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?
Tuesday, April 26, 2005
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.
Wednesday, April 20, 2005
News From The Pru
News From The Pru
The Life insurer Prudential reported an 11% increase in first-quarter sales today.
This is in line with forecasts, and hence allowed it to reiterate its positive outlook for its organisations based in Asia, the United States and Britain.
Revenues for the first three months of the year were £478M vs £433M in 2004.
The consensus forecast sales had been £477M.
Will this help those with endowment policies?
No!
The Life insurer Prudential reported an 11% increase in first-quarter sales today.
This is in line with forecasts, and hence allowed it to reiterate its positive outlook for its organisations based in Asia, the United States and Britain.
Revenues for the first three months of the year were £478M vs £433M in 2004.
The consensus forecast sales had been £477M.
Will this help those with endowment policies?
No!
Wednesday, April 13, 2005
Abbey To Be Fined
Abbey To Be Fined
It seems that Abbey, owned by Banco Santander, is to be fined by the Financial Services Authority (FSA) over its endowment mortgage complaint procedures.
The FSA are now punishing providers for not only mis-selling endowment products, but also for failing to handle the complaints properly.
There have been two firms fined to date for mishandling complaints, Allied Dunbar and Friends Provident, both of which were fined £700K.
Despite warnings from the FSA it seems that a number of providers are content to ignore their duty to investors.
In other words, some life assurance companies don't "give a stuff" about the policy holders.
Complaints to the Financial Services Ombudsman are expected to pass 65,000 in the year to April 2005, and more than 700,000 policies are surrendered short of maturity each year.
It seems that Abbey, owned by Banco Santander, is to be fined by the Financial Services Authority (FSA) over its endowment mortgage complaint procedures.
The FSA are now punishing providers for not only mis-selling endowment products, but also for failing to handle the complaints properly.
There have been two firms fined to date for mishandling complaints, Allied Dunbar and Friends Provident, both of which were fined £700K.
Despite warnings from the FSA it seems that a number of providers are content to ignore their duty to investors.
In other words, some life assurance companies don't "give a stuff" about the policy holders.
Complaints to the Financial Services Ombudsman are expected to pass 65,000 in the year to April 2005, and more than 700,000 policies are surrendered short of maturity each year.
Sunday, April 10, 2005
The Gestation Period of An elephant
The Gestation Period of An Elephant
Taking, what I can only describe as, the gestation period of an elephant; my "professional" claims handling firm has finally come back to me on the complaint that I raised around a year ago, in relation to the mis-selling of my first endowment policy.
They state that they have received notification from my policy provider that it was sold to me by an IFA, they knew this already, and "due to the current rate of success in this type of complaint (it was sold pre 1988) we do not feel that we can help you".
This response, in a nut shell, shows you why complaint handling firms are in general a waste of space.
In effect the service that they are really only prepared to offer is that of filling in paperwork, that you could well do yourself, and raise the matter with the life assurance provider and the FOS.
They are then happy to take 30% of any compensation that you receive, for their "endevours" on your behalf.
The bottom line is that you can save yourself this 30% fee, by doing precisely the same work for yourself.
The only way that they can conceivably add value is where you have already taken these actions yourself, and got nowhere, just as I did.
Unfortunately, as we can see, they are not prepared to help.
I am of course more than happy to hear from any complaint handling company that would actually like to do some real work to earn its fee.
Taking, what I can only describe as, the gestation period of an elephant; my "professional" claims handling firm has finally come back to me on the complaint that I raised around a year ago, in relation to the mis-selling of my first endowment policy.
They state that they have received notification from my policy provider that it was sold to me by an IFA, they knew this already, and "due to the current rate of success in this type of complaint (it was sold pre 1988) we do not feel that we can help you".
This response, in a nut shell, shows you why complaint handling firms are in general a waste of space.
In effect the service that they are really only prepared to offer is that of filling in paperwork, that you could well do yourself, and raise the matter with the life assurance provider and the FOS.
They are then happy to take 30% of any compensation that you receive, for their "endevours" on your behalf.
The bottom line is that you can save yourself this 30% fee, by doing precisely the same work for yourself.
The only way that they can conceivably add value is where you have already taken these actions yourself, and got nowhere, just as I did.
Unfortunately, as we can see, they are not prepared to help.
I am of course more than happy to hear from any complaint handling company that would actually like to do some real work to earn its fee.
Tuesday, March 29, 2005
Sweeping It Under The Carpet
Sweeping It Under The Carpet
Walter Merricks, chief of the Financial Ombudsman Service (FOS), is reported to have said that complaints about mis-sold mortgage endowments occupy most of his time.
They received 70000 last year.
He is predicting that this level of complaints will continue at least for another 18 months. However, they will then decline as the FSA six month time limit for complaints kicks in.
Some cynics might argue that this time limit was the FSA's method of getting the life assurance companies off the hook, in respect of their obligations to provide a product that actually works.
I have a feeling that this problem will not so easily be swept under the carpet.
Walter Merricks, chief of the Financial Ombudsman Service (FOS), is reported to have said that complaints about mis-sold mortgage endowments occupy most of his time.
They received 70000 last year.
He is predicting that this level of complaints will continue at least for another 18 months. However, they will then decline as the FSA six month time limit for complaints kicks in.
Some cynics might argue that this time limit was the FSA's method of getting the life assurance companies off the hook, in respect of their obligations to provide a product that actually works.
I have a feeling that this problem will not so easily be swept under the carpet.
Wednesday, March 23, 2005
Abbey's Curate's Easter Egg
Abbey's Curate's Easter Egg
Abbey has presented its with profits policy holders with something of a curate's egg for Easter.
Despite benefiting from improved investment performance on with profits funds, Abbey will pay no annual bonuses on Scottish Provident, Abbey National Life and Scottish Mutual policies.
How nice of them!
However, they are going to reduce Market Value Reductions (MVR's), the penalties for early surrender, for some policyholders and reintroduce terminal bonuses on some long-term policies.
Abbey's Scottish Provident fund had a return of 10.5% last year, with Abbey National Life and Scottish Mutual showing 9.5% for the same period.
MVR's have been reduced by 6%. As noted, there are no annual bonuses declared for 2004, except where the policies carry guaranteed bonuses.
Scottish Mutual's traditional 25 year maturing endowments now pay a terminal bonus of 30%, an increase of 5%. The 15 year policies now receive a 5% terminal bonus, no change on the previous period.
Abbey National Life 10 year pension plans receive a 5% terminal bonus, introduced for single premium policies, and 1% for regular premiums. Scottish Provident?s 20 year endowment terminal bonus goes up from 0% to 7%.
These "improvements" are on the backs of large cuts in the past. So don't bother getting the champagne out!
At this rate, if MVR's continue to decline, investors will at least be able to take their money out and put it somewhere more useful instead.
At the end of the day endowment policy holders are being screwed left, right and centre!
Abbey has presented its with profits policy holders with something of a curate's egg for Easter.
Despite benefiting from improved investment performance on with profits funds, Abbey will pay no annual bonuses on Scottish Provident, Abbey National Life and Scottish Mutual policies.
How nice of them!
However, they are going to reduce Market Value Reductions (MVR's), the penalties for early surrender, for some policyholders and reintroduce terminal bonuses on some long-term policies.
Abbey's Scottish Provident fund had a return of 10.5% last year, with Abbey National Life and Scottish Mutual showing 9.5% for the same period.
MVR's have been reduced by 6%. As noted, there are no annual bonuses declared for 2004, except where the policies carry guaranteed bonuses.
Scottish Mutual's traditional 25 year maturing endowments now pay a terminal bonus of 30%, an increase of 5%. The 15 year policies now receive a 5% terminal bonus, no change on the previous period.
Abbey National Life 10 year pension plans receive a 5% terminal bonus, introduced for single premium policies, and 1% for regular premiums. Scottish Provident?s 20 year endowment terminal bonus goes up from 0% to 7%.
These "improvements" are on the backs of large cuts in the past. So don't bother getting the champagne out!
At this rate, if MVR's continue to decline, investors will at least be able to take their money out and put it somewhere more useful instead.
At the end of the day endowment policy holders are being screwed left, right and centre!
Friday, March 18, 2005
Another Nail In The Endowment Coffin
Another Nail In The Endowment Coffin
Gordon Brown has managed to bang another nail into the endowment coffin, by adding a new tax on with profits funds.
If this tax is implemented, it will reduce the sums of money available to pay bonuses on with-profits policies.
In other words the already useless endowment policies will be further undermined, and pay out even less money to the hapless holders of these policies.
Gary Withers, chief executive of Norwich Union Life, is reported to have said:
"As we said to the Treasury in December, this is simply a piggy bank raid on the funds that support our customers' savings policies. One of the most effective ways to destroy confidence in savings is to introduce arbitrary tax raids on savings vehicles. We will continue to oppose this stealth tax in the interests of protecting our customers. I would again urge the Treasury to review their proposals in order to promote confidence in long term savings."
Brown started his assault on Britain's savings, when he made a £5BN a year charge on pension funds in 1997.
The new tax will lead to an increase in the tax burden on the free reserves supporting with-profits policyholders' funds.
Peter Vipond, head of financial regulation and taxation at the ABI, is quoted as saying:
"We remain very concerned about the government's intentions in this area. This proposal would represent a significant extra charge on with-profits policyholders and contradict the government's desire to encourage more saving in Britain...We are currently in detailed discussions with the government and negotiations have not concluded. We are determined to do all we can to prevent a rise in taxation on these savings products..".
Up until now, life companies have paid a 20% tax on life fund surpluses and no tax at all on pension fund surpluses. The chancellor is proposing to impose a 30% tax on both these surpluses, which means that there will be less money available to pay bonuses to policyholders.
The bottom line is that we, endowment policy holders, are screwed!
Gordon Brown has managed to bang another nail into the endowment coffin, by adding a new tax on with profits funds.
If this tax is implemented, it will reduce the sums of money available to pay bonuses on with-profits policies.
In other words the already useless endowment policies will be further undermined, and pay out even less money to the hapless holders of these policies.
Gary Withers, chief executive of Norwich Union Life, is reported to have said:
"As we said to the Treasury in December, this is simply a piggy bank raid on the funds that support our customers' savings policies. One of the most effective ways to destroy confidence in savings is to introduce arbitrary tax raids on savings vehicles. We will continue to oppose this stealth tax in the interests of protecting our customers. I would again urge the Treasury to review their proposals in order to promote confidence in long term savings."
Brown started his assault on Britain's savings, when he made a £5BN a year charge on pension funds in 1997.
The new tax will lead to an increase in the tax burden on the free reserves supporting with-profits policyholders' funds.
Peter Vipond, head of financial regulation and taxation at the ABI, is quoted as saying:
"We remain very concerned about the government's intentions in this area. This proposal would represent a significant extra charge on with-profits policyholders and contradict the government's desire to encourage more saving in Britain...We are currently in detailed discussions with the government and negotiations have not concluded. We are determined to do all we can to prevent a rise in taxation on these savings products..".
Up until now, life companies have paid a 20% tax on life fund surpluses and no tax at all on pension fund surpluses. The chancellor is proposing to impose a 30% tax on both these surpluses, which means that there will be less money available to pay bonuses to policyholders.
The bottom line is that we, endowment policy holders, are screwed!
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, March 03, 2005
A Nice Little Earner
A Nice Little Earner
It is reported that Andy Hornby, head of the branch business of the banking group HBOS, is to receive shares worth £2.2m; after reaching targets to boost profits in the bank's Halifax and Bank of Scotland network.
The 38 year old former supermarket executive was offered the shares under a package designed to prevent him becoming chief executive of the troubled chemist chain Boots two years ago.
Thsi despite tha fact that profits have been hit by a £130m provision, to cover claims for endowment misselling.
How nice.
It is reported that Andy Hornby, head of the branch business of the banking group HBOS, is to receive shares worth £2.2m; after reaching targets to boost profits in the bank's Halifax and Bank of Scotland network.
The 38 year old former supermarket executive was offered the shares under a package designed to prevent him becoming chief executive of the troubled chemist chain Boots two years ago.
Thsi despite tha fact that profits have been hit by a £130m provision, to cover claims for endowment misselling.
How nice.
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