endowment policies

[me again]

in 1993 or 4 cant remember I took out an endowment policies on a mortage , after a few years I change to a repayment mortage instead < have just had a letter telling me that there is a large risk the endowment will not reach the required amount ,

I tried to claim from them before but after several letters I got one say that because I had change from a endowment to a repayment and had only kept the endoment as a saving policy they are not liable for any short fall , I am now thinging more deeply about this are they right or it still down to them for miss selling the policy

At the time I was told I would get In the reigon of 106k depentant of full term bonuses , its now looking more like 25k, just a little short !

[buildersmate]

For a kick-off, the statement that they aren't liable for mis-selling because you changed from an interest only mortgage (using the endowment policy to pay off the mortgage) to a repayment type is absolute tripe.
There is no link between mis-selling of endowments and the use to which the policy was to be used.
Time is running out under the FSA for making a claim - but you should go back to the original documents from the company that denied your claim (particularly if the reason given is as you state), then speak to the FSA.

[me again]

Thanks for your reply builder !

I have a feeling I didnt keep any of the docs for my first attempt at claiming , just chucked them in the bin.

[dasherman]

As I understand it,when you changed to a repayment mortgage you effectively removed the connection between your mortgage and the endowment. Hence it just became a savings vehicle similar to a S&S ISA, unit trust or pension.

Sorry but I don't see why you should be entitled to any compensation at all.

[buildersmate]

Sorry guys, but I don't think there is connection between the endowment and the mortgage. You may have originally sold an investment plan (the endowment) that would pay off your interest-only mortgage. I also has one of these but started to overpay the mortgage to get the capital sum down. I was actually denied a claim of mis-selling - but not because I overpaid the mortgage (effectively making it repayment) - but because I pre-date the period that the FSA would consider claims - some random date in 1987.
I stand by my statement - unless any other more knowledgeble bright spark comes along.

[redcrx]

surely it is still the same policy, regardless of whether the funds are now to pay off the mortgage or not?
it was taken out, like many others, on the understanding that it would pay a certain amount on its completion.
Endowments were never sold at that time as something that could go up or down. Thats why people are claiming theyve been miss-sold and are receiving compensation.

[buildersmate]

Precisely.

[me again]

Thanks for all your anawers
the fact that it is no long tied to my mortage is erelivant to me as no matter how you look at it it was a savings policy from the start saving to pay off my mortage or not , the grey area i think is going to be time scale !

thanks

[buildersmate]

No, the compensation is based upon the effect on the investment value of the policy - what the mis-seller 'promised' versus what actually happened to the product in the market-place.
Assumptions were then made that the 'promised value' would create enough return to cover the loan, with probably a bit over as well.
I repeat, the two are not linked inextricably together.

[factor-fiction]

I almost always agree with buildersmate but on this occasion I think i disagree partly. I think the calculation of compensation for endowment mis-selling is, as vibrasphere says, based on the position you would have been in if the mortgage had been a repayment mortgage. I don't think it is based on actual returns versus 'promised' returns.
I'll do some research.

[factor-fiction]

Have a look at this site.
http://www.financial-ombudsman.org.uk/publicat ions/ombudsman-news/35/calculating-compensatio n.htm
A key factor here is the circumstances in which you switched to repayment- if it was because you were warned about a shortfall so converted to repayment but made a conscious decision to keep it as a savings policy then a claim may be difficult.
The site also shows how compensation is worked out, and I think this is in line with what vibrasphere says.