Sweeping It Under The Carpet
Walter Merricks, chief of the Financial Ombudsman Service (FOS), is reported to have said that complaints about mis-sold mortgage endowments occupy most of his time.
They received 70000 last year.
He is predicting that this level of complaints will continue at least for another 18 months. However, they will then decline as the FSA six month time limit for complaints kicks in.
Some cynics might argue that this time limit was the FSA's method of getting the life assurance companies off the hook, in respect of their obligations to provide a product that actually works.
I have a feeling that this problem will not so easily be swept under the carpet.
Tuesday, March 29, 2005
Wednesday, March 23, 2005
Abbey's Curate's Easter Egg
Abbey's Curate's Easter Egg
Abbey has presented its with profits policy holders with something of a curate's egg for Easter.
Despite benefiting from improved investment performance on with profits funds, Abbey will pay no annual bonuses on Scottish Provident, Abbey National Life and Scottish Mutual policies.
How nice of them!
However, they are going to reduce Market Value Reductions (MVR's), the penalties for early surrender, for some policyholders and reintroduce terminal bonuses on some long-term policies.
Abbey's Scottish Provident fund had a return of 10.5% last year, with Abbey National Life and Scottish Mutual showing 9.5% for the same period.
MVR's have been reduced by 6%. As noted, there are no annual bonuses declared for 2004, except where the policies carry guaranteed bonuses.
Scottish Mutual's traditional 25 year maturing endowments now pay a terminal bonus of 30%, an increase of 5%. The 15 year policies now receive a 5% terminal bonus, no change on the previous period.
Abbey National Life 10 year pension plans receive a 5% terminal bonus, introduced for single premium policies, and 1% for regular premiums. Scottish Provident?s 20 year endowment terminal bonus goes up from 0% to 7%.
These "improvements" are on the backs of large cuts in the past. So don't bother getting the champagne out!
At this rate, if MVR's continue to decline, investors will at least be able to take their money out and put it somewhere more useful instead.
At the end of the day endowment policy holders are being screwed left, right and centre!
Abbey has presented its with profits policy holders with something of a curate's egg for Easter.
Despite benefiting from improved investment performance on with profits funds, Abbey will pay no annual bonuses on Scottish Provident, Abbey National Life and Scottish Mutual policies.
How nice of them!
However, they are going to reduce Market Value Reductions (MVR's), the penalties for early surrender, for some policyholders and reintroduce terminal bonuses on some long-term policies.
Abbey's Scottish Provident fund had a return of 10.5% last year, with Abbey National Life and Scottish Mutual showing 9.5% for the same period.
MVR's have been reduced by 6%. As noted, there are no annual bonuses declared for 2004, except where the policies carry guaranteed bonuses.
Scottish Mutual's traditional 25 year maturing endowments now pay a terminal bonus of 30%, an increase of 5%. The 15 year policies now receive a 5% terminal bonus, no change on the previous period.
Abbey National Life 10 year pension plans receive a 5% terminal bonus, introduced for single premium policies, and 1% for regular premiums. Scottish Provident?s 20 year endowment terminal bonus goes up from 0% to 7%.
These "improvements" are on the backs of large cuts in the past. So don't bother getting the champagne out!
At this rate, if MVR's continue to decline, investors will at least be able to take their money out and put it somewhere more useful instead.
At the end of the day endowment policy holders are being screwed left, right and centre!
Friday, March 18, 2005
Another Nail In The Endowment Coffin
Another Nail In The Endowment Coffin
Gordon Brown has managed to bang another nail into the endowment coffin, by adding a new tax on with profits funds.
If this tax is implemented, it will reduce the sums of money available to pay bonuses on with-profits policies.
In other words the already useless endowment policies will be further undermined, and pay out even less money to the hapless holders of these policies.
Gary Withers, chief executive of Norwich Union Life, is reported to have said:
"As we said to the Treasury in December, this is simply a piggy bank raid on the funds that support our customers' savings policies. One of the most effective ways to destroy confidence in savings is to introduce arbitrary tax raids on savings vehicles. We will continue to oppose this stealth tax in the interests of protecting our customers. I would again urge the Treasury to review their proposals in order to promote confidence in long term savings."
Brown started his assault on Britain's savings, when he made a £5BN a year charge on pension funds in 1997.
The new tax will lead to an increase in the tax burden on the free reserves supporting with-profits policyholders' funds.
Peter Vipond, head of financial regulation and taxation at the ABI, is quoted as saying:
"We remain very concerned about the government's intentions in this area. This proposal would represent a significant extra charge on with-profits policyholders and contradict the government's desire to encourage more saving in Britain...We are currently in detailed discussions with the government and negotiations have not concluded. We are determined to do all we can to prevent a rise in taxation on these savings products..".
Up until now, life companies have paid a 20% tax on life fund surpluses and no tax at all on pension fund surpluses. The chancellor is proposing to impose a 30% tax on both these surpluses, which means that there will be less money available to pay bonuses to policyholders.
The bottom line is that we, endowment policy holders, are screwed!
Gordon Brown has managed to bang another nail into the endowment coffin, by adding a new tax on with profits funds.
If this tax is implemented, it will reduce the sums of money available to pay bonuses on with-profits policies.
In other words the already useless endowment policies will be further undermined, and pay out even less money to the hapless holders of these policies.
Gary Withers, chief executive of Norwich Union Life, is reported to have said:
"As we said to the Treasury in December, this is simply a piggy bank raid on the funds that support our customers' savings policies. One of the most effective ways to destroy confidence in savings is to introduce arbitrary tax raids on savings vehicles. We will continue to oppose this stealth tax in the interests of protecting our customers. I would again urge the Treasury to review their proposals in order to promote confidence in long term savings."
Brown started his assault on Britain's savings, when he made a £5BN a year charge on pension funds in 1997.
The new tax will lead to an increase in the tax burden on the free reserves supporting with-profits policyholders' funds.
Peter Vipond, head of financial regulation and taxation at the ABI, is quoted as saying:
"We remain very concerned about the government's intentions in this area. This proposal would represent a significant extra charge on with-profits policyholders and contradict the government's desire to encourage more saving in Britain...We are currently in detailed discussions with the government and negotiations have not concluded. We are determined to do all we can to prevent a rise in taxation on these savings products..".
Up until now, life companies have paid a 20% tax on life fund surpluses and no tax at all on pension fund surpluses. The chancellor is proposing to impose a 30% tax on both these surpluses, which means that there will be less money available to pay bonuses to policyholders.
The bottom line is that we, endowment policy holders, are screwed!
Saturday, March 12, 2005
Comment On FSA Procedures
Comment On FSA Procedures
The Financial Services Authority (FSA) has asked the City to comment on its review of enforcement procedures, specifically it has asked as to whether its regulatory decisions committee is the "right model" for making contentious decisions.
The committee's Chairman, Christopher Fitzgerald, was forced to resign following him being seen talking with a lawyer who was sitting on a panel hearing an appeal against one of its decisions.
The FSA has put out a series of questions about its enforcement process, but indicated that it will not ask for changes in the legislation that sets the terms under which it operates.
The FSA was forced to review its procedures, after the financial services markets tribunal ruled against its £1.1m fine on Legal & General for endowment mis-selling could not be justified.
The Financial Services Authority (FSA) has asked the City to comment on its review of enforcement procedures, specifically it has asked as to whether its regulatory decisions committee is the "right model" for making contentious decisions.
The committee's Chairman, Christopher Fitzgerald, was forced to resign following him being seen talking with a lawyer who was sitting on a panel hearing an appeal against one of its decisions.
The FSA has put out a series of questions about its enforcement process, but indicated that it will not ask for changes in the legislation that sets the terms under which it operates.
The FSA was forced to review its procedures, after the financial services markets tribunal ruled against its £1.1m fine on Legal & General for endowment mis-selling could not be justified.
Thursday, March 03, 2005
A Nice Little Earner
A Nice Little Earner
It is reported that Andy Hornby, head of the branch business of the banking group HBOS, is to receive shares worth £2.2m; after reaching targets to boost profits in the bank's Halifax and Bank of Scotland network.
The 38 year old former supermarket executive was offered the shares under a package designed to prevent him becoming chief executive of the troubled chemist chain Boots two years ago.
Thsi despite tha fact that profits have been hit by a £130m provision, to cover claims for endowment misselling.
How nice.
It is reported that Andy Hornby, head of the branch business of the banking group HBOS, is to receive shares worth £2.2m; after reaching targets to boost profits in the bank's Halifax and Bank of Scotland network.
The 38 year old former supermarket executive was offered the shares under a package designed to prevent him becoming chief executive of the troubled chemist chain Boots two years ago.
Thsi despite tha fact that profits have been hit by a £130m provision, to cover claims for endowment misselling.
How nice.
Sunday, February 27, 2005
Abbey's New Sales Drive
Abbey's New Sales Drive
It seems that Abbey is going to start pushing its savings products in a new sales drive.
It is reported that this sales drive will be launched despite the fact that Abbey has increased its provisions for mis-selling by £154M.
The new CEO, Francisco Gomez-Roldan, has stated that he will introduce a new incentive scheme and impose minimum sales targets on branch staff.
It seems that not everyone is happy with this new sales drive; Marianne Fitzjohn, a director of Endowment Justice, is reported to have said:
"Abbey has an appalling record for mis-selling and its handling of complaints has been equally shabby. I'm very concerned to see this heavy drive on sales..."
Abbey National was fined £1M by the Financial Services Authority in 2002, for mis-selling mortgage endowments to over 40000 customers. Then, for good measure, it was fined over £2M a year later for compliance failings.
It seems that Abbey is going to start pushing its savings products in a new sales drive.
It is reported that this sales drive will be launched despite the fact that Abbey has increased its provisions for mis-selling by £154M.
The new CEO, Francisco Gomez-Roldan, has stated that he will introduce a new incentive scheme and impose minimum sales targets on branch staff.
It seems that not everyone is happy with this new sales drive; Marianne Fitzjohn, a director of Endowment Justice, is reported to have said:
"Abbey has an appalling record for mis-selling and its handling of complaints has been equally shabby. I'm very concerned to see this heavy drive on sales..."
Abbey National was fined £1M by the Financial Services Authority in 2002, for mis-selling mortgage endowments to over 40000 customers. Then, for good measure, it was fined over £2M a year later for compliance failings.
Wednesday, February 23, 2005
Prudential's Little Ray of Sunshine
Prudential's Little Ray of Sunshine
Those of your with underperforming and useless endowment polices, will no doubt be dreading this year's round of letters from your life assurance companies; as they tell you, yet again, that they are cutting their bonuses on their pitifully pathetic products.
However, there is one small piece of good news for those of you with a Prudential with profits policy.
It is reported that bonuses paid to with-profits policy-holders will be the same or bigger than last year's.
Around 5.5M people hold a Prudential with-profits fund. Prudential said the fund had seen an "exceptionally strong" return of 13.4% gross over the past year, compared with the FTSE 100 index's total return of 11.25%. Over the past five years, the fund has seen a pre-tax return of 20.7%, while the FTSE 100 has seen a negative total return of 19.5%.
Prudential said that buoyant performance meant it would add £2.2bn to the value of its policies.
This means that Prudential will at least maintain the same level of bonus it paid last year across all with-profits policies. Additionally, its with-profits annuities total bonus was to be increased to 7.12% this year, up from 6.35% last year.
David Belsham, actuarial director at Prudential Assurance, said that the fund's good performance was down to "long-term prudence" quote:
"We are now seeing the benefit of long-term prudence. We took early action to protect policyholders' funds by switching out of equities ahead of the prolonged bear market and policyholders are now benefiting from the strong returns earned on Prudential's with-profits fund...This year's bonus declaration shows that with-profits continues to be an attractive investment for policyholders when provided by a financially strong and well managed fund, such as Prudential."
I have but two simple questions:
1 If the Pru can do this, why can't the other life assurance companies?
2 The implication of the Pru's prudence (forgive the pun), is that other life assurance companies have not been prudent. This surely means that they (the other life assurance companies that have cut bonuses) can be sued for mismanagement, doesn't it?
Those of your with underperforming and useless endowment polices, will no doubt be dreading this year's round of letters from your life assurance companies; as they tell you, yet again, that they are cutting their bonuses on their pitifully pathetic products.
However, there is one small piece of good news for those of you with a Prudential with profits policy.
It is reported that bonuses paid to with-profits policy-holders will be the same or bigger than last year's.
Around 5.5M people hold a Prudential with-profits fund. Prudential said the fund had seen an "exceptionally strong" return of 13.4% gross over the past year, compared with the FTSE 100 index's total return of 11.25%. Over the past five years, the fund has seen a pre-tax return of 20.7%, while the FTSE 100 has seen a negative total return of 19.5%.
Prudential said that buoyant performance meant it would add £2.2bn to the value of its policies.
This means that Prudential will at least maintain the same level of bonus it paid last year across all with-profits policies. Additionally, its with-profits annuities total bonus was to be increased to 7.12% this year, up from 6.35% last year.
David Belsham, actuarial director at Prudential Assurance, said that the fund's good performance was down to "long-term prudence" quote:
"We are now seeing the benefit of long-term prudence. We took early action to protect policyholders' funds by switching out of equities ahead of the prolonged bear market and policyholders are now benefiting from the strong returns earned on Prudential's with-profits fund...This year's bonus declaration shows that with-profits continues to be an attractive investment for policyholders when provided by a financially strong and well managed fund, such as Prudential."
I have but two simple questions:
1 If the Pru can do this, why can't the other life assurance companies?
2 The implication of the Pru's prudence (forgive the pun), is that other life assurance companies have not been prudent. This surely means that they (the other life assurance companies that have cut bonuses) can be sued for mismanagement, doesn't it?
Tuesday, February 22, 2005
The Lottery of Claiming Compensation
The Lottery of Claiming Compensation
This is Money has an interesting article about the mixed fortunes of two people with identical endowment mortgages, taken out with Canada Life.
It seems that despite the similarity of their policies, when they tried to claim compensation for an expected shortfall, they were treated differently and offered different amounts of compensation.
As I have long suspected, since I began this site over two and a half years ago, the treatment that you get from the life assurance companies and their acolytes is a lottery.
Some win, the majority lose.
This is Money has an interesting article about the mixed fortunes of two people with identical endowment mortgages, taken out with Canada Life.
It seems that despite the similarity of their policies, when they tried to claim compensation for an expected shortfall, they were treated differently and offered different amounts of compensation.
As I have long suspected, since I began this site over two and a half years ago, the treatment that you get from the life assurance companies and their acolytes is a lottery.
Some win, the majority lose.
Monday, February 21, 2005
Slightly Off Topic
Slightly Off Topic
Here is a useful site, that I found today, for checking house prices.
UK House Prices - 3 million UK property records searched here
Here is a useful site, that I found today, for checking house prices.
UK House Prices - 3 million UK property records searched here
Sunday, February 13, 2005
The Long March
The Long March
Those of you with long memories, who have been following my attempts to try to secure redress for the mis-selling of my two underperforming useless endowment policies, may recall that I lodged a claim via professional complaint handlers way back on January 21 2004.
This claim was in respect of the endowment policy that was sold to me in 1987.
Well, over one year on, the claim handlers have written to me enclosing a "mortgage history/authority request".
Apparently my life assurance company requires that I sign this, before they gather information relevant to my case.
I think I will ask one very obvious question here, why the hell has it taken over a year just to get to this stage of the investigation?
This either means that the professional claims firm a re incompetent, or the life assurance company is being deliberately obstructive.
Those of you with long memories, who have been following my attempts to try to secure redress for the mis-selling of my two underperforming useless endowment policies, may recall that I lodged a claim via professional complaint handlers way back on January 21 2004.
This claim was in respect of the endowment policy that was sold to me in 1987.
Well, over one year on, the claim handlers have written to me enclosing a "mortgage history/authority request".
Apparently my life assurance company requires that I sign this, before they gather information relevant to my case.
I think I will ask one very obvious question here, why the hell has it taken over a year just to get to this stage of the investigation?
This either means that the professional claims firm a re incompetent, or the life assurance company is being deliberately obstructive.
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