All your endowments questions, tackled by Tony Boorman, Principal Ombudsman from the Financial Ombudsman Service.
Tony Boorman tackles your questions
We believe we were mis-sold our endowment and have evidence to prove it (original interview sheet etc). However, when we did complain we were out of time. We took the complaint to Financial Ombudsman who were unable to help. When pushed they said we could go back to Friends Provident to ask them to re consider. Is it worth doing this?
There are time limits that have been put in place by the industry regulator, the Financial Services Authority (FSA). And the ombudsman service, generally, cannot look at complaints that are outside the time limits.
From June 2004 firms have had to write to consumers giving an explicit date on which your 'time to complain' runs out. We can only look at a case outside these time limits if the firm waives its objection to us looking at the complaint or if exceptional circumstances apply.
In your case it would seem, unfortunately, that the firm maintained their objection. In terms of the issue you raise about with-profits policies, this is something that goes wider than your individual case, which is why we have suggested that it may be more appropriate to raise the matter with the FSA.
We have one old endowment with Standard Life. It was to cover part of our mortgage as we did not want to sell it. We have half capital and half endowment the other part of our mortgage. We are being told there may be a shortfall on the first one. We are unsure what to do about this.
Julia and Ros.
The FSA has produced a leaflet at http://www.moneymadeclear.fsa.gov.uk/pdfs/mortgages_pay_off.pdf that gives a range of information on the options open to you. If you feel that the product was not suitable for you, you may have cause for complaint. However, there are time limits that could apply. And complaining is only one of the actions you can take.
I would like some advice on an endowment for £12,000 I took out in April 1999 for 10 years.
I took this out to replace my previous endowment which I cashed in a moment of panic to pay a tax bill. I was told by a financial adviser that I should have been advised not to take one out for such a short length of time. He looked into it, but said nothing could be done as the lady who sold it to me had since died. The endowment was organised by Money Services for Women who were taken over by Norwich Union who I am still with, and there will be a shortfall.
Generally, with the mortgage endowment cases we see, consumers are complaining about the firm that advised them to take out the policy in the first place.
From your question it would appear that you were advised to take out your endowment policy by Money Services for Women. The Financial Ombudsman Service can look at complaints where a firm is able to meet the claims made against it. The Financial Services Compensation Scheme (FSCS) is the UK's statutory fund of last resort for customers of authorised financial services firms.
This means that FSCS can pay compensation if a firm is unable, or likely to be unable, to pay claims against it (which they describe as being 'in default'). The Financial Services Compensation Scheme has placed Money Services for Women 'in default'. This means that if you want to make a claim about Money Services for Women you should contact the FSCS.
We took out a mortgage endowment plan for £20.45 each in Jan 1993. We were fortunate to be able to pay off our mortgage in full by other means in 2003, but we have continued to pay our premium every month.
We enquired with Friends Provident and the FSA about endowment mis-selling, but unfortunately they both have said we have been time barred. Friends Provident have told us if we surrender now we will receive £5,229 each, (having each put in £4,436.00) or otherwise continue to maturity (2018), but they have assured us there is a high risk that it will not meet its target. Should we continue paying to the end of term or surrender the plan?
When we consider complaints, we look to see if a consumer is simply disappointed with the way an investment has performed or whether they did not fully understand the risks associated with an endowment policy.
The Financial Ombudsman Service does not give financial advice, so we cannot tell you whether you should keep or surrender a plan.
The growth rates you quote are projections of what the endowment plan could be worth if the stock market continues to perform well and grow at the quoted amount.
And so you will need to think about the risk you are prepared to take. And you might want to consider whether you want to take independent financial advice before making a decision.
I actually have two endowments from 1988 and 1991 and have made claims for mis-selling on both. One is with Phoenix (formerly Royal & Sun Alliance) for £46,740 and is currently projecting a shortfall of £14,240 in 2013. For this one, I did claim within the time limit. However, I was told that "...as the original advice was given by an IFA (now no longer in business) and not an employee of the company, the company is not liable..."
Have you come across this as an excuse? Does this suggest that people should only seek advice from 'tied' salespeople rather than IFAs in order to have protection from any sort of mis-selling?
As with many of the questions, this one touches on the issue of being too late to complain. We are also seeing an increasing number of mortgage endowment complaints being brought to the ombudsman service, where time-barring is an issue.
The general message for consumers - which the ombudsman service, the regulator, consumer organisations and media have been making for a number of years now - is if you are unhappy with your mortgage endowment - act now. Generally, we can look at complaints involving IFAs relating to events after 28 April 1988. If you want to know whether we are able to look at a particular complaint, please call our consumer helpline: 0845 080 1800.
I have been mis-sold endowment policies - I expected mine to be tied to the stockmarket and expected them to go down and up. However, having gone down they aren't now going up because they are no longer invested in equities! Do I, tongue in cheek but frustrated, have a claim?
We don't look into complaints that are solely about the way an investment has performed. And as with some other complainants, you seem to be raising issues that go wider than your own endowment policy and are about how the firm is managing the whole of its fund. You might want to raise these concerns with the regulator. Endowment policies were generally sold as 'with-profits' policies or 'unit-linked'.
'Unit-linked' policies generally fluctuate in line with the stock market, whereas 'with-profits' tend to smooth out stock-market peaks and troughs. Therefore, if you have a with-profits policy it may take longer to see the benefits of a rise in the stock market.
Could you help me with a couple of questions?
Can you still claim after the endowment has matured - and do I still need the documents and policy number to make a claim?
You can still make a complaint after an endowment policy has matured - subject to the time limits that the financial regulator has laid down. A complaint should be made first to the firm who sold you the policy.
If you don't have your policy number, your endowment provider may be able to help. If you have documentation that could be useful. But after a long time has passed, many consumers no longer have all their paperwork. At the ombudsman service, we will look at your financial and personal circumstances at the time, and other relevant factors, in considering your complaint.
I have a question regarding surrender values of endowment policies.
Like a lot of people, I suspect, I hung on to my two Standard Life endowment policies until after demutualisation to take advantage of the (smallish) payout. Luckily I have paid off my mortgage by other means so I am in a position to sell these poorly performing endowment policies now. My policies have current surrender values of about £14,000 and £6,000, with just under a quarter of their term remaining.
Also, am I right in assuming that because of the length of time I have had the policies that I won't be liable for Income Tax on their sale? I am a self employed basic rate taxpayer.
Generally, if a policy is kept to maturity there is no tax liability. However, when a policy is cashed in before the maturity date, the tax position may be less straightforward. Queries on this should be directed to Revenue & Customs or your endowment provider.
Usually, redress for mortgage endowments is paid gross, without tax being deducted.
My endowment 'mis-selling' claim, which is currently being handled by the FSA, is entering its fourth year! I notice that the Financial Ombudsman Service also deals with this type of claim. What's the difference between the two bodies please?
The FSA, as the regulator of financial services, lays down the rules that financial firms have to follow.
The Financial Ombudsman Service looks at individual disputes and can award redress. The FSA looks at wider issues and can fine a financial firm, or take other appropriate action.
The ombudsman service resolves most mortgage endowment cases within six to nine months. Although cases where an ombudsman's decision (rather than the dispute being resolved by an adjudicator) is needed, can take longer.
I started an endowment before I could spell mortgage at the age of about 20.
I was given a glorified view of the savings I could have at the end. To give you some idea how so little I knew about how mortgages etc worked, I stayed with the same lender all of the mortgage's life. Never shopped around, never went to another lender. To cut the long story short, I finished paying the mortgage or the interest if you like and expected huge windfall. What I got was £6,000.
I know it seems tidy amount but had it been at the beginning of the mortgage, it would have seemed good amount but 15 years later, it's real value is much less. Should I have got much more than that and is there anything I can do now?
Generally, the mortgage endowment complaints we are asked to look at are where the consumer has been told that there is likely to be a 'shortfall' with their policy. That is where the policy is unlikely to meet its target and usually this means it won't pay off the whole amount of the mortgage.
Where the Financial Ombudsman Service upholds a consumer's complaint, it aims to put consumers back in the position they would have been in, had the financial firm not done something wrong.
In the mortgage endowment cases we uphold, we will usually compare the position the consumer would have been in had they been correctly advised to take out a repayment mortgage to the amount their endowment policy is now worth.
From your email it looks like your endowment did not have a shortfall and it may be that you have not lost out financially as a result of being advised to take out the endowment. However, if this is not the case and you feel that you were not correctly advised, you should direct your complaint to the firm you feel is responsible in the first instance.
We would like to make a complain about being mis-sold a number of mortgage endowment policies. We are looking for a reputable firm to take on our case on a no win no fee basis. In order to avoid any problems e.g. scam etc., do you have a list of firms providing this type of service that are reliable and trust worthy ? If not, what would be your recommendation and what we should look out for if we try to find one ourselves?
Financial firms have to handle mortgage endowment complaints according to guidelines set out by the regulator, the FSA. So you should not need any special help or support if you complain.
The ombudsman service is a free and informal way of getting disputes resolved, if you remain unhappy with how a firm has handled your complaint. We decide if a complaint is valid by looking at the facts of the case and we prefer to hear from you in your own words.
Our statistics show that there is no difference in the outcome - whether consumers bring their complaints direct to us themselves, or whether they use a claims management company (sometimes called a "no win, no fee" agency) to bring the complaint on their behalf. In other words, we are no more or less likely to uphold a complaint referred to us through a claims management company.
So it is up to you to decide if you want to employ someone to handle your complaint for you - for example, a claims management company . But you'll have to pay their costs yourself. This could mean you paying them part of any compensation you have been awarded.
The opinions expressed are Tony's and not the programme's. The answers are not intended to be definitive and should be used for guidance only. Always seek professional advice for your own particular situation.