowment mortgages.
The FSA have now brought in five of L&G's customers to take the stand at the hearing. This hearing is scheduled to last six weeks, so it is not unreasonable to expect to hear from a few more unhappy endowment policy holders.
The essence of the questioning of the hapless borrowers was, how clearly L&G's salesmen warned them that endowment policies could not be guaranteed to pay off mortgages.
The crux of their response was that they were not warned, and had they known of the risk they would not have taken the policy on.
This is precisely what I have been saying for these past two years; why on earth would you take on a something that is not going to pay off the mortgage?
The endowment policies were designed to pay off the mortgages of those who took them out, they have failed to work; therefore the holders are entitled to recompense.
Thursday, September 16, 2004
Site Update
By the way, if you find it a bore to have to go to this site via my main site www.kenfrost.com, you will be pleased to know that I now have a more direct route for you to use.
You can now use the web address www.endowmentdiary.com to access this site.
By the way, if you find it a bore to have to go to this site via my main site www.kenfrost.com, you will be pleased to know that I now have a more direct route for you to use.
You can now use the web address www.endowmentdiary.com to access this site.
Wednesday, September 15, 2004
FSA Broke The Law
The start of the appeal hearing by Legal and General, against the fine imposed on it by the Financial Services Authority, revealed some interesting backstage dealing.
It seems that the Financial Services Authority, by offering to "cut a deal" with Legal and General over the size of the fine imposed on it, may have broken the law.
The FSA offered to reduce its £1.3M fine on L&G, if L&G promised not to proceed with its appeal against the fine.
That's a bit cheeky, isn't it?
The law, it seems, is unequivocal on this point; the FSA cannot use means, such as offering to reduce fines, to deter or obstruct firms from going to an appeals tribunal.
L&G are contesting that the FSA changed their minds about the quality of L&G's processes, in respect of endowment sales, after publicity about mortgage shortfalls in 1999/2000.
The FSA claimed that L&G's systems for processing endowments were deficient, and resulted in L&G mis-selling the products to "financially unsophisticated customers including an unemployed housewife."
The outcome of this hearing will be watched by everyone in the life assurance industry. If the FSA loses, it will embolden other life assurance firms to stand up to the FSA.
The start of the appeal hearing by Legal and General, against the fine imposed on it by the Financial Services Authority, revealed some interesting backstage dealing.
It seems that the Financial Services Authority, by offering to "cut a deal" with Legal and General over the size of the fine imposed on it, may have broken the law.
The FSA offered to reduce its £1.3M fine on L&G, if L&G promised not to proceed with its appeal against the fine.
That's a bit cheeky, isn't it?
The law, it seems, is unequivocal on this point; the FSA cannot use means, such as offering to reduce fines, to deter or obstruct firms from going to an appeals tribunal.
L&G are contesting that the FSA changed their minds about the quality of L&G's processes, in respect of endowment sales, after publicity about mortgage shortfalls in 1999/2000.
The FSA claimed that L&G's systems for processing endowments were deficient, and resulted in L&G mis-selling the products to "financially unsophisticated customers including an unemployed housewife."
The outcome of this hearing will be watched by everyone in the life assurance industry. If the FSA loses, it will embolden other life assurance firms to stand up to the FSA.
Subscribe to:
Posts (Atom)