Have I been mis-sold an Endowment Policy?

How does one recognise if you have been mis-sold an endowment mortgage?

Mis-selling claims are entirely dependant in the way Life Company or its appointed representative sold the endowment policy. If a policy was sold in a manner that adhered to the rules of the Regulator then the policy in question has not been mis-sold and there are no grounds for a claim. If however the rules have been broken then there are grounds for a mis-selling claim. Examples of mis-selling are shown below.

For many people the term endowment is a description that applied to all mortgages because this was the only type of mortgage available or so they thought. Most people are surprised when they discover their endowment policy is investing in a fund linked to the stock market. Although it might sound bizarre that such a product is being used to pay for probably your largest debt, your mortgage, it is nevertheless true.

Since 1964 there have been seven "bear markets" on the stock exchange where markets were subjected to prolonged downturns. Indeed the '73/'74 bear market produced an overall loss of 70%. Most individuals cannot afford to take this risk when it comes to repaying their mortgage loan in a lot of cases over a long term. So why they would so many want an endowment policy which is directly linked to the stock market, without a guarantee that the loan would be repaid, particularly when the alternative a repayment mortgage provides such a guarantee. In hindsight, when the endowment lost its guarantee a great deal more care should have been taken by Life Assurance Companies when they were advising prospective customers. Unfortunately, commission and the fees earned were too lucrative to forego.

As mentioned before, this is what first attracted the attention of the Regulators who could not understand why so many people were willing to use a stock market investment to repay their mortgage with all its attendant risks.

There are a number of ways in which endowment mortgage policies were mis-sold. These include:

• Homebuyers purchased endowments because it was claimed by their adviser to be the most popular way to repay a mortgage.
• The endowment term stretches beyond the client's retirement age without a detailed description of how this would be affordable.
• The term of the mortgage is not consistent with the term of the endowment
• "Churning" of a policy already in existence beforehand.
• Did an endowment suit the homebuyer's risk profile or match their financial circumstances?
• The endowment was alleged to be cheaper to service each month than the repayment equivalent without any documentary evidence
• Recommendation of endowment policy without any choice or explanation of an equivalent repayment product.
• Forward sale of the policy before setting up the mortgage.
• The promise of guarantees that did not exist.
• "Pressured" selling of endowment to secure mortgage.
• Conditions attached to mortgage that would only be granted if an endowment were arranged.
• Did the prospective policyholder have any previous investment expertise/experience?
• Poor service since the policy was purchased
• How long was the interview to establish that an endowment policy was right for the individual? To describe an endowment correctly, to compare this with a guaranteed repayment mortgage or why this should be forsaken, to explain, confirm and agree your mortgage loan and perhaps house contents and other insurance policies etc. and finally to complete all the necessary paperwork would take roughly three or four hours do be done properly. If an interview took less than this the chances are that corners were cut and choice was either limited or entirely eliminated.
• Was it explained that a shortfall in reaching the target mortgage was possible and should this occur how would it be dealt with?
• Because an endowment policy was already in place it was assumed that you had to have others whenever an upgrade in mortgage was necessary.
• Sales people claiming "This product is so good I have one myself / I advised my daughter to have one, etc".
• False claims that an endowment policy gave greater flexibility whenever a move was contemplated.
• Anything else that breaks the Rules of the Regulator

Most people do not realise that they have been mis-sold their endowment, indeed the terminology is only used within the financial services industry. Having read the above points (which is just the tip of the iceberg) you may well now be wondering whether you were also mis-sold and might wish to evaluate your grounds for a mis-sold endowment claim.

Therefore if, in the light of the above revelations or on any other contentious issue not mentioned, you wish to have your case reviewed we will be pleased to do this free of charge. Should a mutual decision to proceed be taken, we will use our best endeavours to succeed but, of course, we will not be able to guarantee a successful outcome.

We will need you to sign our fee agreement which operates on a "no win no fee" basis before we get down to the serious work of preparing your complaint. Please be aware under the Rules of the Regulator there is an established formula for your complaint to be examined. There will be no involvement with any other legal procedure and more importantly, no additional costs to be incurred except our "no win no fee" approach when the matter is finalised.

Click here to make a claim on a mis-sold endowment policy

Legal Disclaimer
In the preparation of this site every effort has been made to offer the most current, correct and clearly expressed information possible. Nonetheless, inadvertent errors can occur and applicable laws, rules and regulations often change. Further, the information contained herein is intended to afford general guidelines on matters of interest. The application and impact of laws can vary widely, however, from case to case, based upon the specific or unique facts involved. Accordingly, the information in this site is not intended to serve as legal, accounting, tax or financial advice. Users are encouraged to consult with CPH Financial Advisory Services professional advisers for advice concerning specific matters before making any decision and CPH Financial Advisory Services disclaims any responsibility for positions taken by individuals for any misunderstanding upon the part of users. Not all products/services are regulated by the Financial Services Authority (F.S.A.) and in particular the complaint handling process described above. Claims are handled by CPH Financial Advisory Services of the Bath Master's House, Davenport Street, Macclesfield, Cheshire, SK10 1JE The Principal of which is Mr. Michael J. Cooper. CPH Financial Advisory Services is regulated by the Ministry of Justice in respect of regulated claims management activities - authorisation #CRM3589.