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Endowment Mortgages Remembered


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Guest tenant super

Vacant possession, oh dear.

I'm not sure I agree with you, imho you would have to have to be a very unfortunate sole who admits, hand on heart, that they were not aware that an endowment might fail to reach its target, to have not been ready for that risk, but yet still took a policy out!

Hindsight is a wonderful thing but the unpalatable truth is, most people at least knew the consequences but are unable to take the main share of the responsibility and then attempt to have their cake and eat it by suing the insurance company. And why not?

Having worked in complaint handling for two years I do know about endowment mis-selling, but I have vastly more experience of endowment mis-buying!

Finally, commissions were available for agents selling mortgage decreasing term assurance with repayment mortgages, which you should offset against the commission figures you have quoted, which in my experience are out by, as a rough guide, the order of ten.

Anyway, no harm in making a complaint if you have been sold a bad one, you will get an extremely fair hearing, especially as I no longer work there! :)

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Vacant possession, oh dear. 

I'm not sure I agree with you, imho you would have to have to be a very unfortunate sole who admits, hand on heart, that they were not aware that an endowment might fail to reach its target, to have not been ready for that risk, but yet still took a policy out!

Well forgive me, but, though I didn't fall for it myself, I distinctly remember viewing many properties in the South East in 1989 and meeting up with several "independent" advisors who were actually working (undeclared) in league with EA's at the time. These advisors, all of whom claimed membership of one financial advice association or another, not only put great pressure on to accept an endowment, but implied that one was pretty stupid to even mention the word "repayment".

Yes the chattering classes of the late 1980's generally thought anyone with a repayment mortgage was quite stupid and I also distinctly remember being shouted down at many a gathering for having the temerity to suggest repayments were better. I do have a very distinct and vivid memory of this. As I recall the whole nation was absolutely sold on endowments. But worse still, I also recall that many pushers of mortgages REFUSED to deal in repayment mortgages and therefore many people were virtually compelled to take endowments.

Not everyone is a financial expert (and I assume that was why we had "advisors" in the first place). My point is also that the advisors were in fact NOT independent as they claimed, the advise was NOT in the client's interest, the commissions were EXCESSIVE and undeclared, the pressure was UNFAIR, the EA's were IN LEAGUE with the advisors, the building societies were IRRESPONSIBLE and the clients, even after taking due care to seek independent advise were CONNED.

In any other industry this would amount to massive fraud. I therefore stand by my original assessment and would argue that all in involved should be in jail, and not still operating, which many of them still are, including a large number of building society directors. Would you like me to name them? I think their names are researchable.

VacantPossession

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Yes the chattering classes of the late 1980's generally thought anyone with a repayment mortgage was quite stupid and I also distinctly remember being shouted down at many a gathering for having the temerity to suggest repayments were better.

This proves two things:

1) The herd instinct is very strong.

2) The herd is usually wrong.

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I distinctly remember viewing many properties in the South East in 1989 and meeting up with several "independent" advisors who were actually working (undeclared) in league with EA's at the time.

V few 'advisers' even today are IMPARTIAL even if they are independent.

Yes the chattering classes of the late 1980's generally thought anyone with a repayment mortgage was quite stupid and I also distinctly remember being shouted down at many a gathering for having the temerity to suggest repayments were better.

AS it happens, for house'owners' who intend to move regularly ie say every few years, I am not convinved a repayment mortgage is appropriate on the basis that most payments in the first few years are almost entirley to interest. They might as well have an int onyl and save to ISAs to build a lump sum to pay off mortgage eventually or even just pay off lump sums each year to reduce the balance. This may be blasphemy here but that is my professional evaluation.

Not everyone is a financial expert (and I assume that was why we had "advisors" in the first place).

No we had 'advisers' 'cos regulation was light and commission was heavy!

My point is also that the advisors were in fact NOT independent as they claimed, the advise was NOT in the client's interest, the commissions were EXCESSIVE and undeclared, the pressure was UNFAIR, the EA's were IN LEAGUE with the advisors, the building societies were IRRESPONSIBLE and the clients, even after taking due care to seek independent advise were CONNED.

Agreed but again I think you mean impartial advice - independent is a legal and wholly inappropriate title for financial advisers which gives the impression of impartiality. :)

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tenant super,

Cut the crap, do you really think there would be any compensation if many of these policies were not sold on false premises/promises? I don't think so.

Asking somebody what was told to them about a product 5/10 or more years before is pretty pointless as most simply wouldn't remember what was said and would only remember in very vague terms about any level of guarantee or performance. So how do the authorities come to a conclusion about the selling process? - very easy they look at the paperwork and they look at the product brochures and leaflets. Now, many will have through away all that material, but some won't have. Those few that kept them have provided the body of evidence of what representations were made by company X during months X-Y in a particular year. It is the content of these documents that form the backbone of any claim and in a lot of cases is is totally obvious that there were attempts to deceive a customer in regards to the level charges, risk and likely performance. That's before any of the fluff in the presentations.

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My sister and I both got sold a policy from Allied Dunbar around 1994 by my other sisters husband (they're now divorced).

I'm still paying £51 a month into it though don't have a mortgage any more, (don't know whether she's still got hers or not).

It's not going to reach its target (14k-ish not 25k) I was totally unaware at the time of the dangers of them. Is it worth carrying on paying in as a saving scheme? Could I qualify for compensation?

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My sister and I both got sold a policy from Allied Dunbar around 1994 by my other sisters husband (they're now divorced).

I'm still paying £51 a month into it though don't have a mortgage any more, (don't know whether she's still got hers or not).

It's not going to reach its target (14k-ish not 25k) I was totally unaware at the time of the dangers of them. Is it worth carrying on paying in as a saving scheme? Could I qualify for compensation?

Searches for "Allied Crowbar" on Google, HTH.

http://www.google.co.uk/search?hl=en&ie=IS...rowbar%22&meta=

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Thanks OM.

Hmm, the words 'singing' and 'praises' don't come to mind. It looks like I'll get back roughly what I put in at least. Do I have a case for compensation? :huh:

A lot depends on what was in the original sales material. Contributions + a little interst is the figure you need to compare with your current value in relation to your willingness to follow up and do all the paperwork and chase the claim (or pay somebody to do it for you).

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Thanks OM.

Hmm, the words 'singing' and 'praises' don't come to mind. It looks like I'll get back roughly what I put in at least. Do I have a case for compensation? :huh:

Depends what was in the letter of recommendation to you. Was there one? Did they follow accepted appropriate sales/advice practises or did they not do a letter.

Speak to an IFA who will look at your case. Most will see you with no-obligation for a first meeting. :)

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I have to admit to being a little biased because I was one of those people who did very well - thanks very much - out of having an endowment mortgage. As expected, it produced more profits than originally calculated. That's the way things worked in those days.

As to the miss-sellers, their sins are obvious now, with hindsight. If only they'd finished their sales talk with something like:

"... and, there again, if your policy does not do as well as previous ones have done you could be left with a shortfall - possibly an enormous one. Do you understand the implications? Does that nod mean 'Yes' ? Or, am I boring you?"

Were all buyers of endowments really stupid enough to enter into such a long term comittment with their eyes closed? If the maturity proceeds had been unexpectedly high, would they have complained at the miss-selling and insisted on giving away the surpus? My a..e!

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I am not convinced a repayment mortgage is appropriate on the basis that most payments in the first few years are almost entirley to interest.....

..... independent is a legal and wholly inappropriate title for financial advisers which gives the impression of impartiality. :)

The reason you give for not having repayments is exactly the reason many advisors gave at the time, but in fact if you work it out carefully on paper, the chances are that repayments are STILL better than other schemes even if you move several times.

The word "independent", or any other word for that matter is capable of being a legal term if it is included in a legal document. If it is used as a means of advertising a service or attracting clients (which it was) then it is not necessarily a legal term but an inducement to do business on the basis of trust.

Whether or not you want to call it a legal term the fact is that many advisors verbally or otherwise claimed to be independent although they were not in the meaning that they wished to convey, ie that they were impartial in giving advice and not linked to or in league with any other vested interest.

VacantPossession

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Guest tenant super
Cut the crap, do you really think there would be any compensation if many of these policies were not sold on false premises/promises? I don't think so.

Asking somebody what was told to them about a product 5/10 or more years before is pretty pointless as most simply wouldn't remember what was said and would only remember in very vague terms about any level of guarantee or performance. So how do the authorities come to a conclusion about the selling process? - very easy they look at the paperwork and they look at the product brochures and leaflets. Now, many will have through away all that material, but some won't have. Those few that kept them have provided the body of evidence of what representations were made by company X during months X-Y in a particular year. It is the content of these documents that form the backbone of any claim and in a lot of cases is is totally obvious that there were attempts to deceive a customer in regards to the level charges, risk and likely performance. That's before any of the fluff in the presentations.

With respect, perhaps you missed my point that I was actually resolving endowment complaints for two years so I know what goes onto the mixer for decision making. Yes, mostly they were upheld, but not because of the paperwork but as a result of a concoction supplied by the regulatory bodies. In particular, verbal evidence is given a lot of weight despite as you say, the fact that these would be based on distant and therefore unreliable recollections. The paperwork after 1994 contained key features that shout out about charges, risks and so on. Nonetheless complaints could be upheld because the clients stated they were lied to, and if those claims cannot be countered then they win.

I saw plenty of sales that show immense care by the salesman but yet a client is still prepared to say he was a shyster simply because that clients hopes and expectations have not been met... and maybe get some money back.

I hope I've shed some light on the obverse to this thread, but perhaps the deeper theme to focus on is that the herd mentality led many down the wrong path, and residential property investors in the last two years may come to wish that they had only made the mistake of making a small amount of money on an endowment..! ;)

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The reason you give for not having repayments is exactly the reason many advisors gave at the time, but in fact if you work it out carefully on paper, the chances are that repayments are STILL better than other schemes even if you move several times.

I have - interesting that you would think I have not - and int only with lump sums paid in has many advantages. Also, in high infl environment endowment/PEP etc would have produced high returns. The main issue is that inflation was conquered - all those who mattered knew but no-one told their sales forces.

Whether or not you want to call it a legal term the fact is that many advisors verbally or otherwise claimed to be independent although they were not in the meaning that they wished to convey, ie that they were impartial in giving advice and not linked to or in league with any other vested interest.

You make it sound as if I disagree with you. Hence, why I intimated independent is a ******** term used inappropriately. Clients need impartiality.

:)

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With respect, perhaps you missed my point that I was actually resolving endowment complaints for two years so I know what goes onto the mixer for decision making.  Yes, mostly they were upheld, but not because of the paperwork but as a result of a concoction supplied by the regulatory bodies.  In particular, verbal evidence is given a lot of weight despite as you say, the fact that these would be based on distant and therefore unreliable recollections.  The paperwork after 1994 contained key features that shout out about charges, risks and so on. Nonetheless complaints could be upheld because the clients stated they were lied to, and if those claims cannot be countered then they win.

I saw plenty of sales that show immense care by the salesman but yet a client is still prepared to say he was a shyster simply because that clients hopes and expectations have not been met... and maybe get some money back.

I hope I've shed some light on the obverse to this thread, but perhaps the deeper theme to focus on is that the herd mentality led many down the wrong path, and residential property investors in the last two years may come to wish that they had only made the mistake of making a small amount of money on an endowment..! ;)

Tenant super,

Fair enough, post 1994 their act may have cleaned up a lot and but pre-94, well all I can say from experience is that the charges were very well hidden, high and of the scale that would be guaranteed to create an underperfroming investment (or negative one) almost regardless of the perfomance of the underlying investment market. No doubt though that now there are some who look to take advantage now even though the non-perfromance has been in the market and not due to the product charges. Maybe you worked in the industry at a time when there were more of the latter going through the system than the former?

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I have - interesting that you would think I have not - and int only with lump sums paid in has many advantages.  Also, in high infl environment endowment/PEP etc would have produced high returns.  The main issue is that inflation was conquered - all those who mattered knew but no-one told their sales forces.

You make it sound as if I disagree with you.  Hence, why I intimated independent is a ******** term used inappropriately.  Clients need impartiality.

:)

OK, apologies. I did not mean to imply you disagreed in areas where in fact you broadly agreed.

VP

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Guest tenant super
Tenant super,

Fair enough, post 1994 their act may have cleaned up a lot and but pre-94, well all I can say from experience is that the charges were very well hidden, high and of the scale that would be guaranteed to create an underperfroming investment (or negative one) almost regardless of the perfomance of the underlying investment market.  No doubt though that now there are some who look to take advantage now even though the non-perfromance has been in the market and not due to the product charges. Maybe you worked in the industry at a time when there were more of the latter going through the system than the former?

I certainly concur with you here OnlyME. The charging structure was/still is extremely opaque due to their complexity (and I would have to suppose- high cost) I don't think I ever got to the bottom of where the fat turned into the bare bones of a premium and yes I doubt anything other than a poor sketch of the mechanics of the charging was ever felt necessary.

In addition the paperwork is generally very poor for the pre 95 cases, and the recommendation is either absent or very basic. I worked in this field till last year dealing with sales anywhere between 1978 and 2002. For me the picture is clearer for those more recent sales where you have the paperwork to picture what is likely to have happened, and yes it might well be unfair to extrapolate back to the earlier cases, fair point and thank you, finally as an aside - credit to you for a neat reverse of the word guaranteed in this context...

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credit to you for a neat reverse of the word guaranteed in this context...

LOL, thanks Super. It wasn't until I fully understood the full implications of the charging structure that I could work back over historical market performance and realise the true nature of the "investment". Mind you my short fuse in regards to this area is probably more tainted by other poor buggers at a group meeting where material was being gathered to launch a test case, some of them were in a right state, multiple policies covering nearly all their assets, house, pensions, savings, the lot, all likely to be about 50% underwater. :o

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Guest tenant super
LOL, thanks Super. It wasn't until I fully understood the full implications of the charging structure that I could work back over historical market performance and realise the true nature of the "investment". Mind you my short fuse in regards to this area is probably more tainted by other poor buggers at a group meeting where material was being gathered to launch a test case, some of them were in a right state, multiple policies covering nearly all their assets, house, pensions, savings, the lot, all likely to be about 50% underwater.  :o

OnlyMe, I've seen some shockers believe me. The best one I can recall was the sale of two endowments (designed for mortgage repayment) for 40 year terms sold to a 22 year old - 'to pay for childrens education'. He didnt even have any kids...! We paid some compensation.

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Guest tenant super
Tenant Super,

As an aside - do you know who the hell is buying up all the UK mortgage and asset backed securities? Is it the Europeans chasing yields or is it the funds over here who sold of equities at the recent bottom?

Sorry I haven't the faintest.

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