D Day For Standard Life
Standard Life Assurance faces D Day today, as it faces the vote on whether to demutualise and sell shares next month.
The timing is unfortunate, as the world stock markets are currently in decline.
Chief Executive Officer Sandy Crombie said last night:
"What really matters is the appetite of investors to put money in Standard Life."
Standard Life currently plans to sell its shares at between 240p-290p. Policyholders must vote by today on the plan.
The IPO would value Standard Life at £5.5BN. It is somewhat ironic that Crombie back in 2000 fought against demutualisation, when the reward for policyholders would have been 10 times as much.
In 2000 over 1 million Standard Life policyholders voted against a stock sale, after Standard Life spent £10M on a campaign against it.
The company then incurred investment losses after selling £7.5BN pounds of stocks in 2004, to meet stricter rules from the Financial Services Authority.
In other words, this is a forced sale.
Wednesday, May 31, 2006
Tuesday, May 30, 2006
Gains On Endowments?
Gains On Endowments?
The FT claims that long-term mortgage endowment policyholders, who claimed for mis-selling are now making gains from their policies; according to a survey, the 25 year policies are faring the best.
We shall see.
The FT claims that long-term mortgage endowment policyholders, who claimed for mis-selling are now making gains from their policies; according to a survey, the 25 year policies are faring the best.
We shall see.
Thursday, May 18, 2006
Scots Shortchanged
Scots Shortchanged
Linda Costelloe Baker, Scottish legal services ombudsman, warned on Tuesday that the legislation aimed at tightening the regulation of lawyers will not prevent the mis-selling of mortgage policies.
Ms Costelloe Baker said that last year she handled a record 482 complaints, about the way the Law Society of Scotland and Faculty of Advocates handled complaints about their members.
Around 25% of that related to endowment mis-selling complaints.
The Scottish Executive is proposing a new bill which will create an independent commission to handle complaints about lawyers. However, Ms Costelloe Baker said that this would leave the society in charge of practice rules.
Quote:
"When I was looking at the bill I had endowment misselling complaints very much in mind. I kept on asking myself would this bill stop this happening again, and it wouldn't. Not while the actual regulation is done by the profession.
For example, the society did not expect solicitors to keep business files relating to the sale of endowment policies, so there is little or no evidence on which to base an investigation."
Scots who bought policies from solicitors before December 1 2001, when the Financial Services and Markets Act came into effect, do not qualify for a deal from the Financial Ombudsman Service. They can claim compensation through the society, but only to a maximum of £1000.
A pretty raw deal by anyone's standards!
Linda Costelloe Baker, Scottish legal services ombudsman, warned on Tuesday that the legislation aimed at tightening the regulation of lawyers will not prevent the mis-selling of mortgage policies.
Ms Costelloe Baker said that last year she handled a record 482 complaints, about the way the Law Society of Scotland and Faculty of Advocates handled complaints about their members.
Around 25% of that related to endowment mis-selling complaints.
The Scottish Executive is proposing a new bill which will create an independent commission to handle complaints about lawyers. However, Ms Costelloe Baker said that this would leave the society in charge of practice rules.
Quote:
"When I was looking at the bill I had endowment misselling complaints very much in mind. I kept on asking myself would this bill stop this happening again, and it wouldn't. Not while the actual regulation is done by the profession.
For example, the society did not expect solicitors to keep business files relating to the sale of endowment policies, so there is little or no evidence on which to base an investigation."
Scots who bought policies from solicitors before December 1 2001, when the Financial Services and Markets Act came into effect, do not qualify for a deal from the Financial Ombudsman Service. They can claim compensation through the society, but only to a maximum of £1000.
A pretty raw deal by anyone's standards!
Monday, May 15, 2006
Complain
Complain
The Observer makes rather a good point, that those endowment policy holders who may be time barred from complaining may still be able to raise a valid claim for compensation, if their policy overruns into retirement.
Bottom line, don't let the life assurance companies that sold and poorly managed these useless policies get off the hook.
The Observer makes rather a good point, that those endowment policy holders who may be time barred from complaining may still be able to raise a valid claim for compensation, if their policy overruns into retirement.
Bottom line, don't let the life assurance companies that sold and poorly managed these useless policies get off the hook.
Wednesday, May 10, 2006
Prudential Time Bar
Prudential Time Bar
The Prudential is, according to the Association of British Insurers (ABI), the last major life assurance company to introduce time bars to their endowment policy holders wishing to complain about shortfalls on their endowment policies.
The ABI last year estimated that around 2.7 million households in Britain have an endowment policy that is needed to pay off all or part of a mortgage, and that over 80% face a shortfall.
ABI spokesman Malcolm Tarling said that:
"Time-barring will help focus people's minds. The longer people wait to file a legitimate complaint, the harder it is to establish the facts."
The Prudential says that it will write to 110,000 customers to tell them about the new, six-month deadline for complaints.
Legal & General and Nationwide Building Society have also introduced time barring in the last two months.
Not surprisingly the insurance companies want to bring the matter to a close, as they are the ones who are being hit by the claims from their endowment policy holders.
This sorry pathetic mess could be sorted out at the stroke of a pen, if the insurance companies acted responsibly and underwrote these useless underperforming products which they foisted on the British public back in the 1980's.
The Prudential is, according to the Association of British Insurers (ABI), the last major life assurance company to introduce time bars to their endowment policy holders wishing to complain about shortfalls on their endowment policies.
The ABI last year estimated that around 2.7 million households in Britain have an endowment policy that is needed to pay off all or part of a mortgage, and that over 80% face a shortfall.
ABI spokesman Malcolm Tarling said that:
"Time-barring will help focus people's minds. The longer people wait to file a legitimate complaint, the harder it is to establish the facts."
The Prudential says that it will write to 110,000 customers to tell them about the new, six-month deadline for complaints.
Legal & General and Nationwide Building Society have also introduced time barring in the last two months.
Not surprisingly the insurance companies want to bring the matter to a close, as they are the ones who are being hit by the claims from their endowment policy holders.
This sorry pathetic mess could be sorted out at the stroke of a pen, if the insurance companies acted responsibly and underwrote these useless underperforming products which they foisted on the British public back in the 1980's.
Tuesday, May 02, 2006
The Policyholders Fight Back
The Policyholders Fight Back
Congratulations to Vincent Cunningham, who has succeeded in taking his life assurance company to court and winning compensation from them for their underperforming product.
This is reportedly the first case of its kind.
Cunningham has successfully sued Friends Provident for compensation on the shortfall on his policy, even though he failed to make a claim within three years of receiving a 'red warning letter' notifying him of a potential shortfall.
He was awarded £1500 by Reigate county court.
It should be noted that the case does not set a legal precedent, because it was heard in a county court. However, it could have implications for the thousands of hapless endowment policy holders who have been told they had run out of time to make a claim against their endowment providers.
As such, the case may encourage others to take a stand against the life assurance companies who are trying to impose their own time bar.
Where one leads, others will follow!
Here is the judge's ruling Vincent Cunnignham vs Friends Provident.
Congratulations to Vincent Cunningham, who has succeeded in taking his life assurance company to court and winning compensation from them for their underperforming product.
This is reportedly the first case of its kind.
Cunningham has successfully sued Friends Provident for compensation on the shortfall on his policy, even though he failed to make a claim within three years of receiving a 'red warning letter' notifying him of a potential shortfall.
He was awarded £1500 by Reigate county court.
It should be noted that the case does not set a legal precedent, because it was heard in a county court. However, it could have implications for the thousands of hapless endowment policy holders who have been told they had run out of time to make a claim against their endowment providers.
As such, the case may encourage others to take a stand against the life assurance companies who are trying to impose their own time bar.
Where one leads, others will follow!
Here is the judge's ruling Vincent Cunnignham vs Friends Provident.
Tuesday, April 25, 2006
Standard Life Bonanza
Standard Life Bonanza
Those of you who hold endowment policies with Standard Life may be in for a small windfall, if the company abandons its mutual status and floats.
Standard Life has posted its policy documents to members outlining the terms of the proposed deal, and inviting them to vote in favour either by post or at a special meeting on May 31.
The company says that 2.4M members will be eligible for free shares.
A Standard Life spokesman is quoted as saying:
"The way shares are being allocated is on the basis of a range of factors, which include the type of policy someone might have with us, how long it has been held and how much is in it."
For example, the company said that a policyholder who had been paying £50 a month on a mortgage-linked endowment since 1984, would receive 1287 shares worth about £3350.
Someone whose endowment policy started in 1989 would receive 544 shares, worth £1440, while a policy started in 1994 would earn 132 shares, worth £350. In each case, this would be on top of the basic allocation of 185 free shares. In addition, the company said everyone who holds their shares for up to 12 months after the initial flotation date, expected in July, will receive one more free share for each 20 they already own.
One question mark yet to be answered is what effect the "mortgage endowment promise" (MEP), given by the company in September 2000, will now have.
The company pledged that, subject to certain conditions being met, as long as future investment earnings averaged 6% a year it would top up any shortfalls on the endowments.
The finer details of the promise revealed that it only applied to those who were told back in 2000 that their policy was at risk of failing to hit its target amount.
Those told after that date were not covered!
In 2004 Standard Life welched on its promise, and abandoned the MEP as unaffordable.
In its proposal document, Standard Life says that if members back its flotation plans, the MEP for qualifying members "will no longer be dependent on a capital growth condition. Instead [it] will be based on investment returns on the with-profits fund".
A spokesman claimed:
"The amount payable to holders of top-up MEP policies will be broadly equivalent to that which would have been paid by Standard Life under the current promise."
We shall see.
Those of you who hold endowment policies with Standard Life may be in for a small windfall, if the company abandons its mutual status and floats.
Standard Life has posted its policy documents to members outlining the terms of the proposed deal, and inviting them to vote in favour either by post or at a special meeting on May 31.
The company says that 2.4M members will be eligible for free shares.
A Standard Life spokesman is quoted as saying:
"The way shares are being allocated is on the basis of a range of factors, which include the type of policy someone might have with us, how long it has been held and how much is in it."
For example, the company said that a policyholder who had been paying £50 a month on a mortgage-linked endowment since 1984, would receive 1287 shares worth about £3350.
Someone whose endowment policy started in 1989 would receive 544 shares, worth £1440, while a policy started in 1994 would earn 132 shares, worth £350. In each case, this would be on top of the basic allocation of 185 free shares. In addition, the company said everyone who holds their shares for up to 12 months after the initial flotation date, expected in July, will receive one more free share for each 20 they already own.
One question mark yet to be answered is what effect the "mortgage endowment promise" (MEP), given by the company in September 2000, will now have.
The company pledged that, subject to certain conditions being met, as long as future investment earnings averaged 6% a year it would top up any shortfalls on the endowments.
The finer details of the promise revealed that it only applied to those who were told back in 2000 that their policy was at risk of failing to hit its target amount.
Those told after that date were not covered!
In 2004 Standard Life welched on its promise, and abandoned the MEP as unaffordable.
In its proposal document, Standard Life says that if members back its flotation plans, the MEP for qualifying members "will no longer be dependent on a capital growth condition. Instead [it] will be based on investment returns on the with-profits fund".
A spokesman claimed:
"The amount payable to holders of top-up MEP policies will be broadly equivalent to that which would have been paid by Standard Life under the current promise."
We shall see.
Tuesday, April 11, 2006
Royal Liver Fined
Royal Liver Fined
Royal Liver, the Liverpool-based mutual life insurer, has been fined £550K by the Financial Services Authority (FSA) who judged it to be guilty of mis-selling with-profits savings policies to thousands of its elderly customers.
The policies were bundled together with life insurance contracts, which were not suitable for the majority of customers.
Some customers ended up getting back less from their policies than they had put in!
Margaret Cole, the FSA's director of enforcement, said:
"This was a serious case of mis-selling, particularly as a significant number of Royal Liver Assurance's customers were nearing retirement age and did not need the cover they were sold.
The failings were systemic and arose from weaknesses in the firm's sales and compliance processes and persisted over a long period of time. Firms must make sure that they take account of all products which may be suitable when making a recommendation."
Royal Liver said in a statement:
"The relevant contracts were withdrawn in the UK in 2004 and all policyholders affected have been contacted and offered a full refund of premiums plus interest at an appropriate rate.
Royal Liver has worked closely with the FSA on this issue to ensure that the appropriate lessons have been learned and controls have been strengthened as a result."
Is it any wonder people don't trust the life assurance industry?
Royal Liver, the Liverpool-based mutual life insurer, has been fined £550K by the Financial Services Authority (FSA) who judged it to be guilty of mis-selling with-profits savings policies to thousands of its elderly customers.
The policies were bundled together with life insurance contracts, which were not suitable for the majority of customers.
Some customers ended up getting back less from their policies than they had put in!
Margaret Cole, the FSA's director of enforcement, said:
"This was a serious case of mis-selling, particularly as a significant number of Royal Liver Assurance's customers were nearing retirement age and did not need the cover they were sold.
The failings were systemic and arose from weaknesses in the firm's sales and compliance processes and persisted over a long period of time. Firms must make sure that they take account of all products which may be suitable when making a recommendation."
Royal Liver said in a statement:
"The relevant contracts were withdrawn in the UK in 2004 and all policyholders affected have been contacted and offered a full refund of premiums plus interest at an appropriate rate.
Royal Liver has worked closely with the FSA on this issue to ensure that the appropriate lessons have been learned and controls have been strengthened as a result."
Is it any wonder people don't trust the life assurance industry?
Wednesday, March 29, 2006
The Decline of The IFA
The Decline of The IFA
This is Money reports that 10 years ago there were about 350,000 financial advisers. However, increased regulation and the impact of the endowment misselling scandal has severely reduced their numbers down to 55,000.
It seems that it is not just the hapless policyholders who are paying the price for these underperforming and useless products.
This is Money reports that 10 years ago there were about 350,000 financial advisers. However, increased regulation and the impact of the endowment misselling scandal has severely reduced their numbers down to 55,000.
It seems that it is not just the hapless policyholders who are paying the price for these underperforming and useless products.
Thursday, March 23, 2006
Legal & General U Turn
Legal & General U Turn
Legal & General have announced that they will tell over 600,000 endowment policyholders that they have only six more months to claim compensation, if they believe they were mis-sold the products.
Up until now, L&G now had been one of the few large endowment policy providers to rule out "time-barring" customers.
L&G has started to send out letters to their policy holders this week, covering the new time bar rule and informing the policy holders about their projected returns/shortfalls on polices.
Only Prudential and Nationwide Building Society are keeping an open commitment to consider complaints.
The clock is ticking.
Legal & General have announced that they will tell over 600,000 endowment policyholders that they have only six more months to claim compensation, if they believe they were mis-sold the products.
Up until now, L&G now had been one of the few large endowment policy providers to rule out "time-barring" customers.
L&G has started to send out letters to their policy holders this week, covering the new time bar rule and informing the policy holders about their projected returns/shortfalls on polices.
Only Prudential and Nationwide Building Society are keeping an open commitment to consider complaints.
The clock is ticking.
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