FSA Apologises For Failures
The chairman of the Financial Services Authority (FSA), Callum McCarthy, has apologised over its heavy handed approach to regulation.
McCarthy said that he accepted that the FSA had been dogged by "failures", but claimed it had now made reforms.
Quote:
"The review of the FSA's enforcement procedures we completed last year shows that when we recognise failures in our processes we will seek to remedy them.
I regret that it took us so long to recognise the legitimacy of concerns expressed to us that these processes were not fair to those subject to them."
The apology comes in the wake of the fiasco with Legal & General, which took the FSA to the Financial Services & Markets Tribunal after it was fined £1.1m for mis-selling endowment mortgages. The tribunal ruled the fine had been twice as high as was justified.
Meanwhile, the holders of these useless underperforming products continue to face shortfalls.
Wednesday, June 28, 2006
Thursday, June 22, 2006
Bradford and Bingley Hit
Bradford and Bingley Hit
Bradford & Bingley have been hit by new claims for compensation for the misselling of endowment and investment policies. They are thinking of taking a charge to cover potential settlements.
B&B provided a trading statement which did not make it clear as to whether the increase, over the first half of this year, was temporary or indicated a trend in increased claims.
Quote:
"The volume of claims for compensation related to endowment and investment products has increased markedly, reversing the downward trend established in the second half of 2005.
At this stage it is not clear whether the recent increase in claims is temporary and reflects only an acceleration of future claims or whether this is a new trend.
We are currently reviewing the adequacy of our provisions in respect of these claims with a view to taking a further charge and will provide an update at the interim [results]."
Why don't the life assurance companies just underwrite these policies, thus reducing the amount of time and money wasted by them on trying to avoid paying claims for compensation?
Bradford & Bingley have been hit by new claims for compensation for the misselling of endowment and investment policies. They are thinking of taking a charge to cover potential settlements.
B&B provided a trading statement which did not make it clear as to whether the increase, over the first half of this year, was temporary or indicated a trend in increased claims.
Quote:
"The volume of claims for compensation related to endowment and investment products has increased markedly, reversing the downward trend established in the second half of 2005.
At this stage it is not clear whether the recent increase in claims is temporary and reflects only an acceleration of future claims or whether this is a new trend.
We are currently reviewing the adequacy of our provisions in respect of these claims with a view to taking a further charge and will provide an update at the interim [results]."
Why don't the life assurance companies just underwrite these policies, thus reducing the amount of time and money wasted by them on trying to avoid paying claims for compensation?
Friday, June 16, 2006
Standard Life Price Reduction
Standard Life Price Reduction
The current rout of the world stock markets has forced Standard Life to cut the price range for its listing on the UK stock market next month by 10%.
The group's 2.4 million policyholders will have their average payouts reduced to about £1,540 compared to £1,700.
Needless to say, the policyholders are far from happy with this, some are quoted as saying that they are "completely disillusioned" with the company.
The price range for the shares has been brought down from 240-290p to 210-270p.
Sandy Crombie, its chief executive, said the board and its advisers "had a very serious discussion about delaying".
He compared the float process with "a juggernaut, difficult to stop once it is launched".
This is rather ironic as only a few years ago Crombie fought against listing Standard Life, and managed to persuade the policyholders to vote against it. That was back in 2000, when the policyholders would have made ten times as much as they are doing now.
A cynic might question why Crombie still holds office?
Phil Needham, a policyholder, is quoted as saying:
"I'm completely disillusioned with Standard Life.
My own payment was expected to be between 7,000 and 9,000, but this development will knock about 10 per cent off this figure. They ought to have demutualised five years ago.
As a company over the past five years its performance has been appalling."
This fall in price leaves them open to a hostile bid.
Given this shambles, and the ongoing industry wide endowment policy fiasco, it is hardly surprising that people have totally lost confidence in Britain's life assurance industry.
The current rout of the world stock markets has forced Standard Life to cut the price range for its listing on the UK stock market next month by 10%.
The group's 2.4 million policyholders will have their average payouts reduced to about £1,540 compared to £1,700.
Needless to say, the policyholders are far from happy with this, some are quoted as saying that they are "completely disillusioned" with the company.
The price range for the shares has been brought down from 240-290p to 210-270p.
Sandy Crombie, its chief executive, said the board and its advisers "had a very serious discussion about delaying".
He compared the float process with "a juggernaut, difficult to stop once it is launched".
This is rather ironic as only a few years ago Crombie fought against listing Standard Life, and managed to persuade the policyholders to vote against it. That was back in 2000, when the policyholders would have made ten times as much as they are doing now.
A cynic might question why Crombie still holds office?
Phil Needham, a policyholder, is quoted as saying:
"I'm completely disillusioned with Standard Life.
My own payment was expected to be between 7,000 and 9,000, but this development will knock about 10 per cent off this figure. They ought to have demutualised five years ago.
As a company over the past five years its performance has been appalling."
This fall in price leaves them open to a hostile bid.
Given this shambles, and the ongoing industry wide endowment policy fiasco, it is hardly surprising that people have totally lost confidence in Britain's life assurance industry.
Monday, June 12, 2006
Welsh Victory
Welsh Victory
Congratulations to Philip Lewis, who has managed to achieve the first victory in Wales against a building society who sold him an underperforming endowment mortgage.
The Principality has been ordered by Cardiff County Court to pay £4,600 to Mr Lewis, who bought a house in the city for £8,500 in 1975.
More details here: endowment victory.
Congratulations to Philip Lewis, who has managed to achieve the first victory in Wales against a building society who sold him an underperforming endowment mortgage.
The Principality has been ordered by Cardiff County Court to pay £4,600 to Mr Lewis, who bought a house in the city for £8,500 in 1975.
More details here: endowment victory.
Monday, June 05, 2006
Time Bar Challenge
Time Bar Challenge
It is reported that Brunel Franklin, an endowment claims specialist, has raised a legal challenge to the Financial Services Authority (FSA) and the Financial Ombudsman Service over time bars on endowment mortgage complaints.
Brunel Franklin believe that the policy is "inconsistent", and hope to change the current time bar deadline for endowment policy holders to make a complaint.
The FSA rules sate that insurers are within their rights to impose a deadline, but that this must be three years from the date the policyholder received a 'red' letter warning of a potential shortfall.
It is estimated that one million people have already been time barred to date.
Brunel Franklin claim that the red letters were misleading and did not state all the facts.
Claims director Ian Allison is quoted:
"Many did not explain to policyholders that their endowment may have been mis-sold and that they had the right to complain about its sale.
As such, a policyholder could not reasonably have expected to know that they were mis-sold the endowment or what to do about it."
All of this could be so easily resolved, if the life assurance companies underwrote these useless underperforming policies.
It is reported that Brunel Franklin, an endowment claims specialist, has raised a legal challenge to the Financial Services Authority (FSA) and the Financial Ombudsman Service over time bars on endowment mortgage complaints.
Brunel Franklin believe that the policy is "inconsistent", and hope to change the current time bar deadline for endowment policy holders to make a complaint.
The FSA rules sate that insurers are within their rights to impose a deadline, but that this must be three years from the date the policyholder received a 'red' letter warning of a potential shortfall.
It is estimated that one million people have already been time barred to date.
Brunel Franklin claim that the red letters were misleading and did not state all the facts.
Claims director Ian Allison is quoted:
"Many did not explain to policyholders that their endowment may have been mis-sold and that they had the right to complain about its sale.
As such, a policyholder could not reasonably have expected to know that they were mis-sold the endowment or what to do about it."
All of this could be so easily resolved, if the life assurance companies underwrote these useless underperforming policies.
Thursday, June 01, 2006
Standard Life To Float
Standard Life To Float
Standard Life will list on the stock exchange in July, after 98% of members voted to demutualise yesterday.
Had the company not campaigned so hard in 2000 against demutualisation, when the members were persuaded to vote no, the members would have made ten times the amount that they are likely to make now.
Funny old world isn't it?
Standard Life will list on the stock exchange in July, after 98% of members voted to demutualise yesterday.
Had the company not campaigned so hard in 2000 against demutualisation, when the members were persuaded to vote no, the members would have made ten times the amount that they are likely to make now.
Funny old world isn't it?
FT
FT
Hat tip to Charles Pretzlik of the Financial Times, who yesterday mentioned this site and the endowment petition that I am running.
Hat tip to Charles Pretzlik of the Financial Times, who yesterday mentioned this site and the endowment petition that I am running.
Wednesday, May 31, 2006
D Day For Standard Life
D Day For Standard Life
Standard Life Assurance faces D Day today, as it faces the vote on whether to demutualise and sell shares next month.
The timing is unfortunate, as the world stock markets are currently in decline.
Chief Executive Officer Sandy Crombie said last night:
"What really matters is the appetite of investors to put money in Standard Life."
Standard Life currently plans to sell its shares at between 240p-290p. Policyholders must vote by today on the plan.
The IPO would value Standard Life at £5.5BN. It is somewhat ironic that Crombie back in 2000 fought against demutualisation, when the reward for policyholders would have been 10 times as much.
In 2000 over 1 million Standard Life policyholders voted against a stock sale, after Standard Life spent £10M on a campaign against it.
The company then incurred investment losses after selling £7.5BN pounds of stocks in 2004, to meet stricter rules from the Financial Services Authority.
In other words, this is a forced sale.
Standard Life Assurance faces D Day today, as it faces the vote on whether to demutualise and sell shares next month.
The timing is unfortunate, as the world stock markets are currently in decline.
Chief Executive Officer Sandy Crombie said last night:
"What really matters is the appetite of investors to put money in Standard Life."
Standard Life currently plans to sell its shares at between 240p-290p. Policyholders must vote by today on the plan.
The IPO would value Standard Life at £5.5BN. It is somewhat ironic that Crombie back in 2000 fought against demutualisation, when the reward for policyholders would have been 10 times as much.
In 2000 over 1 million Standard Life policyholders voted against a stock sale, after Standard Life spent £10M on a campaign against it.
The company then incurred investment losses after selling £7.5BN pounds of stocks in 2004, to meet stricter rules from the Financial Services Authority.
In other words, this is a forced sale.
Tuesday, May 30, 2006
Gains On Endowments?
Gains On Endowments?
The FT claims that long-term mortgage endowment policyholders, who claimed for mis-selling are now making gains from their policies; according to a survey, the 25 year policies are faring the best.
We shall see.
The FT claims that long-term mortgage endowment policyholders, who claimed for mis-selling are now making gains from their policies; according to a survey, the 25 year policies are faring the best.
We shall see.
Thursday, May 18, 2006
Scots Shortchanged
Scots Shortchanged
Linda Costelloe Baker, Scottish legal services ombudsman, warned on Tuesday that the legislation aimed at tightening the regulation of lawyers will not prevent the mis-selling of mortgage policies.
Ms Costelloe Baker said that last year she handled a record 482 complaints, about the way the Law Society of Scotland and Faculty of Advocates handled complaints about their members.
Around 25% of that related to endowment mis-selling complaints.
The Scottish Executive is proposing a new bill which will create an independent commission to handle complaints about lawyers. However, Ms Costelloe Baker said that this would leave the society in charge of practice rules.
Quote:
"When I was looking at the bill I had endowment misselling complaints very much in mind. I kept on asking myself would this bill stop this happening again, and it wouldn't. Not while the actual regulation is done by the profession.
For example, the society did not expect solicitors to keep business files relating to the sale of endowment policies, so there is little or no evidence on which to base an investigation."
Scots who bought policies from solicitors before December 1 2001, when the Financial Services and Markets Act came into effect, do not qualify for a deal from the Financial Ombudsman Service. They can claim compensation through the society, but only to a maximum of £1000.
A pretty raw deal by anyone's standards!
Linda Costelloe Baker, Scottish legal services ombudsman, warned on Tuesday that the legislation aimed at tightening the regulation of lawyers will not prevent the mis-selling of mortgage policies.
Ms Costelloe Baker said that last year she handled a record 482 complaints, about the way the Law Society of Scotland and Faculty of Advocates handled complaints about their members.
Around 25% of that related to endowment mis-selling complaints.
The Scottish Executive is proposing a new bill which will create an independent commission to handle complaints about lawyers. However, Ms Costelloe Baker said that this would leave the society in charge of practice rules.
Quote:
"When I was looking at the bill I had endowment misselling complaints very much in mind. I kept on asking myself would this bill stop this happening again, and it wouldn't. Not while the actual regulation is done by the profession.
For example, the society did not expect solicitors to keep business files relating to the sale of endowment policies, so there is little or no evidence on which to base an investigation."
Scots who bought policies from solicitors before December 1 2001, when the Financial Services and Markets Act came into effect, do not qualify for a deal from the Financial Ombudsman Service. They can claim compensation through the society, but only to a maximum of £1000.
A pretty raw deal by anyone's standards!
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