Hi,

I took out an endowment policy with mortgage in 1992. The BS manager advised us that it would meet the mortgage and probably give us a lump sum too, although our written docs are vague on this.

We specifically stated that we were worried about Endowment performances as already peole were being advised of shortfalls. We were reassured that this would not happen as "the policy is regularly reviewed to make sure it is OK" Each year the price has gone up and we assumed this was as a result of the review.

When the hoo ha started again last year we were not worried as we assumed our policy was being regularly reviewed, therefore is came as a really bad shock when we got our letter through the door stating we had a projected £40K shortfall (policy for £70K).

After a panicy search we managed to find all our paperwork and I have now put in a complaint.

Anyone else in the same boat? Anyone actually getting anywhere? Any opinions on the likelyhood of any success?

I've passed being angry and shocked now, just very depressed :(

Mandy

-- Mandy (mandy.edwards@ukonline.co.uk), November 15, 2001

Answers

First of all look carefully at the original written quotation. There should be a copy of the terms and conditions and complaints procedures. Some firms print this in very small, grey, letters on the back of their letters. This should tell you how to proceed.

All investment advisors or tied agents (agents giving you advice who can only sell the products of the company he works for) have a fiduciary duty to give "Best Advice". If they have given you advice as they have here which is not of the best then you have recall to the PIA (The Personal Investment Authority) If it was a Building Society employee who gave you that advice then the first point of action is to write to the Manager of the branch involved. They have to have a formal complaints procedure which they are obligated to disclose to you. If you don't get any help there, write direct to the compliance department at their head office. Failing that, write directly to the PIA with copies of all your correspondence.

If it was an Independent Financial Advisor who gave you the advice then a similar procedure applies. Most large firms of Consultants have Compliance Departments, and all have a legal duty to give you best advice. Find out from them if they are truly independent or in fact are tied to only one Insurance Company as are some banks and building societies. If you have problems or need technical advice on what should have happened with your endowment policy and the returns you could have expected, go to an Independent Financial Advisor who will work for you on a fee paying basis. Even if you have to pay a fee it could be well worth it when set against such a large potential shotfall in your endowment policy. One important point though, don't let anyone tell you to cash in your endowment policy to take out a new one. If you must get rid of your policy there is a market in 2nd hand endowment policies. Be careful also about accepting any advice to take out another endowment policy, these pay a lot of commission to the selling agent. Keep on a fee paying basis and ensure that any top up policy is on a nil commission basis with any possible commission being reinvested in the policy.

There have been some horror stories, but there have also been a lot of stories where compensation has been granted, some big sums have been paid out. I hope you manage to get somewhere with the BS.

-- Anne Veasey (anneveasey@surfanytime.co.uk), January 19, 2002.