Endowment Claim

Briefly, no. Your failure to make payments does not affect whether the policy was *sold* correctly. If your complaint is upheld it may affect the level of compensation that is due to you, but it won't influence the company's decision as to whether the advice you received at the time of sale was suitable for you.

HTH

Laura.

Possibly, in that had it been a repayment mortgage, and you had suspended payments on it, you could be looking at repossession.

Good point, but he could have reverted to 'interest only' which is what he has, in effect, done. Without the lenders knowledge though I reckon.

"Jonathan Bryce" wrote

Surely the question of whether the policy was "mis-sold" can only depend on circumstances around the time of the actual sale??!

The salesman could only possibly take into account "current" (&" past") circumstances when trying to offer advice/recommendations at the time of sale - or do you think that all salesmen should be issued with (working!) crystal balls?? :-)

Ah, but there are two questions to be answered. The first is "Did mis-selling take place?", and as you say the answer to that can only depend on what was known at the time of the sale. But the second, which is only relevant once the first is answered in the affirmative, is "How much compensation is due?", and that is usually calculated on the basis of how much better a position the individual would be in had a repayment mortgage been taken instead.

"Ronald Raygun" wrote

Agreed. And the calculation of the compensation for the period prior to Jun

If flexibility in the event of financial difficulties was a consideration when advising that he took and endowment mortgage, and if the endowment mortgage gave additional flexibility, and he made use of it; then that would indicate that no mis-selling had taken place.

Compensation would surely be calculated with reference to the date on which a claim is submitted. Neil stopped paying his premiums in June, but is only now thinking about making a claim. So the reference date would not be June 2003, would it? More like November.

"Jonathan Bryce" wrote

Unfortunately, people often change their minds - on attitiude to risk, or to flexibility, or whatever. Might not the OP's personal circumstances in Jun 2003 have been different than they were at the time of sale, hence giving a different attitude to flexibility?

"Ronald Raygun" wrote

I realise that - but was suggesting that the calculation may be split into two, the first part for the period before Jun 2003 and the second for the period after?

Period upto Jun 2003 calculated based on continuing to pay premiums (as they were). Period Jun 2003 to Nov 2003 calculated based on premiums having ceased.

Should the first part be any different depending on actual decisions/outcomes in/after Jun 2003?

What would that achieve? His position in June is hypothetical and irrelevant. His position in November is hypothetical and relevant.

Compensation would be sought for the consequences of one decision only, that taken at time of sale. You need to work out the hypothetical position in which he would be had the decision gone the other way, and compare that with his actual position in November 2003.

A complication arises if, as might well be the case, his regular monthly outgoings had been more with the repayment option, this may have brought forward the point in time at which he would have had to reduce his payments by, say, suspending his "overpayments" and temporarily going to interest-only, or it might have caused him actually to go into full-blown arrears.

Neither way is his interim hypothetical position in June of any more than passing interest, and it would have no bearing on the size of his claim.

"Ronald Raygun" wrote

"Ronald Raygun" wrote

When modelling the hypothetical position, surely you will need to consider what would have happened, had he used a repayment mortgage instead of the endowment one? In this consideration, you need to come up with a likely course of events under the "hypothetical" scenario - eg he *might* have reduced his payments by the same amount in June as he did with the endowment, or he *might* have reduced them further, or he *might* not have reduced them at all!

All I was suggesting is that the "hypothetical history" before June 2003 should not be affected by the "actual history" *in* June 2003...

"Ronald Raygun" wrote

... which is the result of the period upto June 2003 combined with the period from Jun 2003 to Nov 2003.

"Ronald Raygun" wrote

I suspect that the calculations will not be that precise. When considering the "hypothetical situation", you could argue (as you have here) that, other things being the same, this point in time would have happened earlier. You could also argue that he may well have "tightened his belt" more under the hypothetical situation, knowing that he had higher mortgage payments to make, and hence it may still have happened in June 2003.

I'd expect the calculations instead to effectively assume that he would have been able to make any higher payments being modelled, and allow for the opportunity cost by rolling-up the difference in contributions at a suitable rate of interest.

"Ronald Raygun" wrote

I was not suggesting that the hypothetical position in June should actually be calculated; simply that any course of events being modelled in the "hypothetical history" prior to June 2003 should *not* be affected by the actual course of events during June 2003. Is that not fair?

I wouldn't regard missing premiums, which break the terms of the contract and are not 'features', as being flexibility. I would regard the ability to convert the repayment type from repayment to interest only, or to extend the repayment period, as being 'flexibility'.

I wouldn't regard missing premiums, which break the terms of the contract and are not 'features', as being flexibility. I would regard the ability to convert the repayment type from repayment to interest only, or to extend the repayment period, as being 'flexibility'.

Yup, agreed.

If that's what you meant, I'm sorry I failed to get that impression from what you actually said. It is of course correct, because the two scenarios are basically in different universes and cannot influence each other.

On the other hand, the two scenarios share a common influence, namely his circumstances of shortage of funds. This shortage led, in the actual scenario, to his stopping premiums in June. Depending on the difference in monthly cost of the two scenarios, it is fair to suppose that any action he may or may not have needed to take as a result of this shortage, may have been taken in June, or earlier, or later, and it is difficult to guess which of the sub-cases you mention above is the likeliest.

If that's what you meant, I'm sorry I failed to get that impression from what you actually said. It is of course correct, because the two scenarios are basically in different universes and cannot influence each other. [There's a terrible echo in here]

It certainly is, but it is not fair to exclude the *cause* of those events because it will have influenced both scenarios. In the actual scenario, June was just when the camel's back happened to break. In a different scenario, it might have broken at a different time, or not at all. It might have crept up on him less slowly, which might have spurned him into taking more drastic action sooner, like getting a better-paid job or taking up a heroin import and wholesale sideline, and he could have gone on to buy the mortgage company.