Policyholder Event
For information:
"Which? is considering staging a policyholder event in central London on 25th June, from 10am to 12pm. This is a great chance for policyholders to stand up and be counted in our campaign for a fair deal.
We are only in the planning stages at the moment, but if you'd be interesting in coming along please let us know asap. We will then keep you updated with our plans.
Best wishes,
The Which? With-Profits Team
Which?
2 Marylebone Road
London NW1 4DF
www.which.co.uk"
Monday, June 16, 2008
Thursday, June 05, 2008
Reattribution Change
Reattribution Change
The Financial Services Authority (FSA) has proposed that insurance companies should no longer be able to use surpluses from their with-profits funds to compensate customers who have been mis-sold endowment policies.
Many of the claims for mis-selling of endowment policies have been settled using with-profit surpluses and returns on the retained funds.
Under existing FSA regulations, compensation and other business costs can be met from orphan funds, which are eventually reattributed to policyholders and shareholders, normally at a ratio of 90-10 (policyholders to shareholders).
However, the proposals for the reattribution of Norwich Union's £2.6BN has brought down a deluge of criticism on the heads of the FSA and life assurance companies for the use of retained funds in this way.
Clare Spottiswoode, the policyholder advocate in this case, has described Aviva's (owners of Norwich) proposals and the FSA regulations as unfair to policyholders.
The proposal by the FSA may be a step in the right direction, if it is implemented.
The Financial Services Authority (FSA) has proposed that insurance companies should no longer be able to use surpluses from their with-profits funds to compensate customers who have been mis-sold endowment policies.
Many of the claims for mis-selling of endowment policies have been settled using with-profit surpluses and returns on the retained funds.
Under existing FSA regulations, compensation and other business costs can be met from orphan funds, which are eventually reattributed to policyholders and shareholders, normally at a ratio of 90-10 (policyholders to shareholders).
However, the proposals for the reattribution of Norwich Union's £2.6BN has brought down a deluge of criticism on the heads of the FSA and life assurance companies for the use of retained funds in this way.
Clare Spottiswoode, the policyholder advocate in this case, has described Aviva's (owners of Norwich) proposals and the FSA regulations as unfair to policyholders.
The proposal by the FSA may be a step in the right direction, if it is implemented.
Monday, June 02, 2008
Risky Business
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.
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, 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.
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