Endowment Complaints Tailing Off
In its annual review, the Financial Ombudsman Service (FOS) said that endowment complaints are tailing off.
Last year's review reported 69,149 endowment problems, while this year the figure had fallen to 46,134.
Chief ombudsman, Walter Merricks, said:
"This year marked the completion of over 500,000 financial disputes by the FOS since we were set up in 2001. Half of these complaints have involved mortgage endowments, although the record numbers of these cases is now at last decreasing, as we had predicted was likely to happen."
That does not of course mean that the problem is resolved, or indeed has gone away.
Many endowments were a "crock" form start to finish!
Thursday, May 24, 2007
Monday, May 14, 2007
The List of Shame
The List of Shame
Those of us who are unfortunate enough to have bought an endowment policy in the late 1980's and early 1990's may find an analysis produced by Money Management to be of interest.
It shows that, despite rising stock markets, payouts to policy holder continue to fall in most cases.
They compared policies maturing in 2007 with those maturing in 2006, for a male non smoker investing £50 from the outset over 25 years. The variation in returns was staggering. The average growth rate was 8.5%.
The top performer was Reliance Mutual with a return of 13.6%. However, the laggards showing below average returns were as follows (%):
Norwich Union - 8.3
Canada Life - 8.3
CGU - 8.2
General Accident - 8.2
Brittanic Assurance - 8.2
Clerical Medical - 7.9
Legal&General - 7.7
Scottish Widows - 7.3
Scottish Life - 7.2
Standard Mutual - 6.8
Scottish Mutual - 6.8
Friends Provident - 6.7
Equitable Life - 6.5
Eagle Star - 5.7
Well done!
The key question that policy holders should be asking of their endowment company, if they are in one of the under performing ones, is why are your returns worse than others?
Does that not reflect badly on the quality of management, and on the charges levied against the fund?
Those of us who are unfortunate enough to have bought an endowment policy in the late 1980's and early 1990's may find an analysis produced by Money Management to be of interest.
It shows that, despite rising stock markets, payouts to policy holder continue to fall in most cases.
They compared policies maturing in 2007 with those maturing in 2006, for a male non smoker investing £50 from the outset over 25 years. The variation in returns was staggering. The average growth rate was 8.5%.
The top performer was Reliance Mutual with a return of 13.6%. However, the laggards showing below average returns were as follows (%):
Norwich Union - 8.3
Canada Life - 8.3
CGU - 8.2
General Accident - 8.2
Brittanic Assurance - 8.2
Clerical Medical - 7.9
Legal&General - 7.7
Scottish Widows - 7.3
Scottish Life - 7.2
Standard Mutual - 6.8
Scottish Mutual - 6.8
Friends Provident - 6.7
Equitable Life - 6.5
Eagle Star - 5.7
Well done!
The key question that policy holders should be asking of their endowment company, if they are in one of the under performing ones, is why are your returns worse than others?
Does that not reflect badly on the quality of management, and on the charges levied against the fund?
Wednesday, May 09, 2007
Standard Life
Standard Life
Congratulations to Standard Life on their bumper first quarter results, worldwide sales rose by 40% to £3.92BN.
The question that the endowment policy holders are asking is, whether these bumper results will be reflected in bumper returns on their flagging endowment policies.
Highly unlikely I would say, as since July 2006 the masters of Standard Life are the shareholders not the policy holders.
Congratulations to Standard Life on their bumper first quarter results, worldwide sales rose by 40% to £3.92BN.
The question that the endowment policy holders are asking is, whether these bumper results will be reflected in bumper returns on their flagging endowment policies.
Highly unlikely I would say, as since July 2006 the masters of Standard Life are the shareholders not the policy holders.
Monday, April 23, 2007
Bridging Loans
As thousands of underfunded endowment policies start coming to the end of their lives, the demand for bridging loans is expected to rise; as people struggle to make up the shortfall on their under performing endowment policies.
Bridging loans are a very expensive way of borrowing, with monthly rates of between 1.5% to 2% (akin to credit cards).
People should exercise due care when thinking of taking out one of these expensive products.
Bridging loans are a very expensive way of borrowing, with monthly rates of between 1.5% to 2% (akin to credit cards).
People should exercise due care when thinking of taking out one of these expensive products.
Monday, March 26, 2007
Sacked By Text
Cheshireonline reports that police had to be called after a Chester businessman sacked his workers by mobile phone text message.
"Lee Wilson, MD of Stanley Porters and Co Ltd, texted staff at 7.45am on Wednesday, with the words: 'Due to the lack of professionalism and poor overall performance of the Chester office, i hav no option but to let u go.
'Ur pay wil be calculated and paid on pay day. U are not required to go into the office. All belongings wil be sent to u.'
But the four workers, whose job was to win compensation for home owners who had been mis-sold endowment mortgages, collected their belongings from the Union Street offices and asked for the attendance of police to prevent trouble."
"Lee Wilson, MD of Stanley Porters and Co Ltd, texted staff at 7.45am on Wednesday, with the words: 'Due to the lack of professionalism and poor overall performance of the Chester office, i hav no option but to let u go.
'Ur pay wil be calculated and paid on pay day. U are not required to go into the office. All belongings wil be sent to u.'
But the four workers, whose job was to win compensation for home owners who had been mis-sold endowment mortgages, collected their belongings from the Union Street offices and asked for the attendance of police to prevent trouble."
Monday, March 19, 2007
Standard Life
Standard Life
In rather a curate's egg development, Standard Life is due to write to its 750,000 endowment policy holders informing them that their endowments may not pay off their mortgages.
However, Standard Life will attempt to sugar the unpleasant pill by telling its hapless policy holders that the shortfall may not be as bad as it was anticipated a year ago.
So that's alright then!
It is estimated that around 90% of Standard Life's policies are not on target to meet the debt that they were meant to cover.
A Standard Life spokesman said:
"For many customers, a small shortfall will not present a problem, as these consumers have already paid off the mortgage, and were holding on to their policies for savings purposes. Others may be fully aware of the position of their contract, but have other savings to make up the shortfall, and so be comfortable with the situation."
I find the logic of the above to be highly dubious. Was not the point of taking these useless policies out to cover the mortgage?
Therefore how can a policy holder be "comfortable" with a shortfall?
In rather a curate's egg development, Standard Life is due to write to its 750,000 endowment policy holders informing them that their endowments may not pay off their mortgages.
However, Standard Life will attempt to sugar the unpleasant pill by telling its hapless policy holders that the shortfall may not be as bad as it was anticipated a year ago.
So that's alright then!
It is estimated that around 90% of Standard Life's policies are not on target to meet the debt that they were meant to cover.
A Standard Life spokesman said:
"For many customers, a small shortfall will not present a problem, as these consumers have already paid off the mortgage, and were holding on to their policies for savings purposes. Others may be fully aware of the position of their contract, but have other savings to make up the shortfall, and so be comfortable with the situation."
I find the logic of the above to be highly dubious. Was not the point of taking these useless policies out to cover the mortgage?
Therefore how can a policy holder be "comfortable" with a shortfall?
Thursday, March 01, 2007
HBOS Profits
HBOS Profits
Congratulations to HBOS, which has announced a 26% rise in profits for 2006 to £2.12BN.
This despite that fact that last year HBOS had to set aside a £95MN provision for compensation related to customer complaints over the bank's sale of endowment mortgages.
Congratulations to HBOS, which has announced a 26% rise in profits for 2006 to £2.12BN.
This despite that fact that last year HBOS had to set aside a £95MN provision for compensation related to customer complaints over the bank's sale of endowment mortgages.
Tuesday, January 23, 2007
Insurers Cash Grab
Insurers Cash Grab
Aviva and Prudential are planning to divert billions of pounds of surplus cash in their with-profits funds to shareholders, despite the fact that those who hold endowments, bonds and pensions are suffering lousy returns.
Aviva own Norwich Union, which recently warned 90% of its endowment policy holders to expect shortfalls on their policies. Aviva wants to pass a large part of the £4BN of inherited estate, in its Commercial Union Life and CGNU Life with-profits funds, to shareholders in 2008.
It is estimated that 1.4m policyholders will each received several hundreds of pounds of compensation. However, Which? believes that they are entitled to over £2K.
Doug Taylor at Which is quoted in The Times as saying:
"The fair solution would be to give 90% to policyholders and 10% to shareholders, even if this is not Norwich Union's preferred result."
Patrick Connolly at JS&P Towry Law, said:
"Norwich Union doesn't want to release the funds to benefit policyholders but because it wants to use them to support the business and boost shareholders' profits."
Prudential also wants to pass on £9BN billion from the inherited estate to shareholders.
These moves are expected to encourage other insurers to do the same, in order to prop up their share prices and to keep the shareholders quiet and subservient.
David Riddington, a senior actuary for Norwich Union, said:
"The inherited estate is legally owned by the company and its shareholders, so policyholders don't have any rights as such. Payments to customers are likely to be comparatively modest."
Ian Allison at Brunel Franklin, said:
"We are astonished that Norwich Union sees fit to attribute some of its surplus to shareholders while many endowment victims' finances remain in tatters."
Clare Spottiswoode has been appointed as "policyholder advocate", by Norwich.
The Policyholder Advocate is the representative for all the eligible with-profits policyholders of a company that is considering a reattribution of inherited estates.
The Policyholder Advocate's key job is to negotiate the size of any incentive to withy-profits policyholders to give up their rights to any possible future distribution from the inherited estate.
Details about Spottiswoode can be found on the website www.policyholderadvocate.org.
The outcome of these two moves will impact the rest of the industry, and the finances of the long suffering endowment policy holders.
Aviva and Prudential are planning to divert billions of pounds of surplus cash in their with-profits funds to shareholders, despite the fact that those who hold endowments, bonds and pensions are suffering lousy returns.
Aviva own Norwich Union, which recently warned 90% of its endowment policy holders to expect shortfalls on their policies. Aviva wants to pass a large part of the £4BN of inherited estate, in its Commercial Union Life and CGNU Life with-profits funds, to shareholders in 2008.
It is estimated that 1.4m policyholders will each received several hundreds of pounds of compensation. However, Which? believes that they are entitled to over £2K.
Doug Taylor at Which is quoted in The Times as saying:
"The fair solution would be to give 90% to policyholders and 10% to shareholders, even if this is not Norwich Union's preferred result."
Patrick Connolly at JS&P Towry Law, said:
"Norwich Union doesn't want to release the funds to benefit policyholders but because it wants to use them to support the business and boost shareholders' profits."
Prudential also wants to pass on £9BN billion from the inherited estate to shareholders.
These moves are expected to encourage other insurers to do the same, in order to prop up their share prices and to keep the shareholders quiet and subservient.
David Riddington, a senior actuary for Norwich Union, said:
"The inherited estate is legally owned by the company and its shareholders, so policyholders don't have any rights as such. Payments to customers are likely to be comparatively modest."
Ian Allison at Brunel Franklin, said:
"We are astonished that Norwich Union sees fit to attribute some of its surplus to shareholders while many endowment victims' finances remain in tatters."
Clare Spottiswoode has been appointed as "policyholder advocate", by Norwich.
The Policyholder Advocate is the representative for all the eligible with-profits policyholders of a company that is considering a reattribution of inherited estates.
The Policyholder Advocate's key job is to negotiate the size of any incentive to withy-profits policyholders to give up their rights to any possible future distribution from the inherited estate.
Details about Spottiswoode can be found on the website www.policyholderadvocate.org.
The outcome of these two moves will impact the rest of the industry, and the finances of the long suffering endowment policy holders.
Friday, January 12, 2007
Norwich Issues Red Alert
Norwich Issues Red Alert
Norwich Union has given its hapless endowment policy holders an unwelcome New Year present, by categorising nearly 90% of its 750,000 mortgage endowments as being in the "Red" category.
The red alert means that policyholders need to take urgent action, to avoid shortfalls on their home loans.
Norwich Union stated that 89.5% of endowment holders had been placed in the 'red' category, this is a staggering rise of 72% from last year.
Last year Norwich Union categorised 7% of its endowment policyholders as green and 21% amber.
David Riddington, senior actuary for Norwich Union, said:
"We didn't think amber was adding a lot. What we want, and what the FSA wants, is if people aren't on green, they should really think about the position they're in and decide whether to take action.
What happened with the amber is it perhaps lulled people into not doing anything, so this is a way to get people to at least sit up and take notice."
A fair and honest point, in my view, which in effect makes a mockery of the FSA's three coloured traffic light system.
The average shortfall projected by Norwich Union for 2007 is £1,400.
As I keep repeating, all of this heartache, wasted time and money could be avoided if the life assurance industry "bit the bullet" and underwrote these useless underperforming products.
Norwich Union has given its hapless endowment policy holders an unwelcome New Year present, by categorising nearly 90% of its 750,000 mortgage endowments as being in the "Red" category.
The red alert means that policyholders need to take urgent action, to avoid shortfalls on their home loans.
Norwich Union stated that 89.5% of endowment holders had been placed in the 'red' category, this is a staggering rise of 72% from last year.
Last year Norwich Union categorised 7% of its endowment policyholders as green and 21% amber.
David Riddington, senior actuary for Norwich Union, said:
"We didn't think amber was adding a lot. What we want, and what the FSA wants, is if people aren't on green, they should really think about the position they're in and decide whether to take action.
What happened with the amber is it perhaps lulled people into not doing anything, so this is a way to get people to at least sit up and take notice."
A fair and honest point, in my view, which in effect makes a mockery of the FSA's three coloured traffic light system.
The average shortfall projected by Norwich Union for 2007 is £1,400.
As I keep repeating, all of this heartache, wasted time and money could be avoided if the life assurance industry "bit the bullet" and underwrote these useless underperforming products.
Thursday, January 11, 2007
The Manx Black Hole
The Manx Black Hole
Those of you in the UK with underperforming endowment mortgages, who feel that they have been given the wrong end of a very unpleasant stick, should spare a thought for those endowment mortgage holders resident in the Isle of Man.
Reports from the Isle of Man indicate that there is a legislative black hole there, relating to the mis-selling of investment products.
A discrepancy in legislation has been highlighted, which means that the Manx ombudsman's power only applies to policies sold after April 20 1999, some 11 years later than the UK.
What a mess!
Those of you in the UK with underperforming endowment mortgages, who feel that they have been given the wrong end of a very unpleasant stick, should spare a thought for those endowment mortgage holders resident in the Isle of Man.
Reports from the Isle of Man indicate that there is a legislative black hole there, relating to the mis-selling of investment products.
A discrepancy in legislation has been highlighted, which means that the Manx ombudsman's power only applies to policies sold after April 20 1999, some 11 years later than the UK.
What a mess!
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