Mortgage Endowment Shortfall Compensation

Yes I have. You don't need a claims company.

Log onto the "Which" web-site

http://www.which.net/endowmentaction/

Review the contents carefully. There is also a very useful complaint letter generator. By inputting the necessary details, it will print out a letter for you to which the finance company will have to respond. In my case, the complaint took some 6 months to investigate but was in the end successful.

Remember though, the whole point of it is not to "make" money. All this exercise does, is to restore to you, the difference between what you would have paid out had you had a repayment mortgage.

Also be aware that you are complaining because the product wasn't right for you - your requirements were not taken into consideration by the person who sold you the product. Just because the product hasn't performed well is not grounds for complaint.

Following my lead, several colleagues have done this, and have received between £5000 - 21,000. Obviously the larger pay out reflects the size of his mortgage and associated risk in the first place.

Hi jn. We considered using one of the "specialist" companies, oft. seen in the pages of the daily rags. They work on a no-win-no-fee basis, but their fee tends to be 20% or so. Sounds quite high to me. If you tried to claim yourself, but was unsuccessful, or decided it was all too complicated, then I guess 80% of something is better than 100% of nothing.
matt

Mike,

I thought terminal bonuses were discretionary and not calculated until the end of the term. Hence, I guess, why they can't be included in any projection.

Are you saying that a with-profits policy accrues 'guaranteed' terminal bonus as the policy progresses and that the policy provider will give this information if asked ?

Allan.

Hi Allan

You are correct that Terminal Bonus ("TB") are not usually communicated to you until your policy matures.

Your best bet is to call your insurer (or broker) and ask them what the current terminal bonus rate is for policies of a similar premium and duration to yours.

EG:if you have 5 years to go on a 25 year initil term, ask what the TB rate is for 20 year policies maturing this year (and also for 25 year policies maturing today)

You will the be better place to (gu)estimate what your TB rate might be, although it is not guaranteed until it is paid to you.

This info may prevent you from an early surrender which will often result in you losing more than you you should.

I have done some calcs* and performed some investigations and illustrations for friends of mine to assist them maks such choices (and invariably the best plan is not to surrender the policy and NOT TO make any further "Top up") contributions to the same policy)

If it were me, I'd do additional saving via a different investment vehicle.

Regards

P

* I am an Actuary with some experience in these matters!

Hi Pat,

Thanks for the feedback. I have a number of policies and for better or worse decided some time ago to stick it out rather than go the surrender or compensation route.

My greatest hope was with a Royal Life policy (now Royal & SunAlliance) that is due to mature in 2009. As this policy was started so long ago, it's been less affected by recent stock market troubles than policies started, say, in the last ten years. I was rather hoping that when the time comes, the Terminal Bonus with this one would still be pretty much intact.

Unfortunately my optimism on the Terminal Bonus was knocked back a bit recently when I got a letter from Royal & SunAlliance to say that they had sold mine and similar policies to some previously unknown (to me) company called Resolution. The way I see it, Resolution are not in the market to take new business from the public or have any need to maintain a public reputation. They are a business based on maximising the profit from the funds they buy from companies who want to get out of the with-profits business. As Terminal Bonuses are discretionary, what motivation do Resolution have to pay any bonus at all ?

Allan

Hi Allan

All things being equal*, the sale of your policy and the complete Life fund at Royal should not impact upon your expectation of what will be paid to you on policy maturity.

In approving the sale/purchase and transfer of the Life fund, the FSA (the Regulator) would want to ensure that people like you should not be adversely affected.

Assuming that your polict is a "with Profit" one (i.e where the amount you received is largely un guarnteed and depends on investment gains) an Independent Actuary would need to have signed off on the process and would certify that policyholders reasonable expectations would be maintained, given the purchase price. (This would also apply to Terminal bonuses etc.) If not, then more assets would need to be transferred to the new entity.

If this process was not in place, then you could imagine what skull duggery could go on in the industry!

That said, there is now a natural break between the maturity values and sales and marketing of new business which is usually not good for policyholders. Often the single biggest reason for paying our favourable mtaurity values (incl high Terminal bonus rates) is that the sales force of the company can "bang that drum" and say that their company is doing well. This does not apply to a company closed to new business as there is no sale force etc.

Your only protection is from the FSA and the hope that the new run off company (and their appointed actuary) will keep expenses low and generate good investment returns so that by 2009, you will get a decent maturity value.

You should contact the purchasers (Resolution) and ask what they are paying to currently maturing 20 year endowments in 2005. This will give you an idea.

Regards P

* and they may not be in a run off situation!

We are currently in the middle of "walking through treacle".

Two sites which are of great help:

http://www.financial-ombudsman.org.uk/

http://www.fsa.gov.uk/consumer/index.html

Hope that helps,

Yours, Ian Macdonald, MCR

Thanks Pat for putting together the detailed reply.

Allan