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| Have I been mis-sold an endowment policy? | |
|
In recent times, the financial services sector has faced accusations of mis-selling. Its regulator, the Financial
Services Authority (FSA) has had to take serious action. Here is a brief synopsis of the events that led to this state
of affairs.
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| Full endowment policies guaranteed repayment | |
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The ‘full' endowment policy though more expensive than the equivalent repayment mortgage, did guarantee the repayment
of the mortgage loan at maturity, and, more often than not, provided a substantial tax-free lump sum payable in
addition. However, because of the extra expense, on a monthly basis, its popularity wavered.
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| A new kind of endowment policy | |
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To maintain levels of business, Life Assurance Companies developed ‘the low cost' endowment, which was less expensive
to cover each month. It often undercuts the repayment mortgage equivalent, but at the cost of the underwritten
guarantee - the basis of the ‘full' endowment. This meant more risk and also opened the way for unscrupulous selling.
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| Sales for commission and increased risk versions | |
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The commissions paid on the low-cost endowment could often exceed the total of the first year's premiums. It quickly
became popular with sales people as a way to generate large commission payments on the back of the boom in housing and
home ownership. Sales commissions were increased further with the introduction of the even riskier ‘unitised with
profits' versions and unit linked ‘Managed Fund' arrangements with life cover. Very often, people were sold endowments
unaware of the nature of the risk, and were led to believe that the endowment was ‘safe' and a guarantee of ultimate
mortgage repayment. Unfortunately many of the people who bought these policies and paid the premiums each month were
unaware that they had no guarantee that their home loans would be paid-off.
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| IF YOU THINK YOU MAY HAVE A CLAIM - CLICK HERE TO TAKE THE TEST | |
| HOW TO RECOGNISE A MIS-SOLD ENDOWMENT MORTGAGE - CLICK HERE | |
| TO MAKE A CLAIM NOW - CLICK HERE | |
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Telephone: 01252 361200 Fax: 01252 361201 | |