Adviser Claims Foul by Norwich Union
The FT reports that Dolly Pickering, of Heather, Moor & Edgecomb (an IFA), has claimed that Norwich Union's change in projection calculations has led to an endowment misselling claim being brought against it.
Ms Pickering was informed of a £6K drop in the value of a client's policy, caused by an improvement to the accuracy of estimated maturity value (EMV) calculations.
Ms Pickering stated that it was unfair that IFAs were being punished for selling endowment policies, whose initial projected values were inaccurate, and holds the providers responsible.
Saturday, September 20, 2008
Monday, September 08, 2008
Norwich Union Cut Bonuses
Norwich Union Cut Bonuses
Norwich Union have delivered another blow to the tattered reputation of the life assurance industry, and its much derided and failed product of endowment policies.
Norwich have told their 2.4M with-profits policy fund holders that it will cut policies maturing this year by 11%, in comparison with those that matured last year.
The phrase "with-profits" sounds somewhat hollow does it not?
I wonder why it is that no one has tried to sue the life assurance industry for misrepresenting their product by using that phrase?
The theory of with-profits policies is that they are meant to smooth returns. However, given the ongoing cuts in these policies, that theory appears to be half baked. The life assuring companies have quite clearly mismanaged these policies.
The cuts made by Norwich Union are in line with the fall in the FTSE 100 index over the past 12 months, and that means that the "smoothing" has had no benefit or effect whatsoever.
The changes mean that payouts from Norwich's top-paying mortgage endowment fund dropped by 5%, or £2,144, overnight.
Those who hold these useless, mismanaged polices should take a class action against the life assurance industry for:
-misrepresentation
-mis-selling
-mismanagement
-overcharging
Norwich Union have delivered another blow to the tattered reputation of the life assurance industry, and its much derided and failed product of endowment policies.
Norwich have told their 2.4M with-profits policy fund holders that it will cut policies maturing this year by 11%, in comparison with those that matured last year.
The phrase "with-profits" sounds somewhat hollow does it not?
I wonder why it is that no one has tried to sue the life assurance industry for misrepresenting their product by using that phrase?
The theory of with-profits policies is that they are meant to smooth returns. However, given the ongoing cuts in these policies, that theory appears to be half baked. The life assuring companies have quite clearly mismanaged these policies.
The cuts made by Norwich Union are in line with the fall in the FTSE 100 index over the past 12 months, and that means that the "smoothing" has had no benefit or effect whatsoever.
The changes mean that payouts from Norwich's top-paying mortgage endowment fund dropped by 5%, or £2,144, overnight.
Those who hold these useless, mismanaged polices should take a class action against the life assurance industry for:
-misrepresentation
-mis-selling
-mismanagement
-overcharging
Thursday, August 28, 2008
The Great Swindle
The Great Swindle
Tony Hazell in The Daily Mail writes:
"With-profits policies must be the most widespread con ever perpetrated on British investors. Very few people over 30 will have completely avoided having some of their money mismanaged in these massive funds.
But aside from a few mis-selling fines, the insurance companies responsible have got away with this great swindle."
I couldn't agree with him more!
The life assurance companies should set this matter straight and underwrite these useless products that have been badly designed, and massively mismanaged.
They won't of course, because too many people in these companies have made far too much money by way of commissions and bonuses; ie greed, rather than integrity, is the overriding principle at play here.
Tony Hazell in The Daily Mail writes:
"With-profits policies must be the most widespread con ever perpetrated on British investors. Very few people over 30 will have completely avoided having some of their money mismanaged in these massive funds.
But aside from a few mis-selling fines, the insurance companies responsible have got away with this great swindle."
I couldn't agree with him more!
The life assurance companies should set this matter straight and underwrite these useless products that have been badly designed, and massively mismanaged.
They won't of course, because too many people in these companies have made far too much money by way of commissions and bonuses; ie greed, rather than integrity, is the overriding principle at play here.
Tuesday, August 19, 2008
Greed
Greed
Mortgage advisers have blamed policyholder greed for the endowment policy disgrace.
Fairinvestment.co.uk conducted a study that showed that 87% of people believed that they were mis-sold policies by brokers, who failed to explain in sufficient detail the possible shortfalls.
However, some advisers have taken umbrage at this slur and claim that a combination of personal greed and changing market conditions have contributed to the failure of these policies.
Alan Townley, of Dave Alan Financial Services, is quoted:
"Let's make no mistake, people are greedy and although you can spell out that past performance does not equate to future performance it tends to fall on deaf ears when they can only see pound signs in front of them."
I believe that a more fundamental problem is to blame, quite simply many of the policies are not fit for purpose. They were designed to pay off the mortgage, yet are manifestly failing to do so.
When a newly purchased TV or car fails to function, the owner can claim redress; so it should be for the policy holders of these poorly designed and badly managed products.
Blaming market conditions and greed is an easy excuse, the real blame lies with a lousy design and excess management charges (for precious little quality management).
The costs for this scandal should be met by the companies that run these underperforming products.
Mortgage advisers have blamed policyholder greed for the endowment policy disgrace.
Fairinvestment.co.uk conducted a study that showed that 87% of people believed that they were mis-sold policies by brokers, who failed to explain in sufficient detail the possible shortfalls.
However, some advisers have taken umbrage at this slur and claim that a combination of personal greed and changing market conditions have contributed to the failure of these policies.
Alan Townley, of Dave Alan Financial Services, is quoted:
"Let's make no mistake, people are greedy and although you can spell out that past performance does not equate to future performance it tends to fall on deaf ears when they can only see pound signs in front of them."
I believe that a more fundamental problem is to blame, quite simply many of the policies are not fit for purpose. They were designed to pay off the mortgage, yet are manifestly failing to do so.
When a newly purchased TV or car fails to function, the owner can claim redress; so it should be for the policy holders of these poorly designed and badly managed products.
Blaming market conditions and greed is an easy excuse, the real blame lies with a lousy design and excess management charges (for precious little quality management).
The costs for this scandal should be met by the companies that run these underperforming products.
Saturday, August 16, 2008
The Endowment Rip Off
The Endowment Rip Off
Farininvestment.co.uk has published research that shows 90% of people who own a useless and underperforming endowment product believe that they were victims of mis-selling.
The research also showed that 86% of endowment policyholders were expecting their policy to suffer a shortfall.
Of those who felt their had bought their policy after receiving poor advice, 49% said they had been given a guarantee that the policy would cover the mortgage costs, while 27% say the risks involved were not made clear. A further 6% felt fees and charges had not been properly explained.
Something that our financial services industry can be proud of?
Farininvestment.co.uk has published research that shows 90% of people who own a useless and underperforming endowment product believe that they were victims of mis-selling.
The research also showed that 86% of endowment policyholders were expecting their policy to suffer a shortfall.
Of those who felt their had bought their policy after receiving poor advice, 49% said they had been given a guarantee that the policy would cover the mortgage costs, while 27% say the risks involved were not made clear. A further 6% felt fees and charges had not been properly explained.
Something that our financial services industry can be proud of?
Thursday, July 31, 2008
The £1BN Payoff
The Times reports that long suffering Norwich Union endowment policyholders have been offered £1BN of its with-profits fund.
Aviva, the owner of Norwich Union, will offer about 700,000 policyholders between £400 and £1,000 in exchange for foregoing their right to future bonus payments. A further 220,000 will receive up to about £3,500 and a handful of long-term investors will collect several thousand pounds more.
Clare Spottiswoode, the policyholder advocate, is well pleased and describes the result as a "triple-whammy winner" for the policyholders.
Aviva, the owner of Norwich Union, will offer about 700,000 policyholders between £400 and £1,000 in exchange for foregoing their right to future bonus payments. A further 220,000 will receive up to about £3,500 and a handful of long-term investors will collect several thousand pounds more.
Clare Spottiswoode, the policyholder advocate, is well pleased and describes the result as a "triple-whammy winner" for the policyholders.
Tuesday, July 29, 2008
Public Censure
Public Censure
The Financial Services Authority (FSA) has publicly censured Mandrake Associates Limited (MAL) for serious failings in the way it handled mortgage endowment complaints.
The FSA has also prohibited William John Pirie, the firm's sole director, from carrying out any customer functions in regulated financial services due to his mishandling of endowment mortgage complaints received by MAL.
The FSA claimed that as a result of MAL's failings, there was an enhanced risk that endowment mis-selling complaints were either wrongly rejected or delayed.
MAL was found to have failed to ensure its complaints handling procedures were operating effectively, failed to provide adequate resources for the handling of mortgage endowment complaints and failed to ensure that complaint handling personnel were trained to carry out fair investigations.
In addition it failed to finalise the complaints that were dealt with, within a reasonable time and failed to provide complainants with updates about the progress of investigation in a timely fashion, while it also failed to co-operate fully and promptly with the directions of the Financial Ombudsman Service.
Margaret Cole, director of enforcement at the FSA, said:
"Firms must have in place and operate an effective complaints handling system as a key part of treating customers fairly. MAL's endowment complaints handling failings were systemic, lasting for four years and meant consumers who had been mis-sold endowments were at risk of not receiving compensation at all or only after long delay.
Firms who fail their customers in this way will face enforcement action. MAL would have faced a fine of £400,000 if it had not been for its current financial position."
The Financial Services Authority (FSA) has publicly censured Mandrake Associates Limited (MAL) for serious failings in the way it handled mortgage endowment complaints.
The FSA has also prohibited William John Pirie, the firm's sole director, from carrying out any customer functions in regulated financial services due to his mishandling of endowment mortgage complaints received by MAL.
The FSA claimed that as a result of MAL's failings, there was an enhanced risk that endowment mis-selling complaints were either wrongly rejected or delayed.
MAL was found to have failed to ensure its complaints handling procedures were operating effectively, failed to provide adequate resources for the handling of mortgage endowment complaints and failed to ensure that complaint handling personnel were trained to carry out fair investigations.
In addition it failed to finalise the complaints that were dealt with, within a reasonable time and failed to provide complainants with updates about the progress of investigation in a timely fashion, while it also failed to co-operate fully and promptly with the directions of the Financial Ombudsman Service.
Margaret Cole, director of enforcement at the FSA, said:
"Firms must have in place and operate an effective complaints handling system as a key part of treating customers fairly. MAL's endowment complaints handling failings were systemic, lasting for four years and meant consumers who had been mis-sold endowments were at risk of not receiving compensation at all or only after long delay.
Firms who fail their customers in this way will face enforcement action. MAL would have faced a fine of £400,000 if it had not been for its current financial position."
Monday, July 28, 2008
The £1BN Payout
The £1BN Payout
The Financial Services Compensation Scheme (FSCS) reported that over £1BN of compensation has been paid out to consumers who lost money due to the collapse of financial services firms over the past seven years.
The FSCS was set up in 2001, and has paid out £1.04BN since inception. However, out of the 16,490 new claims, the majority (7,410) still relate to mortgage endowments. The hapless claimants having bought the useless product from a firm that had collapsed before they received their compensation for mis-selling.
The average payout was £1,800 each.
The Financial Services Compensation Scheme (FSCS) reported that over £1BN of compensation has been paid out to consumers who lost money due to the collapse of financial services firms over the past seven years.
The FSCS was set up in 2001, and has paid out £1.04BN since inception. However, out of the 16,490 new claims, the majority (7,410) still relate to mortgage endowments. The hapless claimants having bought the useless product from a firm that had collapsed before they received their compensation for mis-selling.
The average payout was £1,800 each.
Monday, July 21, 2008
Friends Provident Cuts Bonuses
Friends Provident Cuts Bonuses
Those long suffering endowment policy holders who have polices managed by Friends Provident will have been disappointed to learn that it will be slashing the final bonuses it pays to long-term savers.
Friends Provident state that the value of its with-profits fund fell by more than 7% during the first half of the year.
Whilst annual bonuses are being maintained, the final bonuses are being cut. Those in the main with-profits fund are being more than halved.
A policyholder with a 15 year unitised pension plan in the main fund will receive a regular bonus of 4%, but their final bonus will be cut from 18.7% if the policy had matured in January to just 2.1% now.
Those with a 25 year policy will be paid a final bonus of 17.5%, a massive reduction from the original 40% in January.
The ongoing credit crisis and recent falls in the stock market are being blamed. All very well, but what about the previous years when the stock market was booming?
A lousy result for those who have spent years investing in these policies.
Those long suffering endowment policy holders who have polices managed by Friends Provident will have been disappointed to learn that it will be slashing the final bonuses it pays to long-term savers.
Friends Provident state that the value of its with-profits fund fell by more than 7% during the first half of the year.
Whilst annual bonuses are being maintained, the final bonuses are being cut. Those in the main with-profits fund are being more than halved.
A policyholder with a 15 year unitised pension plan in the main fund will receive a regular bonus of 4%, but their final bonus will be cut from 18.7% if the policy had matured in January to just 2.1% now.
Those with a 25 year policy will be paid a final bonus of 17.5%, a massive reduction from the original 40% in January.
The ongoing credit crisis and recent falls in the stock market are being blamed. All very well, but what about the previous years when the stock market was booming?
A lousy result for those who have spent years investing in these policies.
Monday, July 14, 2008
Equitable Life
Equitable Life
The long suffering, and shockingly mistreated, investors in Equitable Life may be slightly cheered by a report in today's Telegraph that says:
"Prudential, Legal & General and Swiss Re are among a pack of insurance giants circling Equitable Life, Britain's oldest mutual insurer.
Equitable has drawn up a shortlist of bidders for the remnants of the former insurance leader, which at its peak was worth £26bn and had 1.5m policyholders.
News of prospective bids for the business comes ahead of this week's publication of a damning report by Ann Abraham, the Parliamentary Ombudsman, who will criticise the Government for its failure to regulate the society properly in the lead-up to its near collapse."
The purchase, if it comes, will take some time. Therefore, whilst the investors are waiting for the outcome of that, they should mount a class action against the government for its maladministration of one of the biggest scandals to shake Britain's financial services industry.
The long suffering, and shockingly mistreated, investors in Equitable Life may be slightly cheered by a report in today's Telegraph that says:
"Prudential, Legal & General and Swiss Re are among a pack of insurance giants circling Equitable Life, Britain's oldest mutual insurer.
Equitable has drawn up a shortlist of bidders for the remnants of the former insurance leader, which at its peak was worth £26bn and had 1.5m policyholders.
News of prospective bids for the business comes ahead of this week's publication of a damning report by Ann Abraham, the Parliamentary Ombudsman, who will criticise the Government for its failure to regulate the society properly in the lead-up to its near collapse."
The purchase, if it comes, will take some time. Therefore, whilst the investors are waiting for the outcome of that, they should mount a class action against the government for its maladministration of one of the biggest scandals to shake Britain's financial services industry.
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