Compensation for mis-selling mortgage endowment

Well, why should the borrower not be compensated for needing to divert funds from his hard-pressed income streams or savings?

I'm sure I've seen it authoritatively claimed (sorry, don't remember where or by whom but it's bound to have included JB here) that compensation is still payable even if the loan has been completely paid off. The borrower has simply been making adjustments to his balance sheet, by moving moey around, yet the overall shortfall still exists. Why should it make a difference whether he's left short on the mortgage or on that big retirement treat he had been planning for many years?

I agree with you. I am not saying that it is right, only that the FSA have decided that is how it should be.

According to the expert on today's (and many previous) Working Lunch(s), the FSA have agreed with the endowment providers that you don't get anything.

Once again, I agree that it shouldn't make a difference.

But it does.

And that is the point I am making. Your idea of how it should be is not how it is. But this time I am posting a link to the proof, which unfortunately, is time limited, which was why I couldn't do it before.

tim

The only thing I can guess is that the lender is arguing that by adjusting your mortgage payments you have accepted that the endowment isn't going to perform as well as you were originally promised.

Otherwise you should have complained at that point about misselling and maybe converted your endowment into a repayment mortgage.

However, the people I know who have endowments have all paid their mortgage off completely before the endowment matures and have been keeping the endowment only because the final bonuses if the endowment runs to term make the future investment in the endowment sensible. (i.e. the projected maturity value minus current surrender value is greater than the future cost of the remaining payments to be made even though the endowment is predicted to show a shortfall at maturity)

Although one of those people who, I think has a pru endowment (was a different company originally but I can't remember which), is now finding that the annual increase in the value of their endowment is less than the annual premiums they are paying in.

Tim.

In message , tim..... writes

Its typical BBC misquoting I think. The guy says "I made a mis-selling claim and was told that I was mis-sold my endowment but because of the over payments I had made and the calculation they use to evaluate compensation they say that I am not entitled to any compensation, as my policy will pay off the current mortgage balance.

I feel that I am being unfairly treated. If I not paid anything off I would have received a fairly large sum of compensation but because I have I will not receive anything. Surely this cannot be fair!"

The key sentence is " because of the over payments I had made and the calculation they use".

It is a complicated case because he borrowed more and also overpaid. Nowhere near enough info is given.

The tests are simple :

Getting a Yes to 1 doesnt mean a payout. Many people fail at the 2 stage, and for many reasons. I think the key words are 'and the calculation they use'.

The guy then says " If I not paid anything off I would have received a fairly large sum of compensation but because I have I will not receive anything." This is mostly supposition on his part.

Jim

Hmm. The studio expert, Pat Bunton, appeared to know a lot of the background to this and similar cases and gave his firm opinion that "the Regulator has got it very wrong."

If it's the case that you can be refused compension solely because you successfully mitigated your losses, I would have thought common law must give you some comeback on the regulator.

Matti