Endowment Mortgage Risks: Endowment policy claims & Endowment shortfall claim

Viewing the endowment risks objectively

The objective of this web-site is to make you aware of the problems surrounding the mis-selling of endowment risk policies linked to the repayment of your mortgage and the problems that can arise in the complaints process. With many policyholders yet to make a claim, it is wise to acquaint yourself with the risks associated in making such a complaint and the matters arising from this action. You will then have sufficient information to decide what to do, bearing in mind your personal and financial circumstances. It is important to realise if your endowment mortgage is on a critical path it is entirely your responsibility to fulfil your mortgage debt.

Over 8 Million Endowment Mortgage Policies were sold in the UK during the ’80s and ’90s

Policyholders were not given sufficient or accurate information concerning the risks involved in linking an endowment policy to the repayment of their mortgage at the time when it was sold and are now entitled to compensation (redress) as a result.

Endowment Risk #1 – the risk of doing nothing.

Having failed to do anything so far with regard to your endowment complaint, it must be assumed you are satisfied with the advice you were provided with at the point-of-sale. If that is not the case and you have been “waiting and seeing” you will no doubt have received reprojection letters from your endowment provider forecasting the future “high risk” of a shortfall at maturity.

Some of the firms sending these letters are trying to mitigate their own losses and are using these warning letters to implement a time-bar, under the Limitation Act. Should this underhand tactic work (and the Regulators seem happy with this) you will have no means of achieving any form of redress unless you react within certain time constraints and the forecasted shortfall will have to be paid from your own resources. As the consequences of not mitigating your loss are obvious, I would recommend you take action and the sooner the better.

We at CPH / Endowment Risk see the risk of doing nothing as by far the greatest risk. It would mean all the efforts of the Regulator and the £millions spent by my firm and others in highlighting this problem would have been wasted which would be a shame in getting it satisfactorily resolved because your compensation is what you are entitled to. Please at least make the effort and contact CPH before it is too late.

Endowment Shortfalls are now a certainty…

All CPH / Endowment Risk complaints have the communication of risk and its suitability as its central theme, which is at the heart of the modern endowments claims handling. For the future, our main task is to get the message across to the hundreds of thousands of endowment policyholders, who hitherto have done little or nothing to help themselves who have been hoping against hope that something will “turn up”. Frankly, in our view it is too late in the cycle for things to resolve themselves naturally as bonus rates on these policies continue to fall significantly. It is time to take action, as your redress is waiting for you because the Rules have been put in place to protect you from mis-selling. If you would care to complete the “policy review” section and allow one of the CPH Advisers to discuss the options open to you (under no obligation) you can then make a decision of how best to proceed. You may not realise that your home could be at stake if you do nothing. In addition, your retirement could be ruined by having to extend your mortgage when you should be enjoying the “fruits of your labour”.

If you are forced to sell your property consider the true cost of downsizing; the cost of stamp duty and bills from solicitors and estate agents and the sums needed of bringing your new home up to standard is ‘dead’ money. All because you were sold an endowment mortgage which more than likely you didn’t want in the first place!

Endowment Risk #2 – A significant percentage of people fail when handling their own endowment complaint… (Endowment shortfall)

The claims procedure involves the ‘tortuous’ process of proving beyond doubt the mis-selling of your endowment policy. So far only a small percentage of policyholders have taken any action, with mixed results.

Our research on this matter has revealed a reluctance of people to embark on a process of which they often have no knowledge and understanding. It occurs to us that it must be difficult to complain about something you don’t know much about, as the compliance issues raised in mounting a successful claim are often deeply complex. Moreover, one must prove beyond reasonable doubt that one was mis-sold a policy as the mere mention of performance issues will guarantee rejection. The onus of proof is on the complainant.

This is where the invaluable experience of CPH can help explain your complaint in the most relevant and appropriate way, in order to get the correct result for you.

CPH has developed a unique approach to complaint handling. This largely does away with the sorting out of who said what to whom at the point-of-sale, as this often occurred many years ago. Instead we concentrate exclusively on the evidence available (which the Firm holds) as this provides the only thread which links the situation then with the events which occurred today. We therefore expect to win every case we take because our interpretation of the evidence available is likely to prove that mis-selling took place. CPH provides the money to back-up your claim, as we operate on a no-win, no-fee basis.

The people who seemingly need the most help are the ones being failed by the system, which has been put in place to assist them in obtaining what is, after all, their entitlement. If you are worried how the complaints procedure works it is all done informally by letters, there are no appearances in court, no cross examination, or (hopefully) little involvment by yourselves. Finally on this subject you can only make one claim so make sure it is handled correctly by using CPH / Endowment Risk.

City Regulator decides against review of all endowment sales.

When Sir Howard Davies, Chairman of the Financial Services Authority (FSA), took the final decision in 2000 not to launch a pro-active review of all previous endowment sales, the battle lines were drawn. The only way forward for a policyholder to seek redress was the ‘tortuous’ process of making a complaint through existing procedures. Whilst no one was happy with this development at least it was a Decision and people could make their arrangements accordingly. Endowment mis-selling claims began in earnest in 2002. It was then that CPH launched their first website to help create a general awareness of the Endowment mis-selling Scandal.

Endowment Risk #3 – The Financial Services Authority (FSA) defines “Key Risk”.

A further major development then took place in 2002, when Mr. John Tiner (then the Chief Executive of the FSA) wrote to all firms involved in endowment complains suggesting he was unhappy with the general standard of complaints handling. He produced guidance notes, the major conclusion of which is that assessments (of endowment risk) should recognise “that the key risk for consumers is that the endowment may not repay the mortgage loan”. Furthermore, “this risk is different in nature and consequence from the usual investment risk of an endowment policy”.

As most firms had not even considered these matters, this made it more difficult for them to defend a complaint with key risk as its central theme. Some firms have since been dealt with by the FSA’s Enforcement for failures in their in-house Procedures based on the guidance letter and more are expected to follow. This is one of the reasons why CPH / Endowment Risk is now involved to such an extent because the firms simply cannot be trusted to handle their complaints properly, (also see Risk #5 below).

Endowment Risk #4 – Investment Risk.

As well as the key risk (which is nowadays referred to as the capital shortfall risk), there is the obvious risk that the recommended policy fails to perform well enough to repay the mortgage amount. In its defence, the firm who advised you is likely to say you were willing to accept such risk with the repayment of probably your largest debt in order to secure a tax free surplus at maturity, so therefore it was your own fault. In hindsight, it might appear as though you had taken leave of your senses but that was the recommendation by the firm as the most suitable way to repay your mortgage or more sinister this was the only offer ‘on the table’. This part of your claim has to be dealt with carefully and with skill because arguments based on performance are likely to be rejected and a fine line has to be successfully navigated to draw the distinction between performance and mis-selling. You will now begin to realise that consistently successful claims handling is not the ‘breeze in the park’ some ill informed pundits would have you believe as each set of circumstances are different.

CPH offers a professional endowment claims handling service. No win, No fee.

As mentioned earlier, in 2002 the decision was taken that CPH would offer a professional service on a no-win, no-fee basis (see tariff below) so that clients would have a wider choice of whether to make a complaint on their own behalf or to subcontract this task to a professionally qualified group. As CPH understood compliance issues and more importantly, what had gone wrong with the endowment approach to repaying a mortgage, we felt confident in improving upon the poor success rate of DIY complainers. The Endowment mis-selling Scandal was now manifest and our first decision was to design (and later perfect) a unique approach, which would ensure the maximum impact at the level to whom we were complaining, specifically based on capital shortfall and investment risk and the other matters arising. The major bonus with this focused approach was the experience since gained in receiving many thousands of victories we are able to view this from a position of strength and experience. Please refer to the list of testimonials on the right of this page for confirmation. Consider why our web-based novice competitors do not have any testimonials; one can only assume they haven’t got any! It may be of interest to you to know we have successfully negotiated well in excess of £30 million in compensation on behalf of our Clients.

Fee Tariff.

The cost of the service is one quarter (i.e.25%) of all sums of redress paid. There are no other deductions, so therefore you are ensured 75% of all receipts. This is strictly on a no-win, no-fee contingency basis, so your position is secured in the unlikely event that the redress be nil. The surrender value of your policy is specifically excluded, as this is your property.

To clear up any confusion that you may have in your mind, the method of calculating the compensation does not aim to make up any anticipated shortfall that you may be facing on your endowment policy at maturity, rather it aims to put you back into the position you would have been today in if you had been correctly advised to have a capital repayment mortgage from the outset. Therefore assuming you have, say a £10,000 shortfall at the maturity date, the loss is likely to be less at this point-in-time. Indeed, our average invoice is circa £750 implying an average loss of £3000. The rest of your mortgage can then be switched to a repayment approach over the same term which of course provides a guarantee of repayment – problem solved! Should you wish to keep your policy, as qualified advisers we will be able to advise on the pro’s and con’s of this for you.

Endowment Risk #5 – Nearly 50% of endowment claims are calculated incorrectly.

With thousands of complaints successfully turned into victories every week, the last thing you would expect is the offer of compensation (redress) to be incorrectly calculated. Disappointingly, having dealt with all the major endowment firms, every single one of these struggle to get their redress figures consistently right. Just like CPH they have had 5 years experience, but relatively simple matters seem to confuse them. Complex issues are often way beyond their comprehension, which is unsurprising considering most are contractors to whom you are just a number. A DIY complainer would therefore have no idea that the amount offered may be incorrect and have no way of finding out. To accept an offer simply because it appears satisfactory is plain stupid because once it has been accepted this would be in ‘full and final settlement’. It is interesting to note that out of the thousands of victories we have had you can count on the fingers of one hand where the firm has mistakenly paid too much. You can draw your own conclusions why these firms underpay!

CPH has just concluded a case where the original offer was £300 and the firm has now agreed to pay over £25,000. The CPH philosophy on this issue is delightfully simple: “if it’s right that’s fine, if it’s wrong it will be put right” – end of story. Our skills in ensuring the compensation is correct have been reported in the press and our knowledge increases with every victory we receive. Novice complaint handlers often seek our help in some of their cases!

Finally, we have enough confidence in our ability to offer all endowment mortgage policyholders a review on a free of charge basis. We will provide an honest appraisal of the likely outcome of the complaint process if we are handling your complaint as there would be no point pursuing an un-winnable case and wasting your time and ours. Some firms have introduced a time-bar because they wish to mitigate their losses. We therefore recommend an early enquiry because time is fast running out.

Assuming that you would wish to proceed to the next stage, CPH Financial Advisory Services’ in-house endowment experts will review your situation and offer advice on your potential endowment claim. The link below will take you to the ‘review policy’ page. Complete and submit the form and one of our Advisers will telephone you shortly. This service is free of charge and without any obligation.

http://endowmentrisk.co.uk