Discussion about mis-selling of endowment mortgages in the 80s and 90s

[SexyGreyFox]

There would have been annual statements too and at some point, plenty of people would have been written to specifically to warn them that their endowment is not on track to cover the full amount and so they ought to make additional arrangements.

Wrong, I don't know why you and others keep saying this, perhaps because you want to believe that Banks and their Professionals wouldn't do this.
We were lied to and when the Government got involved the Banks couldn't defend themselves.

 

[dowie]

One of the reasons people keep mentioning the internet is because back in those days you couldn't find out the information yourself easily (if at all), so if as several people who experienced it have said in here, you go to multiple advisors and they all play down any risks or don't mention them, then how were you, back in the days of card catalogues at the library going to find out the truth yourself? Most people didn't have time to become a chartered accountant, or take a course in investing and finance to cover themselves for a mortgage.

Sorry, but that's getting a little bit hyperbolic, sure you don't have internet forums, money saving expert etc.. or review sites sure and of course, some of the advisors were cowboys (I appreciate that). There were still information packs, leaflets and promotional materials on the shelves in banks etc.. explaining these things and of course, you still have to fill out paperwork for these products.

You don't need to be a chartered accountant to understand the following:

1) A repayment mortgage involves you making a monthly repayment, a portion of which covers the interest on the loan and a portion of which pays down the principal until it is fully paid off exactly at the end of the term.

2) An interest-only mortgage involves you making a monthly repayment that only covers the interest on the loan, the principal remains unaffected and needs to be repaid at the end of the loan... in order to do this you will have an endowment policy which you'll also make payments into.

That they've pushed the endowment doesn't negate that you can quite easily know the basics of what you're buying in the same way that I could pick up information leaflets as a kid and find out about savings accounts without needing the internet, or indeed just read the Sunday Times money section.

 

[dowie]

Wrong, I don't know why you and others keep saying this, perhaps because you want to believe that Banks and their Professionals wouldn't do this.
We were lied to and when the Government got involved the Banks couldn't defend themselves.

Whether you were lied to or not by an advisor and any belief regarding that has absolutely no relevance to whether you were sent an annual statement.

That makes no sense at all tbh... you made regular monthly payments into both an interest only mortgage and an endowment policy (a combo of an investment and a life assurance policy) but didn't receive an annual statement over 20 or however many years? I don't understand how you could make a regular monthly payment and not want to have something sent to you to document it.

 

[Hagar]

IFA's frequently did not inform clients as to the extent of their rewards and fees from the first years of the endowment.
Yes there would have been an annual statement but this would have been a payments in and current value with bonuses. No projection as to future value except for the final bonuses anticipated. Which no lay person could calculate.
It was only in late 1990's, 2000's that customers got warnings on products that had been active for fifteen or twenty years.

Tldr:

Don't trust most who claim expertise, least of all financial ones.

I lost 5-10k, more on the upper limit of projection, but I did not lose my house and it is now history.

 

[Pipe & Slippers]

you still have to fill out paperwork for these products.

The IFA did it for you..you just signed at the bottom

 

[Pipe & Slippers]

IFA's frequently did not inform clients as to the extent of their rewards and fees from the first years of the endowment.
Yes there would have been an annual statement but this would have been a payments in and current value with bonuses. No projection as to future value except for the final bonuses anticipated. Which no lay person could calculate.

IIRC many people were pushed into with-profits funds, a scandal in itself, and the only people that can calculate their value, let alone projected value, and be able to explain how they did it, were actuaries with a minimum IQ of 14,702

 

[dlockers]

Tldr:

Don't trust most who claim expertise, least of all financial ones.

It's amazing that a group as vocal about the good old days needed to lose lots of money to understand this!

 

[Mercenary Keyboard Warrior]

Really the main issues were for those too young to remember. The banking industry was nothing like it looks like now.
Building societies were for mortgages really, and banks for bank accounts and investments.
Simple savings you put in building societies and hence they funded the mortgages basically.

You needed a relationship with a building society, start young, save regularly to stand a chance of getting a mortgage.
It wasn't just that price comparison sites didn't exist, you wouldn't have been able to get a mortgage from one of the other places you had no relationship with either.

The market was opened up progressively over time, without enough regulation.
General public only (as ever) saw the positives, missed the negatives.
So yes they were right they had trusted financial institutions, but they hadn't realised (some of them) that those institutions were changing.

It had been a highly restrictive, know your manager type environment, that was stale and not in fact great for many. (we don't like that Mr Smith, not sure about him, don't think we will lend him money to buy a house!. Now who is poor Mr Smith going to borrow from?)
When the deregulation came the banks swooped in and bought all the building societies (the 90s BS share boom for members). Pre this is was unusual to have a mortgage with a bank.

As odd as it sounds I am convinced people are more financially literate now. Not by a massive amount, but in general.
The opening up of the markets has forced more people to have a bit more knowledge, no bad thing.

People saying the compo given proves it was mis-sold are being very liberal with the truth here.
This was the first time of "mis-selling" and whilst for sure there would be cases of this, the industry was not able to provide any defence, there was no real record keeping of advice given and hence once a few really obvious ones won cases the whole reclaim industry started.
You can't fight a claim with no evidence.

 

[SexyGreyFox]

but didn't receive an annual statement over 20 or however many years?

No we didn't receive a statement until 1 year before it was over.
I know you find it hard to take this in but we were told we would get £14000 for the mortgage and £16000 lump sum.
Nobody showed us 3 different figures and we got excited at the best one so our brains turned to jelly, nobody explained we could get nothing, it was "This is what you'll get".
Just try and accept that 1000s and 1000s of us were conned by people we should trust, the Government got involved, the banks didn't fight it and laws were changed because of their behaviour.

 

[Kenai]

No we didn't receive a statement until 1 year before it was over.

Did you not ever get worried that your money might literally be going nowhere?

 

[SexyGreyFox]

Did you not ever get worried that your money might literally be going nowhere?

No because we were promised by trusted people in a bank that is what we would get.
I know you find it hard to believe but 1000s were conned and laws changed.

 

[dod]

No we didn't receive a statement until 1 year before it was over.
I know you find it hard to take this in but we were told we would get £14000 for the mortgage and £16000 lump sum.
Nobody showed us 3 different figures and we got excited at the best one so our brains turned to jelly, nobody explained we could get nothing, it was "This is what you'll get".
Just try and accept that 1000s and 1000s of us were conned by people we should trust, the Government got involved, the banks didn't fight it and laws were changed because of their behaviour.

In fairness I do remember that we got statements. The problem was that in the early years it was impossible to say whether or not the endowment would pay out what was being promised, the benefits weren't linear and depenmded on various performance bonuses and the mysterious "final bonus".

If I remember correctly it was about half way through ours we were advised that the projections had been revised and it "probably" wouldn't meet the full sum required but one of the options we got at that time was still "do nothing, returns may improve again". I'll have a look later, I might actually still have some of that paperwork

It was a bit of a mess looking back on it now.

 

[Kenai]

No because we were promised by trusted people in a bank that is what we would get.
I know you find it hard to believe but 1000s were conned and laws changed.

I find it hard to believe that someone would happily send money somewhere for nearly 20 years, on the promise that it would magically become worth more because "reasons", with apparently zero record that anyone was even receiving it or that it still existed in any capacity whatsoever.

I don't find it hard to believe that the industry pushed a product that was beneficial to their own commissions and downplayed the risks of the product they were selling.

 

[Mercenary Keyboard Warrior]

I find it hard to believe that someone would happily send money somewhere for nearly 20 years, on the promise that it would magically become worth more because "reasons", with apparently zero record that anyone was even receiving it or that it still existed in any capacity whatsoever.

I don't find it hard to believe that the industry pushed a product that was beneficial to their own commissions and downplayed the risks of the product they were selling.

Its amazing isn't it.
Thing is the magic beans took 19 years to germinate so couldn't see any evidence of them existing until that 19 years was up

 

[dowie]

IFA's frequently did not inform clients as to the extent of their rewards and fees from the first years of the endowment.
Yes there would have been an annual statement but this would have been a payments in and current value with bonuses. No projection as to future value except for the final bonuses anticipated. Which no lay person could calculate.
It was only in late 1990's, 2000's that customers got warnings on products that had been active for fifteen or twenty years.

Some would have a projection with the annual statement as standard, others perhaps not... the issue I'm questioning though is the claim that even an annual statement wasn't sent and that the poster had no clue the endowment policy was invested... that seems very suspect. Ditto to the claim that there was no way of knowing that pre-internet - that's total rubbish.

The IFA did it for you..you just signed at the bottom

It's not an IFA in these cases being mentioned in the thread but an advisor at the bank/building society, they'd have leaflets, promotional material in branch etc.. you'd have some paperwork to take with you. I don't believe for a moment that someone took out a mortgage, had no paperwork and made monthly payments for 20 years with no annual statements... they're just seeing a payment go out of their account every month and have no records of the product it is for?

No we didn't receive a statement until 1 year before it was over.

I think you're confusing this with a warning letter there, I doubt very much you didn't get an annual statement... whether you got a projection showing if you're on track to meet the target or not you should have had a statements detailing your payments and the value of the policy at that point in time etc..

I find it hard to believe that someone would happily send money somewhere for nearly 20 years, on the promise that it would magically become worth more because "reasons", with apparently zero record that anyone was even receiving it or that it still existed in any capacity whatsoever.

I don't find it hard to believe that the industry pushed a product that was beneficial to their own commissions and downplayed the risks of the product they were selling.

^^^ this, that's the bit I'm questioning.

 

[Feek]

We got a statement every year.

It showed the money we'd paid in and our balance.

The balance never changed because it was an interest only mortgage. It showed the outstanding interest, and payments made. They always pretty much equalled each other.

There were no projection figures, it was literally money paid in and the balance. Nothing more. There was nothing on them which indicated any problems.

The first we knew about it was when we got the red letter and that when I looked into sorting it, that's explained in my first post in this thread.

 

[dowie]

We got a statement every year.

It showed the money we'd paid in and our balance.

The balance never changed because it was an interest only mortgage. It showed the outstanding interest, and payments made. They always pretty much equalled each other.

There were no projection figures, it was literally money paid in and the balance. Nothing more. There was nothing on them which indicated any problems.

But that's the mortgage, that's separate. Did you not have any annual statements for the endowment policy that you paid into for 20 or so years?

 

[dlockers]

I think the thread has run its course tbh. There were just some people who were less financially experienced/competent who put all their trust into a salesmen; and others who didn't. People from both camps took out endowments - people from both camps won or lost. The poor processes gave some recourse to those who "lost out" on endowments.

/thread

 

[Feek]

But that's the mortgage, that's separate. Did you not have any annual statements for the endowment policy that you paid into for 20 or so years?

Yes and as far as I'm aware, there were no predictions. If there had been, I'd have dealt with it.

 

[SexyGreyFox]

But that's the mortgage, that's separate. Did you not have any annual statements for the endowment policy that you paid into for 20 or so years?

Yes we got the mortgage ones, we didn't get the endowment ones.

Talking to the Mrs we got our 'red letter' 1 year before it finished in 2003 so we just paid the £1200 we owed (actually it was about £1150).
I didn't know this but when the poo hit the fan she went to the bank to discuss it.

So let's give you some figures:
We paid £60 a month for our mortgage.
We paid £20 a month for our endowment.
We got £12850 off the endowment for our mortgage so over 20 years we got £53.50 a month back.
Take off the £1150 we owed and that turns out to be £45 month we got back.
If we had paid a 'normal' mortgage we would have nowhere near have paid an extra £45 a month on top of our £60 so we did OK, did make a bit of money back and didn't have a right to claim.
Some people however got totally ripped off.