The Endowment Diary

The Endowment Diary


The Endowment Mis-selling Debacle - one of the UK's worst financial scandals

Wednesday, May 31, 2006

D Day For Standard Life

D Day For Standard Life

Standard Life Assurance faces D Day today, as it faces the vote on whether to demutualise and sell shares next month.

The timing is unfortunate, as the world stock markets are currently in decline.

Chief Executive Officer Sandy Crombie said last night:

"What really matters is the appetite of investors to put money in Standard Life."

Standard Life currently plans to sell its shares at between 240p-290p. Policyholders must vote by today on the plan.

The IPO would value Standard Life at £5.5BN. It is somewhat ironic that Crombie back in 2000 fought against demutualisation, when the reward for policyholders would have been 10 times as much.

In 2000 over 1 million Standard Life policyholders voted against a stock sale, after Standard Life spent £10M on a campaign against it.

The company then incurred investment losses after selling £7.5BN pounds of stocks in 2004, to meet stricter rules from the Financial Services Authority.

In other words, this is a forced sale.

Tuesday, May 30, 2006

Gains On Endowments?

Gains On Endowments?

The FT claims that long-term mortgage endowment policyholders, who claimed for mis-selling are now making gains from their policies; according to a survey, the 25 year policies are faring the best.

We shall see.

Thursday, May 18, 2006

Scots Shortchanged

Scots Shortchanged

Linda Costelloe Baker, Scottish legal services ombudsman, warned on Tuesday that the legislation aimed at tightening the regulation of lawyers will not prevent the mis-selling of mortgage policies.

Ms Costelloe Baker said that last year she handled a record 482 complaints, about the way the Law Society of Scotland and Faculty of Advocates handled complaints about their members.

Around 25% of that related to endowment mis-selling complaints.

The Scottish Executive is proposing a new bill which will create an independent commission to handle complaints about lawyers. However, Ms Costelloe Baker said that this would leave the society in charge of practice rules.


"When I was looking at the bill I had endowment misselling complaints very much in mind. I kept on asking myself would this bill stop this happening again, and it wouldn't. Not while the actual regulation is done by the profession.

For example, the society did not expect solicitors to keep business files relating to the sale of endowment policies, so there is little or no evidence on which to base an investigation

Scots who bought policies from solicitors before December 1 2001, when the Financial Services and Markets Act came into effect, do not qualify for a deal from the Financial Ombudsman Service. They can claim compensation through the society, but only to a maximum of £1000.

A pretty raw deal by anyone's standards!

Monday, May 15, 2006



The Observer makes rather a good point, that those endowment policy holders who may be time barred from complaining may still be able to raise a valid claim for compensation, if their policy overruns into retirement.

Bottom line, don't let the life assurance companies that sold and poorly managed these useless policies get off the hook.

Wednesday, May 10, 2006

Prudential Time Bar

Prudential Time Bar

The Prudential is, according to the Association of British Insurers (ABI), the last major life assurance company to introduce time bars to their endowment policy holders wishing to complain about shortfalls on their endowment policies.

The ABI last year estimated that around 2.7 million households in Britain have an endowment policy that is needed to pay off all or part of a mortgage, and that over 80% face a shortfall.

ABI spokesman Malcolm Tarling said that:

"Time-barring will help focus people's minds. The longer people wait to file a legitimate complaint, the harder it is to establish the facts."

The Prudential says that it will write to 110,000 customers to tell them about the new, six-month deadline for complaints.

Legal & General and Nationwide Building Society have also introduced time barring in the last two months.

Not surprisingly the insurance companies want to bring the matter to a close, as they are the ones who are being hit by the claims from their endowment policy holders.

This sorry pathetic mess could be sorted out at the stroke of a pen, if the insurance companies acted responsibly and underwrote these useless underperforming products which they foisted on the British public back in the 1980's.

Tuesday, May 02, 2006

The Policyholders Fight Back

The Policyholders Fight Back

Congratulations to Vincent Cunningham, who has succeeded in taking his life assurance company to court and winning compensation from them for their underperforming product.

This is reportedly the first case of its kind.

Cunningham has successfully sued Friends Provident for compensation on the shortfall on his policy, even though he failed to make a claim within three years of receiving a 'red warning letter' notifying him of a potential shortfall.

He was awarded £1500 by Reigate county court.

It should be noted that the case does not set a legal precedent, because it was heard in a county court. However, it could have implications for the thousands of hapless endowment policy holders who have been told they had run out of time to make a claim against their endowment providers.

As such, the case may encourage others to take a stand against the life assurance companies who are trying to impose their own time bar.

Where one leads, others will follow!

Here is the judge's ruling Vincent Cunnignham vs Friends Provident.