Risky Business
A survey of more than 2,000 people, carried out by Engage mutual assurance, showed that 23% of people with a mortgage will only be able to pay it off if they inherit money.
That's a risky way to keep a roof over your head.
Monday, June 02, 2008
Monday, May 26, 2008
Standard Life Rejects Fund Call
Standard Life Rejects Fund Call
Standard Life has rejected a call to use £100M a year from its profits to fund a programme to cover the firm's endowment policy "black hole".
The call to build up a fund to cover the shortfalls of with-profits mortgage endowments, came at the company's annual general meeting in Edinburgh last week.
Alastair McClelland, a Standard Life shareholder, used the AGM to demand that the company set aside £100m a year over ten years into the firm's "with-profits fund".
Standard Life chairman Gerry Grimstone argued that the problems with with-profits policies were a legacy of the company's mutual past.
In 2000 Standard Life promised that it would meet any shortfall policyholders faced on their endowment policies. However, when the company got into solvency problems, the promise was changed in 2004 to a guarantee of paying only a proportion of shortfalls.
Standard Life has rejected a call to use £100M a year from its profits to fund a programme to cover the firm's endowment policy "black hole".
The call to build up a fund to cover the shortfalls of with-profits mortgage endowments, came at the company's annual general meeting in Edinburgh last week.
Alastair McClelland, a Standard Life shareholder, used the AGM to demand that the company set aside £100m a year over ten years into the firm's "with-profits fund".
Standard Life chairman Gerry Grimstone argued that the problems with with-profits policies were a legacy of the company's mutual past.
In 2000 Standard Life promised that it would meet any shortfall policyholders faced on their endowment policies. However, when the company got into solvency problems, the promise was changed in 2004 to a guarantee of paying only a proportion of shortfalls.
Monday, May 19, 2008
The 9 Million Shortfall
The 9 Million Shortfall
Over 10 million endowment policies were sold to hapless mortgage applicants in the 1980's and 1990's. The policyholders were assured by the insurance companies that the endowments would pay off the mortgage (why buy it if it wasn't fit for purpose?) and that there may even be a surplus.
Unfortunately those assurances, as we are all well aware, were worthless.
Fairinvestment.co.uk have conducted research that shows that a staggering 86% of endowment policy holders (who were questioned) have been warned that their endowment policy will not be enough to pay off the mortgage.
Could the companies that sold and manage these useless products please explain to us exactly what is the purpose of these useless products, if they are not going to pay off the mortgage?
Within those who expect a shortfall, 41% are expecting a deficit of 25% and 23% are expecting ashortfall of a mind numbing 50%.
What exactly have the companies that have been "manging" these policies been doing with their policyholders' monthly contributions?
The figures confirm government findings, which in 2003 estimated that 80% of endowment policies would fail to fulfill their intended purpose.
So, once again, let me give the companies that sold and manage these useless policies the opportunity to answer this question:
Given that these products are incapable of paying off policyholders' mortgages, what exactly are they good for and why did you sell them in the first place?
Over 10 million endowment policies were sold to hapless mortgage applicants in the 1980's and 1990's. The policyholders were assured by the insurance companies that the endowments would pay off the mortgage (why buy it if it wasn't fit for purpose?) and that there may even be a surplus.
Unfortunately those assurances, as we are all well aware, were worthless.
Fairinvestment.co.uk have conducted research that shows that a staggering 86% of endowment policy holders (who were questioned) have been warned that their endowment policy will not be enough to pay off the mortgage.
Could the companies that sold and manage these useless products please explain to us exactly what is the purpose of these useless products, if they are not going to pay off the mortgage?
Within those who expect a shortfall, 41% are expecting a deficit of 25% and 23% are expecting ashortfall of a mind numbing 50%.
What exactly have the companies that have been "manging" these policies been doing with their policyholders' monthly contributions?
The figures confirm government findings, which in 2003 estimated that 80% of endowment policies would fail to fulfill their intended purpose.
So, once again, let me give the companies that sold and manage these useless policies the opportunity to answer this question:
Given that these products are incapable of paying off policyholders' mortgages, what exactly are they good for and why did you sell them in the first place?
Tuesday, May 13, 2008
The Traded Endowment Policy Market
The Traded Endowment Policy Market
The Motley Fool gives a straightforward, helpful and easy to understand explanation of the traded endowment policy market.
"A traded endowment policy (TEP) is an endowment that the original policyholder has sold on to an investor. The new investor is then entitled to all future benefits that the policy provides, as they have effectively bought it second-hand. They will also take on responsibility for paying the remaining premiums (if applicable)."
It is worth reading if you are considering selling your policy.
The Motley Fool gives a straightforward, helpful and easy to understand explanation of the traded endowment policy market.
"A traded endowment policy (TEP) is an endowment that the original policyholder has sold on to an investor. The new investor is then entitled to all future benefits that the policy provides, as they have effectively bought it second-hand. They will also take on responsibility for paying the remaining premiums (if applicable)."
It is worth reading if you are considering selling your policy.
Wednesday, May 07, 2008
Worse Than Worthless
Worse Than Worthless
According to a recent survey by Investment, Life & Pensions Moneyfacts the vast majority of 25 year with-profits endowment policies are now are producing lower returns than they did last year and the year before that.
That's not too good!
Are the people who sold us these useless products, and the people who continue to mismanage them ,receiving lower bonuses as a result of their failure?
I doubt it!
The Motley Fool has some advice about the options available to holders of these useless products.
According to a recent survey by Investment, Life & Pensions Moneyfacts the vast majority of 25 year with-profits endowment policies are now are producing lower returns than they did last year and the year before that.
That's not too good!
Are the people who sold us these useless products, and the people who continue to mismanage them ,receiving lower bonuses as a result of their failure?
I doubt it!
The Motley Fool has some advice about the options available to holders of these useless products.
Monday, April 21, 2008
Norwich Union Deadlock
Norwich Union Deadlock
The negotiations over the fate of the orphan assets of Norwich Union have become deadlocked.
As such the task of freeing up the deadlock has fallen to John McFall, chairman of the Treasury Select Committee.
Norwich Union are refusing to offer policyholders anymore. However, policyholder advocate Clare Spottiswoode is standing firm against the current offer on the table by Norwich Union.
Norwich Union have surplus (orphan) assets of £5BN (aka "inherited estate"). They are using £2.1BN to increase the value of policyholders' assets over the coming 3 years.
However, the dispute centres around what will happen to another £2.7BN.
The argument is focused on whether it is right for Norwich to use the money in ways that do not benefit policyholders, eg instance paying tax or financing growth.
The danger is that Norwich walk away from the negotiations and keep this £2.7BN for themselves.
The negotiations over the fate of the orphan assets of Norwich Union have become deadlocked.
As such the task of freeing up the deadlock has fallen to John McFall, chairman of the Treasury Select Committee.
Norwich Union are refusing to offer policyholders anymore. However, policyholder advocate Clare Spottiswoode is standing firm against the current offer on the table by Norwich Union.
Norwich Union have surplus (orphan) assets of £5BN (aka "inherited estate"). They are using £2.1BN to increase the value of policyholders' assets over the coming 3 years.
However, the dispute centres around what will happen to another £2.7BN.
The argument is focused on whether it is right for Norwich to use the money in ways that do not benefit policyholders, eg instance paying tax or financing growth.
The danger is that Norwich walk away from the negotiations and keep this £2.7BN for themselves.
Thursday, April 10, 2008
Tuesday, April 08, 2008
Time Bar Pays Dividends
Time Bar Pays Dividends
Life assurance group Chesnara, the holding company for Countrywide Assured plc and City of Westminster Assurance Company Limited, has benefited from the time bar on making mortgage endowment complaints for mis-selling.
Its results for 2007 have improved.
Figures show that pre-tax profits rose 11% to £27.7M in 2007 from £25M in 2006. The significant reduction in endowment complaints allowed for a provision release of £2.8M.
Chesnara Chairman, Christopher Sporborg, said:
"Our recent experience of mortgage endowment mis-selling complaints has been generally positive. The number of complaints has reduced significantly and an increasing proportion of those received are time-barred in line with FSA rules, while uphold rates on those complaints which are not time-barred have increased.
Although we do not believe that this issue has fully run its course, we do feel able, however, whilst maintaining an element of conservatism, to reduce our redress provisions, by £2.8 million, based on our revised expectation of future complaint activity."
It's nice to see that someone can make money out this mess.
Life assurance group Chesnara, the holding company for Countrywide Assured plc and City of Westminster Assurance Company Limited, has benefited from the time bar on making mortgage endowment complaints for mis-selling.
Its results for 2007 have improved.
Figures show that pre-tax profits rose 11% to £27.7M in 2007 from £25M in 2006. The significant reduction in endowment complaints allowed for a provision release of £2.8M.
Chesnara Chairman, Christopher Sporborg, said:
"Our recent experience of mortgage endowment mis-selling complaints has been generally positive. The number of complaints has reduced significantly and an increasing proportion of those received are time-barred in line with FSA rules, while uphold rates on those complaints which are not time-barred have increased.
Although we do not believe that this issue has fully run its course, we do feel able, however, whilst maintaining an element of conservatism, to reduce our redress provisions, by £2.8 million, based on our revised expectation of future complaint activity."
It's nice to see that someone can make money out this mess.
Monday, March 24, 2008
Fingers in The Pie
Fingers in The Pie
The trouble with some of the life assurance companies that are "managing" this country's useless and underperforming endowment policies, is that they can't seem to distinguish between assets that belong to their hapless and much put upon policy holders and the company's assets.
Normally, this "confusion" over ownership is demonstrated by the excessive and unjustified management charges levied by life assurers against the minuscule returns of the endowment policies that they fail to manage.
However, Norwich Union have found another way to tap the assets of their hapless endowment policy holders. The Times reports that Norwich Union has helped itself to £300M of policyholders' funds, in order to plug a hole in its own pension fund and to pay for its own mis-selling costs.
Some would argue that it is pretty rich of Norwich Union to help themselves in this manner, in fact most people with any concept of ownership and property would argue this. However, Norwich Union is unabashed; safe in the knowledge that it can do this, because it can do this.
If only life were that simple and profitable for its policy holders!
Needless to say this raid on the policyholders' funds will mean lower payouts for 1.1 million policyholders.
Norwich Union has helped itself to £83M of its surplus assets to cover a deficit in its staff pension scheme, with £182M being set aside to pay for endowment and pension mis-selling.
To run that by you again, it is making its policy holders pay for its pension failings and for its mistakes wrt selling endowment policies.
Happy with that?
Vince Cable, the Liberal Democrats’ Treasury spokesman, is quoted in The Times:
"The Financial Services Authority perpetuates rules which give preference to shareholders over policyholders and allow such appalling abuses as penalties for pensions mis-selling to be taken from policyholders' inherited estates. Companies like Norwich Union and Prudential are managing, under the cloak of complexity, to deprive their policyholders of large sums."
Norwich Union is currently involved in "testy" and "bad tempered" negotiations as to how it will split up £5BN of orphan assets (inherited estate). Needless to say, Norwich Union wants to take as much of that money for themselves as they can, they believe that their shareholders outrank their policyholders.
The fact that these orphan assets arise as a direct results of the policyholders' contributions, and not from anything that the shareholders have done, is irrelevant to Norwich Union.
Why are they treating their policyholders with such contempt?
Simple, because they can!
They know that their policyholders lack the legal and vocal clout of their shareholders.
It is high time that the policyholders gave companies such as Norwich Union a very bloody nose, a class action should be initiated by the policyholders of Norwich Union and the life assurance companies given a lesson not to treat their policyholders with such contempt.
The trouble with some of the life assurance companies that are "managing" this country's useless and underperforming endowment policies, is that they can't seem to distinguish between assets that belong to their hapless and much put upon policy holders and the company's assets.
Normally, this "confusion" over ownership is demonstrated by the excessive and unjustified management charges levied by life assurers against the minuscule returns of the endowment policies that they fail to manage.
However, Norwich Union have found another way to tap the assets of their hapless endowment policy holders. The Times reports that Norwich Union has helped itself to £300M of policyholders' funds, in order to plug a hole in its own pension fund and to pay for its own mis-selling costs.
Some would argue that it is pretty rich of Norwich Union to help themselves in this manner, in fact most people with any concept of ownership and property would argue this. However, Norwich Union is unabashed; safe in the knowledge that it can do this, because it can do this.
If only life were that simple and profitable for its policy holders!
Needless to say this raid on the policyholders' funds will mean lower payouts for 1.1 million policyholders.
Norwich Union has helped itself to £83M of its surplus assets to cover a deficit in its staff pension scheme, with £182M being set aside to pay for endowment and pension mis-selling.
To run that by you again, it is making its policy holders pay for its pension failings and for its mistakes wrt selling endowment policies.
Happy with that?
Vince Cable, the Liberal Democrats’ Treasury spokesman, is quoted in The Times:
"The Financial Services Authority perpetuates rules which give preference to shareholders over policyholders and allow such appalling abuses as penalties for pensions mis-selling to be taken from policyholders' inherited estates. Companies like Norwich Union and Prudential are managing, under the cloak of complexity, to deprive their policyholders of large sums."
Norwich Union is currently involved in "testy" and "bad tempered" negotiations as to how it will split up £5BN of orphan assets (inherited estate). Needless to say, Norwich Union wants to take as much of that money for themselves as they can, they believe that their shareholders outrank their policyholders.
The fact that these orphan assets arise as a direct results of the policyholders' contributions, and not from anything that the shareholders have done, is irrelevant to Norwich Union.
Why are they treating their policyholders with such contempt?
Simple, because they can!
They know that their policyholders lack the legal and vocal clout of their shareholders.
It is high time that the policyholders gave companies such as Norwich Union a very bloody nose, a class action should be initiated by the policyholders of Norwich Union and the life assurance companies given a lesson not to treat their policyholders with such contempt.
Wednesday, March 19, 2008
Named and Shamed
Named and Shamed
As we all know, endowment policies have proven to be the worst, most costly financial scandal perpetrated on millions of home owners in living memory.
Money Management have produced a list of the worst performers.
Endowments managed by Resolution and Pearl, which bought up several closed-life funds, dominates the list.
Money Management shows that their endowment policyholders have earned less than in a deposit account over 25 years.
Resolution owns Life Association of Scotland, this was the worst performing endowment in the survey. It gave a 3.9% return over 25 years..yes you did read that correctly...3.9% over 25 years.
What exactly have they been doing with people's money?
Crusader and Britannia, also owned by Resolution, were the third and fourth-worst performers at 4.3% and 4.9% respectively.
National Provident was second with a return of 4.2%.
Clive Cowdery, Resolution's founder, has made millions from his dealing with these funds. However, his policyholders haven't.
Ironically some of Resolution's funds have done very well. Phoenix Assurance, owned by Resolution since September 2004, has paid out £317,800 on typical 25-year maturing endowment policies, reflecting an annual growth rate of 20%, or 1,168% more than the Life Association of Scotland policy.
Phoenix has paid out so much because it has been winding down its estate, and distributing the proceeds to 1,500 policyholders.
Resolution owned National Employers Life, with an annual growth rate of 11%, and Swiss Life, at 9.4%, also topped Money Management's list of 25-year policies.
Money Management reveals that some 10 year endowments have in fact lost money over 10 years, even though the FTSE All Share is up 43.3% during the last 10 years.
The worst 10-year policy, Pearl-owned London Life, fell by 1.6% a year while Resolution's Sun Alliance & London Assurance dropped 1.2%, Royal Life fell 0.6% and Scottish Mutual declined 0.4%.
The holders of these useless products are going to receive a nasty shock when these shortfalls crystallise.
As we all know, endowment policies have proven to be the worst, most costly financial scandal perpetrated on millions of home owners in living memory.
Money Management have produced a list of the worst performers.
Endowments managed by Resolution and Pearl, which bought up several closed-life funds, dominates the list.
Money Management shows that their endowment policyholders have earned less than in a deposit account over 25 years.
Resolution owns Life Association of Scotland, this was the worst performing endowment in the survey. It gave a 3.9% return over 25 years..yes you did read that correctly...3.9% over 25 years.
What exactly have they been doing with people's money?
Crusader and Britannia, also owned by Resolution, were the third and fourth-worst performers at 4.3% and 4.9% respectively.
National Provident was second with a return of 4.2%.
Clive Cowdery, Resolution's founder, has made millions from his dealing with these funds. However, his policyholders haven't.
Ironically some of Resolution's funds have done very well. Phoenix Assurance, owned by Resolution since September 2004, has paid out £317,800 on typical 25-year maturing endowment policies, reflecting an annual growth rate of 20%, or 1,168% more than the Life Association of Scotland policy.
Phoenix has paid out so much because it has been winding down its estate, and distributing the proceeds to 1,500 policyholders.
Resolution owned National Employers Life, with an annual growth rate of 11%, and Swiss Life, at 9.4%, also topped Money Management's list of 25-year policies.
Money Management reveals that some 10 year endowments have in fact lost money over 10 years, even though the FTSE All Share is up 43.3% during the last 10 years.
The worst 10-year policy, Pearl-owned London Life, fell by 1.6% a year while Resolution's Sun Alliance & London Assurance dropped 1.2%, Royal Life fell 0.6% and Scottish Mutual declined 0.4%.
The holders of these useless products are going to receive a nasty shock when these shortfalls crystallise.
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