Endowment Crisis Worsening
It seems that things are lurching from bad to worse in respect of the performance of the underperforming and useless endowment policies, held by 10 million people in the UK.
It is reported that over 50% of all policies, due to mature this year, will not meet their targets.
Norwich Union said that 19,000, or 58%, of its 33,000 policies will fall short this year.
Standard Life said that over 14,000, or 47%, of its 30,000 policies maturing this year will fall short.
That did not prevent Sir Brian Stewart, chairman of Standard Life, from deluding himself and others last week by saying that endowments were "not all bad"; in fact he was even predicting that they would make a comeback!
Scottish Widows is expecting that 2/3rds will not meet their targets this year.
L&G didn't seem to have any figures, they were not "readily available", how reassuring!
However, Prudential said that none of its 8,376 policies due to mature this year would fall short.
Maybe Prudential has something to teach the other life assurance companies, as to how to manage an endowment fund?
Sunday, May 08, 2005
Wednesday, May 04, 2005
Time Bar To Bring Chaos
Time Bar To Bring Chaos
Life assurance companies, who sold underperforming and useless endowment policies to 8 million home owners, are using a number of methods to reduce the claims being made against them for compensation.
One such method is the time bar, whereby claimants are given a deadline to complain or lose their right to do so for ever.
This neat little trick is allowed by the Financial Services Authority (FSA), which said that an insurer may disregard a case for mis-selling three years after a policyholder receives the first "red" letter warning that an endowment has a high risk of not meeting its target.
Needless to say, there is now a deluge of complaints swamping the system.
Many hundreds of thousands of red letters were sent out in early 2003, this means that the deadline is now fast approaching for these people to make a claim.
The deluge has been further exacerbated by the fact that the FSA has told the life assurance companies that they must remind people 6 months before the final deadline, as to their right to make a claim.
Needless to say the life assurance companies and the Ombudsman will be hard pressed to cope with this deluge of complaints.
It has taken me over two years to reach the final stage of my claims which, for the record, were both rejected.
Simply put, the system can't cope!
This problem is exacerbated by the fact that, according to Chief Ombudsman Walter Merricks, 45% of endowment mis-selling cases were upheld by his office after being turned down by life companies.
These companies are reportedly issuing time bars:
Norwich Union - it has 1M endowment policyholders. It began warning of a time bar last October, giving 12 months' notice.
Standard Life - it has 1.2M endowment policyholders. It will write to customers in coming weeks to remind them about its deadline, giving 12 months' notice.
Royal & SunAlliance - it has 450K policyholders. It began reminding policyholders about time-barring last May and gives policyholders six months to complain after a second red warning letter.
Allied Dunbar/Eagle Star - it has 100K policyholders. Policyholders have 12 months to complain after receiving second letter.
Friends Provident - it has 450K policyholders. They have imposed a three-year time bar after policyholders receive their first red letter.
Pearl/NPI/London Life - it has 100K policyholders. Time barring applies three years after the first red letter.
Axa - it has 160K endowment policyholders. It introduced time-barring last month and is writing to customers giving 12 months' notice.
Scottish Widows - it has 165K endowment policyholders. It introduced time-barring in February, giving customers 12 months to complain after receiving their second red letter.
Good luck!
Life assurance companies, who sold underperforming and useless endowment policies to 8 million home owners, are using a number of methods to reduce the claims being made against them for compensation.
One such method is the time bar, whereby claimants are given a deadline to complain or lose their right to do so for ever.
This neat little trick is allowed by the Financial Services Authority (FSA), which said that an insurer may disregard a case for mis-selling three years after a policyholder receives the first "red" letter warning that an endowment has a high risk of not meeting its target.
Needless to say, there is now a deluge of complaints swamping the system.
Many hundreds of thousands of red letters were sent out in early 2003, this means that the deadline is now fast approaching for these people to make a claim.
The deluge has been further exacerbated by the fact that the FSA has told the life assurance companies that they must remind people 6 months before the final deadline, as to their right to make a claim.
Needless to say the life assurance companies and the Ombudsman will be hard pressed to cope with this deluge of complaints.
It has taken me over two years to reach the final stage of my claims which, for the record, were both rejected.
Simply put, the system can't cope!
This problem is exacerbated by the fact that, according to Chief Ombudsman Walter Merricks, 45% of endowment mis-selling cases were upheld by his office after being turned down by life companies.
These companies are reportedly issuing time bars:
Norwich Union - it has 1M endowment policyholders. It began warning of a time bar last October, giving 12 months' notice.
Standard Life - it has 1.2M endowment policyholders. It will write to customers in coming weeks to remind them about its deadline, giving 12 months' notice.
Royal & SunAlliance - it has 450K policyholders. It began reminding policyholders about time-barring last May and gives policyholders six months to complain after a second red warning letter.
Allied Dunbar/Eagle Star - it has 100K policyholders. Policyholders have 12 months to complain after receiving second letter.
Friends Provident - it has 450K policyholders. They have imposed a three-year time bar after policyholders receive their first red letter.
Pearl/NPI/London Life - it has 100K policyholders. Time barring applies three years after the first red letter.
Axa - it has 160K endowment policyholders. It introduced time-barring last month and is writing to customers giving 12 months' notice.
Scottish Widows - it has 165K endowment policyholders. It introduced time-barring in February, giving customers 12 months to complain after receiving their second red letter.
Good luck!
Tuesday, May 03, 2005
Lazy Claims
Lazy Claims
Prudential, one of the UK's biggest sellers of endowment policies, is to refuse to pay "claims handlers".
These companies, which are unregulated, take on customers' mis-selling claims in return for up to 50% of the compensation payouts.
The market for claims handlers has grown rapidly over the past year, as many of the 7m endowment holders realise they may be entitled to compensation.
The simple truth is, people are using these companies because they are lazy.
Make the claim yourself, and save the fee!
Prudential, one of the UK's biggest sellers of endowment policies, is to refuse to pay "claims handlers".
These companies, which are unregulated, take on customers' mis-selling claims in return for up to 50% of the compensation payouts.
The market for claims handlers has grown rapidly over the past year, as many of the 7m endowment holders realise they may be entitled to compensation.
The simple truth is, people are using these companies because they are lazy.
Make the claim yourself, and save the fee!
Wednesday, April 27, 2005
Sir Brian Stewart's Deluded View of Reality
Sir Brian Stewart's Deluded View of Reality
Sir Brain Stewart, chairman of Standard Life, gave an interview recently in which he expressed the desire to bring back the endowment policy.
He went on to say that endowment policies "weren't all bad news", and that they had "worked for a lot of people".
I have to ask, I wonder on which planet Sir Brian is exactly residing?
There are currently 8 million people facing a shortfall on their useless and underperforming endowment policies.
Does he seriously think that this shows that these unloved and useless products work?
Let us remind ourselves of some of the problems with these products:
1 They don't work
2 The commissions being charged by the life assurance companies further reduce their value
3 Many of the life assurance companies mismanaged them, so that their returns are even worse than the norm
4 Many life assurance companies paid out too much in the way of bonuses in the late 80's and early 90's, in order to attract new customers and to prop up their share price.
The result?
The funds were stripped bare of reserves, for the leaner times ahead.
5 Many of the life assurance companies are doing their level best to hinder the compensation process, hardly a sign of integrity or honesty
6 There are very strong rumours that many life assurance companies knew, as early as the late 80's, that the policies would fail. Yet they sat on their hands and did nothing!
The above points, and they are not exhaustive by any means, clearly show that the reputation of the products and the companies that sold them have been irreversibly shot to pieces.
The above should give any level headed individual good cause to think twice before re-inventing these useless products.
Sir Brian please take note.
Sir Brain Stewart, chairman of Standard Life, gave an interview recently in which he expressed the desire to bring back the endowment policy.
He went on to say that endowment policies "weren't all bad news", and that they had "worked for a lot of people".
I have to ask, I wonder on which planet Sir Brian is exactly residing?
There are currently 8 million people facing a shortfall on their useless and underperforming endowment policies.
Does he seriously think that this shows that these unloved and useless products work?
Let us remind ourselves of some of the problems with these products:
1 They don't work
2 The commissions being charged by the life assurance companies further reduce their value
3 Many of the life assurance companies mismanaged them, so that their returns are even worse than the norm
4 Many life assurance companies paid out too much in the way of bonuses in the late 80's and early 90's, in order to attract new customers and to prop up their share price.
The result?
The funds were stripped bare of reserves, for the leaner times ahead.
5 Many of the life assurance companies are doing their level best to hinder the compensation process, hardly a sign of integrity or honesty
6 There are very strong rumours that many life assurance companies knew, as early as the late 80's, that the policies would fail. Yet they sat on their hands and did nothing!
The above points, and they are not exhaustive by any means, clearly show that the reputation of the products and the companies that sold them have been irreversibly shot to pieces.
The above should give any level headed individual good cause to think twice before re-inventing these useless products.
Sir Brian please take note.
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.
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.
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