Any comments on this apparently curious decision on my mortgage endowment missale compensation offer

"David Lowndes" wrote

Are you sure that they are actually recommending surrender, or did they just quote the current surrender value and use the figure when calculating any redress??

Am I right in assuming that Woolwich has offered to recompense you? And does this recompense take the form of putting you in the position you would have been if you'd had a repayment mortgage at the outset? If the answers are 'yes', then it is up to you to decide whether you take them up on this offer or not. If you keep with the endowment you will be continuing with the risk of it not paying off the mortgage and you will by now know, if you didn't before, that this is a risk, although it may be acceptable to you. Recompense is usually offered when the complainant states that he was not informed of this risk and there is no evidence to show that he was.

The general advice that you have quoted usually infers that it might be better to continue with the policy rather than jack it in if no compensation is offered. I doubt that this would be the advice if you are getting satisfactory compensation.

Rob Graham

They don't recommend anything - but there's no way on the offer acceptance form provided to do anything but accept the offer as presented including the surrender!

Dave

Just to re-iterate my question as it seems to have been overshadowed (or I've not fully grasped the replies so far):

Are there any general situations where it would be recommended to surrender the policy?

... since all advice I've seen previously says to keep the endowment (presumably with the hope that the terminal bonus will be worth having rather than losing) and either keep paying it or make it paid up, and to make up the projected mortgage shortfall by some other means.

Dave

"David Lowndes" wrote

What exactly is the "offer"? A lump sum payment? Then just tell them that you'll accept the lump sum, but that you'll continue with the endowment policy as it is and *not* to surrender it...

'Phone them up first to explain & ask them whether they want you to just write this on the existing acceptance form, or if they'd prefer the request by letter...

Yes - all in accordance with whatever FSA guidelines they have to meet (of course).

You've confused me Rob, they are offering compensation (whether it's satisfactory is another matter), so what's the general recommended course of action with keeping/surrendering the policy in that situation, and why should the general advice be any different? They certainly don't seem to be making me an offer I can't refuse here ;)

Dave

Not exactly - unlike the offer I've had from Eagle Star, which was fully a lump sum settlement.

All the Woolwich offer is to pay us £149, and the rest to the lender - themselves ;) - to change the mortgage to a repayment and a transfer to reduce the outstanding balance.

Dave

So if I understand it correctly, they are converting you to a repayment mortgage, and making the mortgage balance what it would be had you been repayment from the outset?

Obviously you need to check the figures, but it seems a potentially reasonable offer.

Unlikely. Usually selling is better than surrendering, and -- unless you need the money NOW -- keeping it going or making it paid up is better still.

In general, surrendering is not as good an option as pretty well any of the others, but as soon as you're in a compensation context, you're no longer in the "general" arena, so a lot depends on the precise terms of the compensation offer.

Is it conditional on surrendering and *actually* placing you in the position you would have been in had you gone for a repayment deal in the first place, or is it simply a one-off cash payment for the difference?

Yes, though there's no detail of which type of Woolwich mortgage deal it would be converted to. It's all very imprecise (the figures they present add up of course), and doesn't on the face of it give me any options. To be honest, I want to move my mortgages from the Woolwich anyway - their service has gone down the toilet these last few years.

... and how do I know if it's a reasonable offer? It doesn't "feel" good to me :(

Dave

That's what I'd thought too. I don't need the money now.

This is why I'm curious about why they apparently want me to surrender it. I really feel like they're out to rob me - or they're not telling me something crucial that they know!

I'd have thought an awful lot of people would be in the same general position that I am now. :(

The Woolwich offer is to pay us £149, and the rest to the lender - themselves ;) - to change the mortgage to a repayment and a transfer to reduce the outstanding balance.

It doesn't appear to be conditional on those exact terms, because after my phone call to them, they've said I do have the option to maintain the endowment - though there's no mention of any options in the original letter, or on the form I'd have to sign.!

Dave

I don't really see what your problem is. They've made you an offer. If you don't like it, don't sign, and then you'll continue as you are. There's no reason why they should be recommending what you do. They're just saying 'here you are, we'll do this if you want'.

Rob Graham

so what's the general recommended

The generally recommended course may well be to keep the policy going (although I'm not sure I would agree with that generalisation in all circumstances), but your case is different. You have been made a specific offer to put you back where you would have been if you hadn't had the endowment (I think this is what you have been offered). This offer isn't open to a lot of people who took out an endowment knowing the pitfalls, but then regretted it. The generalisation applies to these people who are not offered any recompense and who wonder whether their endowment will come good in the end.

Rob

In message , David Lowndes writes

Yes.

My personal view in addressing this situation is to look at the endowment and see what fund(s) it is investing in. Then have a look at that fund in comparison with other life funds and the better Unit Truts/OEICS. Then as yourself 'if I wanted to save money on a monthly basis, is this fund any good?'. If the answer is YES, then consider keeping the policy. If the answer is NO, then surrender it.

(BUT you will lose the life cover and if you have suffered a medical event since you took the endowment you may find getting new cover expensive or impossible.)

IME there isn't a single decent unitised life fund in existence, most endowments have expensive mortality charges, and the policy and fund charges are whopping, so surrender would be the most likely way out.

If you wanted to keep the mortgage on an inter4est only basis and take a risk on the stock market then put some dosh into a fund supermarket type ISA splitting your investment between a few fund managers, and buy a separate protection plan for life assurance/critical illness or whatever.

The woolwich policy is almost certainly not sellable.

No, get out now. Its a crap investment.

Whether the Woolwich policy is sellable or crap is irrelevant. The question I answered addressed "general situations", not the Woolwich policy specifically.

John,

Thanks for your views on this.

I've checked through the paperwork we have, and I can't find anything that identifies what the fund(s) are - not that I'd probably be any better informed if I did know!

I'm wondering if the Woolwich are effectively hinting that the policy is no good - by making the default action that of surrendering the policy. Of course they won't give me a straight answer.

Dave