The Death of a Thousand Cuts

Yet more cuts in bonus rates have been foisted on endowment policy holders.

This time, it is Friends Provident who give policy holders a kick in the guts; they have reduced their payouts on maturing policies by 3%. This reduction is expected to affect around 1 million endowment policy holders, and is their fourth cut in 18 months.

Reports indicate that, for example, the payout on a £50 per month 25 year endowment will fall from £51K to £48K (in 2003 the same policy was worth £62K).

To my humble view, using a technical term here, these people are simply "taking the piss" out of endowment policy holders.

Friends Provident claim that the reductions will ensure: "that there will be a closer alignment of policy payouts with their underlying investment values."

In other words, the policies are worth "F**k All"; and they, Friends Provident and other life assurance companies, are simply softening up the hapless holders for this bombshell by the death of a thousand cuts.

If you haven't signed my petition yet, then don't you think it is time that you did?

It is reported that Norwich Union will be introducing a one year time limit, for customers who complain about mis-sold endowment mortgages.

People with a complaint will have 1 year to lodge the complaint, once they receive their third "red letter".

Norwich Union is writing to its 1 million plus policy holders about their "initiative".

The last round of red letters from Norwich Union, is reported to have only given comfort to 13% of policy holders that their polices would reach their target.

To date it is reported that Norwich Union has received 34000 complaints for mis-selling, 17000 of these have been upheld.

Chesnara, which recently demerged from the Countrywide Assured, recently reported that its interim results had been adversely affected by increased provisions of £16.6M for mortgage endowment mis-selling redress.

It seems that it is not just the hapless endowment mortgage owner who is being hit by underperforming endowment products.

It is reported that Policy Portfolio and Beale Dobie, two specialist firms which buy up people's unwanted policies and sell them on to other investors, will no longer be buying endowment policies; and would sell off their current stock.

Policy Portfolio and Beale Dobie are owned by Investec.

What Goes Up, Goes Up Again

Interest rates went up again yesterday, they now stand at 4.75%. This rise will inevitably negatively impact mortgage rates.

City "experts" predict that the full 0.25% will be passed on to borrowers; with more rate rises likely, mortgage holders face an uncertain future.

This is of course exacerbated by the fact that the shortfalls on the non performing endowment policies are predicted to worsen.

All in all, it is not a very rosy picture.

Another "Little Problem" With Endowment Policies

Those of you who are fed up with holding on to your endowment policies, and are thinking of cashing them in, need to be aware of the latest problem coming to light in the savings industry.

It seems that providers of with profits savings products have thought up another ruse, by which they prevent the poor saps who bought these underperforming policies from collecting what is rightfully theirs.

They make use of Market Value Adjusters (MVA's), which are penalties applied to people who cash in their with profits savings plan early. It seems that the owners of these policies are only just becoming aware of the existence of these penalties; as the companies that operate these polices, and the IFA's that recommended them, failed to tell people of their existence when they bought them.

In the event that you are not happy with being charged a penalty to withdraw from an underperforming and useless endowment policy, then you are at liberty to complain to the Financial Ombudsman.

Good Luck!

Petition Launched

The Treasury Select Committee have reported that Britain's financial services industry is failing the consumer; ie that it is "crap".

Those of us holding underperforming endowment policies didn't need the Committee to tell us that, we knew that already!

I have today launched an electronic petition; pointing out that endowments were sold like TV's and cars, not investments. In view of this, it is my belief that issues regarding the mis-selling and underperformance of these policies should come under the remit of consumer legislation not the FSA.

If you would like to view, and sign the petition, please visit Compensation for Endowment Mis-selling.

Spread the word!

Thanks.

It seems that the Nationwide Building Society has a had a change of heart; regarding its treatment of people who have complained about mis-sold endowment polices, after the three year deadline.

The Treasury Select Committee, investigating the mis-selling of endowment policies, made it clear a month ago that the time bar rule should be discarded.

However, until recently the Nationwide had been disbarring late claimants. Now, following the Treasury Committee ruling and FSA rule changes in respect of warning letters, the Nationwide are reported to be writing to everyone they have time barred offering to investigate their complaints.

In the unlikely event that the Tories win the next election, Oliver Letwin has said that they will seriously consider shutting down the FSA.

How will this help those of us seeking redress for the mis-selling of endowment policies?

Please feel free to use the "Fax Your MP" box on this site to ask him that question.

It is reported that Jeremy Goford, the outgoing president of the Institute of Actuaries, has noted that the present system of commission payments to independent financial advisers (IFA's) must be changed.

He feels that the current system encourages IFA's to sell products that are detrimental to the interests of the consumer.

One fine example of this, as we know, was the sale of endowment policies in the 1980's.

Goford is reported to have said, that it is the role of the actuarial profession to speak out when they see a flaw.

Now let me see, the "flaw" was in place some 20 years go. It has taken him 20 years to speak out.

How much confidence in the actuarial profession, and the financial services sector as a whole, does that give the poor consumer?