ENDOWMENT MISSELLING CLAIM ADVICE

Most endowment misselling took place in the 1980’s and 1990’s at a time when the stock market was rising and seemed to offer riches to any individual or organisation that invested their money in stocks and shares. Coupled with the fact that the Chancellor of the Exchequer offered generous tax benefits on insurance policies, the lure of risk based investments, providing high commission to insurance brokers and agents was sufficient to entice many financial advisers to abandon caution, or indeed in some cases to be dishonest, in their quest to sign up customers to insurance based investments tied to loans used to purchase domestic property. The intention was that the insurance fund would be sufficient in due course, at the end of the term, to pay off a building society or bank loan that had been used to purchase the family home. Unfortunately things didn’t work out as planned and towards the end of the 1990’s the stock market faltered and eventually went into recession with many shares loosing considerable value resulting in impending shortfall of investment based funds.

The Financial Services Authority (FSA) stepped in to clear up the mess and regulations are now in force requiring compensation to be paid to anyone who has suffered a mortgage shortfall as a result of unfair treatment by a financial adviser. The regulations are effectively enforced on behalf of the FSA by the Financial Service Ombudsman (FSO) who has not set down any hard and fast rules as to exactly what endowment misselling is and how it should be defined. If an application for compensation is made to the FSO it will consider all the circumstances of the sale and if there is a degree of unfairness will find in favour of the applicant. There are a number of grounds that have been established since the inception of the scheme but they are not exclusive and a new situation will not preclude a successful claim. The most frequently used grounds for an application for compensation to the FOS are as follows :-

• The financial adviser did not carry out a fact find with the potential investor and as such was unable to properly advise him on his needs and requirements.
• The financial adviser did not discuss other methods of mortgage repayment and did not consider a straight repayment mortgage with the customer.
• The financial adviser did not advise that the fund was based on stock market investment with associated risk and did not establish the customers attitude to risk based investment.
• The financial adviser all but guaranteed that the fund would be sufficient at maturity to pay off the mortgage loan.
• The financial adviser did not consider the consequences of the customers retirement prior to the term of the insurance policy and the subsequent financial implications.
• The financial adviser knew of the existence of a previous policy and rather than topping up, advised cashing the policy and buying a new policy for the full amount, an illicit process known as churning.

If you would like free advice either complete and send the contact form or call the helpline and an expert adviser will discuss your potential no win no fee compensation claim at no cost to you. If after discussing your claim with us you wish to take the matter no further then you are under no obligation to do so and you will not be charged for our initial advice.