Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

Does Anyone have any experience of this situation

I worked in the Life Insurance Industry as a self employed agent (IFA)
from 1994 until 2001.

I have recently been told by the Financial Ombusdsman Service that I am
personally liable for every life insurance based investment (Endowment)
that I sold as an agent of a Life Insurance Company.........that fails
to perform well enough to pay the investors mortgage.

Doh.......How long am I liable?

Well.......My estate is liable until my death plus 3 years. (I'm not
joking)

I have been out of this business since 2001 but the Financial Ombudsman
Service charges =A3365.00 for each case they investigate, valid or not.
Just that charge alone...well you can fill in the blanks.

If anyone has any experience they could pass on.........they would be
most appreciated

Or if anyone knows of a IFA's NewsGroup or Blog where these things are
discussed.

The Life Insurance companies that sold these products seemed to have
shoved all of the blame onto IFA's.

There were adverts in your face everywhere in the early 90's. We sold
them as we were taught to by govt appoved teachers.
And sometimes we did not sell them at all.......customers who saw the
advertizing were directed to us by the Life Insurance Companies.

Practically No one listened to any words of caution from us.

We were always taught to make sure the customer understood that in an
endowment mortgage, the mortgage is Interest only, and that the house
would be paid for by a term dependent on the performance of the
Investment Portion of the endowment, and that there are no guarantees
on the amount of return......but the dear old UK public always just
looked trustingly at the Illustration issued by the Insurance Company,
Norwich Union, Legal and General Etc...... and said thats for me. Early
mortgage payoff, and/or extra cash at the end....where do I sign?

The figures on the Endowment Illustrations came from nowhere else BUT
the Life Insurance Companies.

And what about cancelled contracts that have already been
compensated.....What happens if at the end of the contract an
embittered ex IFA finds out that had the Endowment run it's full course
it would have realised the amount required, does the customer have to
give the money back?

Surely IFA's can not be the only ones that are responsible.

Big Business has got away relatively scot free while putting the blame
on small businesses and even smaller individuals.

We were the ones that first rang the alarm bells with the bullshit
claims we were getting from the Life Inspector (Insurance Company
Salesmen who persuade us to use their products) started to look too far
fetched for comfort

To add insult to injury I have heard stories of Ex IFA and Insurance
sales team managers, working in the Endowment claims
"Industry"

WE (The UK Public) all thought "Which Magazine" were brave souls taking
on the might of the Banks and Insurance companies ............but I
guess that at some point the must have agreed to take the heat off them
and hit the little guys instead.

And the home owners?.....No point in throwing good money after
percieved bad and giving the Life Companies even more of your money
mis-handle......their easiest answer is to put =A350.00 a month into
National Savings and build an emergency fund. If at the end of your
mortgage it's not needed........well then give to a deserving charity.

Surely there is some brave, justice minded journalist out there willing
to take up the cudgels for us....and when it gets started, this story
will run and run.

Bob Cratchit

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

Bob_Cratchit wrote:
> Does Anyone have any experience of this situation
>
> I worked in the Life Insurance Industry as a self employed agent (IFA)
> from 1994 until 2001.
>
> I have recently been told by the Financial Ombusdsman Service that I
> am personally liable for every life insurance based investment
> (Endowment) that I sold as an agent of a Life Insurance
> Company.........that fails to perform well enough to pay the
> investors mortgage.
>
> Doh.......How long am I liable?
>
> Well.......My estate is liable until my death plus 3 years. (I'm not
> joking)
>
> I have been out of this business since 2001 but the Financial
> Ombudsman Service charges £365.00 for each case they investigate,
> valid or not. Just that charge alone...well you can fill in the
> blanks.
>
> If anyone has any experience they could pass on.........they would be
> most appreciated
>
> Or if anyone knows of a IFA's NewsGroup or Blog where these things are
> discussed.
>
> The Life Insurance companies that sold these products seemed to have
> shoved all of the blame onto IFA's.
>
> There were adverts in your face everywhere in the early 90's. We sold
> them as we were taught to by govt appoved teachers.
> And sometimes we did not sell them at all.......customers who saw the
> advertizing were directed to us by the Life Insurance Companies.
>
> Practically No one listened to any words of caution from us.
>
> We were always taught to make sure the customer understood that in an
> endowment mortgage, the mortgage is Interest only, and that the house
> would be paid for by a term dependent on the performance of the
> Investment Portion of the endowment, and that there are no guarantees
> on the amount of return......but the dear old UK public always just
> looked trustingly at the Illustration issued by the Insurance Company,
> Norwich Union, Legal and General Etc...... and said thats for me.
> Early mortgage payoff, and/or extra cash at the end....where do I
> sign?
>
> The figures on the Endowment Illustrations came from nowhere else BUT
> the Life Insurance Companies.
>
> And what about cancelled contracts that have already been
> compensated.....What happens if at the end of the contract an
> embittered ex IFA finds out that had the Endowment run it's full
> course it would have realised the amount required, does the customer
> have to give the money back?
>
> Surely IFA's can not be the only ones that are responsible.
>
> Big Business has got away relatively scot free while putting the blame
> on small businesses and even smaller individuals.
>
> We were the ones that first rang the alarm bells with the bullshit
> claims we were getting from the Life Inspector (Insurance Company
> Salesmen who persuade us to use their products) started to look too
> far fetched for comfort
>
> To add insult to injury I have heard stories of Ex IFA and Insurance
> sales team managers, working in the Endowment claims
> "Industry"
>
> WE (The UK Public) all thought "Which Magazine" were brave souls
> taking on the might of the Banks and Insurance companies
> ............but I guess that at some point the must have agreed to
> take the heat off them and hit the little guys instead.
>
> And the home owners?.....No point in throwing good money after
> percieved bad and giving the Life Companies even more of your money
> mis-handle......their easiest answer is to put £50.00 a month into
> National Savings and build an emergency fund. If at the end of your
> mortgage it's not needed........well then give to a deserving charity.
>
> Surely there is some brave, justice minded journalist out there
> willing to take up the cudgels for us....and when it gets started,
> this story will run and run.
>
> Bob Cratchit

You have my sympathy.

FWIW, I have an endowment and have no problems with it at all, I think
there's been a lot of media scare stories going on here. At the end of the
day, interest is low so they are underperforming, 10 years ago it was the
opposite and were more popular. In 10 years time it might have gone full
circle again.

And even if interest rates stay low and the endowment underperforms, I'm
sure I can figure out some way of saving a bit of cash over the next 15
years. Since interest rates are low, the money I have to pay as interest to
the mortgage lender is lower, so there's the money I have available for
saving?!

R.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Bob_Cratchit" <> wrote in message
news:
Does Anyone have any experience of this situation

I worked in the Life Insurance Industry as a self employed agent (IFA)
from 1994 until 2001.

I have recently been told by the Financial Ombusdsman Service that I am
personally liable for every life insurance based investment (Endowment)
that I sold as an agent of a Life Insurance Company.........that fails
to perform well enough to pay the investors mortgage.

Doh.......How long am I liable?

Well.......My estate is liable until my death plus 3 years. (I'm not
joking)

I have been out of this business since 2001 but the Financial Ombudsman
Service charges £365.00 for each case they investigate, valid or not.
Just that charge alone...well you can fill in the blanks.

If anyone has any experience they could pass on.........they would be
most appreciated

Or if anyone knows of a IFA's NewsGroup or Blog where these things are
discussed.

The Life Insurance companies that sold these products seemed to have
shoved all of the blame onto IFA's.

There were adverts in your face everywhere in the early 90's. We sold
them as we were taught to by govt appoved teachers.
And sometimes we did not sell them at all.......customers who saw the
advertizing were directed to us by the Life Insurance Companies.

Practically No one listened to any words of caution from us.

We were always taught to make sure the customer understood that in an
endowment mortgage, the mortgage is Interest only, and that the house
would be paid for by a term dependent on the performance of the
Investment Portion of the endowment, and that there are no guarantees
on the amount of return......but the dear old UK public always just
looked trustingly at the Illustration issued by the Insurance Company,
Norwich Union, Legal and General Etc...... and said thats for me. Early
mortgage payoff, and/or extra cash at the end....where do I sign?

The figures on the Endowment Illustrations came from nowhere else BUT
the Life Insurance Companies.

And what about cancelled contracts that have already been
compensated.....What happens if at the end of the contract an
embittered ex IFA finds out that had the Endowment run it's full course
it would have realised the amount required, does the customer have to
give the money back?

Surely IFA's can not be the only ones that are responsible.

Big Business has got away relatively scot free while putting the blame
on small businesses and even smaller individuals.

We were the ones that first rang the alarm bells with the bullshit
claims we were getting from the Life Inspector (Insurance Company
Salesmen who persuade us to use their products) started to look too far
fetched for comfort

To add insult to injury I have heard stories of Ex IFA and Insurance
sales team managers, working in the Endowment claims
"Industry"

WE (The UK Public) all thought "Which Magazine" were brave souls taking
on the might of the Banks and Insurance companies ............but I
guess that at some point the must have agreed to take the heat off them
and hit the little guys instead.

And the home owners?.....No point in throwing good money after
percieved bad and giving the Life Companies even more of your money
mis-handle......their easiest answer is to put £50.00 a month into
National Savings and build an emergency fund. If at the end of your
mortgage it's not needed........well then give to a deserving charity.

Surely there is some brave, justice minded journalist out there willing
to take up the cudgels for us....and when it gets started, this story
will run and run.

Bob Cratchit

-----

Some of the blame has to lie with the agent, as they received commission on
every policy sold. Some agents (and no espersions are cast on your character
in that comment), knowingly missold policies and collected hugh
bonuses/commission fees, aware that they would have left the industry once
the policies started to mature.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

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Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

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Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"legal eagle" wrote
> FFS learnt to post properly you dickhead. Snip
> irrelivant material and quote previous which is relivant.

And perhaps you should learn to spell?

"legal eagle" wrote
> And they had no influence whatsoever on the performance
> of the policy. All they could use to indicate future performance
> was historical results, which were favourable at the time.

But don't forget:- "Past performance is no guide to the future..."

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

ABC wrote:
> Some of the blame has to lie with the agent, as they received commission on
> every policy sold. Some agents (and no espersions are cast on your character
> in that comment), knowingly missold policies and collected hugh
> bonuses/commission fees, aware that they would have left the industry once
> the policies started to mature.

Excuse me but you are just repeating phrases that you have read in the
press

Misselling is a claptrap word in this context. Do you imagine there are
2 types of customer?
1. One that doesn't mind losing money
2. One that does

The Huge bonuses/commission fees you mention are spread out over a 4
year period during which customers are bombarded with literature from
the Life Insurance companies re-inforcing the belief that they are not
only going to pay off their mortgage but have money over to "realise
their dreams"

You should be aware that commissions on Endowments were half the amount
of commissions on straight Life Insurance, but against the advertising
at the time the majority of customers opted for endownments and now
regret it. And expect IFA's to take the blame for falling for the Life
Insurance Companies mis-advertising.

As for your point "leaving the industry after they mature" as I said at
the beginning of this thread, Ex IFA's are STILL responsible.

BTW there are companies that are taking advantage of the media induced
panic. These companies buy or auction endowments to NEW investors who
get all the money that the ORIGINAL Investor WOULD have got. Plus the
added bonus that if the ORIGINAL Investor dies earlier........this NEW
investor gets his money quicker and the ORIGINAL family gets nothing on
the death of a partner.





Regards Bob Cratchit
stiil working after 163 years

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Bob_Cratchit" <> wrote in message
news:
> ABC wrote:
>> Some of the blame has to lie with the agent, as they received commission
>> on
>> every policy sold. Some agents (and no espersions are cast on your
>> character
>> in that comment), knowingly missold policies and collected hugh
>> bonuses/commission fees, aware that they would have left the industry
>> once
>> the policies started to mature.
>
> Excuse me but you are just repeating phrases that you have read in the
> press
>
> Misselling is a claptrap word in this context. Do you imagine there are
> 2 types of customer?
> 1. One that doesn't mind losing money
> 2. One that does
>
> The Huge bonuses/commission fees you mention are spread out over a 4
> year period during which customers are bombarded with literature from
> the Life Insurance companies re-inforcing the belief that they are not
> only going to pay off their mortgage but have money over to "realise
> their dreams"
>
> You should be aware that commissions on Endowments were half the amount
> of commissions on straight Life Insurance, but against the advertising
> at the time the majority of customers opted for endownments and now
> regret it. And expect IFA's to take the blame for falling for the Life
> Insurance Companies mis-advertising.
>
> As for your point "leaving the industry after they mature" as I said at
> the beginning of this thread, Ex IFA's are STILL responsible.
>
> BTW there are companies that are taking advantage of the media induced
> panic. These companies buy or auction endowments to NEW investors who
> get all the money that the ORIGINAL Investor WOULD have got. Plus the
> added bonus that if the ORIGINAL Investor dies earlier........this NEW
> investor gets his money quicker and the ORIGINAL family gets nothing on
> the death of a partner.
>
>
>
>
>
> Regards Bob Cratchit
> stiil working after 163 years


surely the way forward in this is to defend individual cases on the basis
that they were not missold i.e. customer was properly informed of risks,
sono non-disclosure or lack of understanding, plus, crucially, the policy as
it stood was suitable AT THE TIME.

I know this own't deal with everything, but it will give complainants a good
run for theior money and will defeat a fair few claims.

I have successfully defended such claims against major insurance companies,
where the policy was sold by a salesperson rather than an IFA. It seems to
me that complainants have a harder task than is sometimes recognised, at
least if the defence is competently conducted.

Andrew McGee

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

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Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

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Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

Full Name wrote:
> Do you have an URL(s) to any news item please?

No. I don't. I wish I could find a Blog or NG where these sort of
things are discussed.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Bob_Cratchit" <> wrote in message
news:

> The Life Insurance companies that sold these products seemed to have
> shoved all of the blame onto IFA's.

I don't know about you but when I applied for a mortgage the IFA clearly
didn't understand the product and appeared to be basing his advice solely on
his commission. I believe it is right and proper that such people are held
to account.

I know that when I looked at endowments in the late 80's I made the
assessment that they were a poor choice compared to repayment.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Bob_Cratchit" <> wrote in message
news:
>
> Full Name wrote:
>> Do you have an URL(s) to any news item please?
>
> No. I don't. I wish I could find a Blog or NG where these sort of
> things are discussed.
>

It would appear that you were an IFA and if so were NOT an agent of any life
company. Therefore you were (or should have been) acting in the client's
interests. If you fell for all the advertising hype then you were on the
same level as the customer. Surely the adviser's job is to find out what's
best for the client, regardless of what any life company is saying. If you
honestly felt that an endowment was the best thing for the client, and
explained to him why and also explained that there were risks involved and
what these risks were, then you have nothing to worry about. But if you
didn't, then a client might well feel aggrieved that a professional whom he
had consulted did not do his job properly.

Rob Graham

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

Rob graham wrote:
> It would appear that you were an IFA and if so were NOT an agent of any l=
ife
> company. Therefore you were (or should have been) acting in the client's
> interests. If you fell for all the advertising hype then you were on the
> same level as the customer.
> Surely the adviser's job is to find out what's
> best for the client, regardless of what any life company is saying. If you
> honestly felt that an endowment was the best thing for the client, and
> explained to him why and also explained that there were risks involved and
> what these risks were, then you have nothing to worry about. But if you
> didn't, then a client might well feel aggrieved that a professional whom =
he
> had consulted did not do his job properly.

Hindsight is a wonderful thing..........who would recommend endowments
now? but at the time......All financial pundits said how great they
were and had past results to back them up.

Even the newspapers were in on the act, carrying stories of how
repayment mortgages were really "Yearly Amortization" mortgages where
you actually continue to pay interest on money that has already been
paid back due to the fact that the capital paid is only deducted from
the mortgage once a year.

What other group of professionals is hounded in this way?

The dental profession in the 1960's thought it was a great idea to load
my natural teeth with silver fillings....whether they needed to or
not.. at =A330.00 a go via the NHS

That was then this is now

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

John wrote:
> "Bob_Cratchit" <> wrote in message
> news:
>
> > The Life Insurance companies that sold these products seemed to have
> > shoved all of the blame onto IFA's.
>
> I don't know about you but when I applied for a mortgage the IFA clearly
> didn't understand the product and appeared to be basing his advice solely on
> his commission. I believe it is right and proper that such people are held
> to account.

Your IFA must have been a silly billy.......contrary to popular myth,
endowments paid half of the commision that a straight life insurance
policy paid.......and during my time in the Life Insurance business, I
never met a widow who said her husband had too much Life Cover!

> I know that when I looked at endowments in the late 80's I made the
> assessment that they were a poor choice compared to repayment.

Well thats just not true unless you could see into the future...when
you looked at endowments in the late 80's, they not only looked
wonderful......the combined might of Insurance Companies, Banks, Govt
regulators and Financial were screaming that they were...........They
should be all be held to account along with IFA's

Very hard to urge caution in imprudent times.

Bob

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Richard Phillips" wrote
> At the end of the day, interest is low so they are underperforming, 10
> years ago it was the opposite and were more popular. In 10 years time it
> might have gone full circle again.

No, try using a little bit of logic.
Interest rates high
(1) repayment mortgage better due to repayment of capital which reduces
interest on loan.
(2) endownment very bad because no capital is repayed, so you pay more
interest on the loan.

Interest rates low
(1) endowment as good as they could ever be, since the extra interest
payments on the loan are less

Endowments are bad because the corrupt scummy IFA which sold them made huge
commissions on them, which us suckers have to pay for over many years.

P.S. The OP probably earned huge commissions by persuading (aka conning)
people to buy Endowments, if he becomes bankrupt then that is justice in
action.
This issue has helped to completely destroy public trust in financial
advisors.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Bob_Cratchit" <> wrote in message
news:
> John wrote:
>> "Bob_Cratchit" <> wrote in message
>> news:
>>
>> > The Life Insurance companies that sold these products seemed to have
>> > shoved all of the blame onto IFA's.
>>
>> I don't know about you but when I applied for a mortgage the IFA clearly
>> didn't understand the product and appeared to be basing his advice solely
>> on
>> his commission. I believe it is right and proper that such people are
>> held
>> to account.
>
> Your IFA must have been a silly billy.......contrary to popular myth,
> endowments paid half of the commision that a straight life insurance
> policy paid.......and during my time in the Life Insurance business, I
> never met a widow who said her husband had too much Life Cover!
>

Yes he clearly didn't understand financial mathematics. What has Life
Insurance got to do with it?


>> I know that when I looked at endowments in the late 80's I made the
>> assessment that they were a poor choice compared to repayment.
>
> Well thats just not true unless you could see into the future...when
> you looked at endowments in the late 80's, they not only looked
> wonderful......the combined might of Insurance Companies, Banks, Govt
> regulators and Financial were screaming that they were...........They
> should be all be held to account along with IFA's
>

It was a bet that the stock market would outperform the mortgage rate (which
averages maybe 2 to 3 % points above bond rates). On top of this were the
endowment management charges and penalties for early redemption.

To base a decision upon a couple of years of a boom market was ludicrous.

> Very hard to urge caution in imprudent times.
>

Not if you are really giving impartial advice and know what you are doing.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

Nuclear Winter wrote:
> Endowments are bad because the corrupt scummy IFA which sold them made huge
> commissions on them, which us suckers have to pay for over many years.

So when the insurance company quotation said that you would get enough
to pay off your mortgage plus some extra..........you told them where
to shove it......yeah right.

No.......you made a decision based on what you had read in newpapers
and mags.......at the time.

Don't believe me??????? Imagine an IFA with an appointment at your
house tonight to talk about endowments..........because of what you
have read you would not let him in now.

10 years ago you would have

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

On 14 Jul 2006 05:27:59 -0700, "Bob_Cratchit"
<> wrote:

>Your IFA must have been a silly billy.......contrary to popular myth,
>endowments paid half of the commision that a straight life insurance
>policy paid.......and during my time in the Life Insurance business, I
>never met a widow who said her husband had too much Life Cover!

I've often wondered how an adviser can be called 'independent' if he
gets a commission on sales, whatever the percentage.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Nuclear Winter" <> wrote in message
news:
> "Richard Phillips" wrote
> > At the end of the day, interest is low so they are underperforming, 10
> > years ago it was the opposite and were more popular. In 10 years time
it
> > might have gone full circle again.
>
> No, try using a little bit of logic.
> Interest rates high
> (1) repayment mortgage better due to repayment of capital which reduces
> interest on loan.

In the old days one got full tax relief on mortgage interest.


> (2) endownment very bad because no capital is repayed, so you pay more
> interest on the loan.
>

You also used to get tax relief on the endownment policy

> Interest rates low
> (1) endowment as good as they could ever be, since the extra interest
> payments on the loan are less
>

Which was bad because you were missing out on tax relief. which you could
then invest and pay off the laon.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

IanAl wrote:
> I've often wondered how an adviser can be called 'independent' if he
> gets a commission on sales, whatever the percentage.

Easy to answer........If you have 50 agencies all paying roughly the
same commission, or marketing charge as they call it now......You pick
the one most suitable for the client.

BTW if the customer deals directly with the Insurance company, the
commision.... is used in their marketing budget.......If the sale comes
to them via an IFA there is no marketing cost, therefore they pay this
amount to the IFA...........geddit

Regards Bob

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

On 14 Jul 2006 07:03:50 -0700,
Bob_Cratchit <> wrote:
>
> Nuclear Winter wrote:
>> Endowments are bad because the corrupt scummy IFA which sold them made huge
>> commissions on them, which us suckers have to pay for over many years.
>
> So when the insurance company quotation said that you would get enough
> to pay off your mortgage plus some extra..........you told them where
> to shove it......yeah right.
>
Yes, I did. I knew how endowments worked, and I knew how repayment
mortgages worked and I knew what I wanted well before I even applied for
my first mortgage.

I must have had half a dozen calls to "confirm" that I really wanted an
endowment, not a repayment, because nobody would consider a repayment
when even in the worst case endowment would leave me so much better off.

Judging by an endowment my partner took out at about the same time for
about the same amount I would expect the endowment to have almost paid
off the mortgage in another 10 years or so.

Instead I've got no mortgage, and any money I save is available for me
and doesn't have to be put aside to cover any possible shortfall. My
partner also has no mortgage so she'll get whatever the endowment pays
out - which looks like it will be slightly less than she would have got
if she'd paid the money into a high interest deposit account instead of
an endowment so what she's done effectively is given up access to the
money and ended up with a lower return!


My brother was in a final salary pension scheme. His comment to some of
his collegues when they couldn't understand why he didn't want to
transfer to a money purchase scheme "You're relying on the performance
of the stock market for the next 40 years; I'm relying on $BIG company
still being around." And their reply "but there's no way you won't be
better off in the money purchase scheme"


Of course, it's people like me who have been hit here. I wasn't mis-sold
my pension[1] but I am now seeing little or no bonuses being awarded,
partly because of the compensation being paid to those who were
mis-sold.


Tim.

[1] To be completely honest here, my pension contributions were so small
over this period that my "losses" as a result of mis selling are tiny in
monetary terms even if they might be significant in comparison to the
value of the pension. But then I never thought pensions were a sensible
place to lock up money while I had a mortgage so again, I was paying in
the minimum amount to maximise my employers contribution - which wasn't
much at all in those days.

--
God said, "div D = rho, div B = 0, curl E = - @B/@t, curl H = J + @D/@t,"
and there was light.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Bob_Cratchit" <> wrote in message
news:
>
> Nuclear Winter wrote:
>> Endowments are bad because the corrupt scummy IFA which sold them made
>> huge
>> commissions on them, which us suckers have to pay for over many years.
>
> So when the insurance company quotation said that you would get enough
> to pay off your mortgage plus some extra..........you told them where
> to shove it......yeah right.

No, I was a sucker and signed up, I trusted the IFA.
Did not know anything about about finance at that time (I was young).
Having had that experience, I would never trust an IFA again and wish that
those greedy scum go to hell.

P.S. I accept that some IFAs may not have sold endowments and may have acted
in the interests of their clients, but the majority just pushed endowments,
just like drug dealers push drugs.
Personally I think (if the UK were just) they should be looking at prison
for fraud, not merely facing the prospect of bankrucptcy.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

On 14 Jul 2006 09:24:28 -0700, "Bob_Cratchit"
<> wrote:

>IanAl wrote:
>> I've often wondered how an adviser can be called 'independent' if he
>> gets a commission on sales, whatever the percentage.
>
>Easy to answer........If you have 50 agencies all paying roughly the
>same commission, or marketing charge as they call it now......You pick
>the one most suitable for the client.

What's to stop the agencies from competing with one another to give
the most commission? In fact, what's the point in giving commission if
they don't do this? Commission is given to a salesman as an incentive
for them to sell more of a product.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

In message <>, Nuclear Winter
<> writes
>Endowments are bad because the corrupt scummy IFA

The majority were NOT sold by IFAs but by tied agents.
>which sold them made huge
>commissions on them, which us suckers have to pay for over many years.
>
>P.S. The OP probably earned huge commissions by persuading (aka conning)
>people to buy Endowments, if he becomes bankrupt then that is justice in
>action.
>This issue has helped to completely destroy public trust in financial
>advisors.
>
>

--
John Boyle

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

In message <>, IanAl
<> writes
>On 14 Jul 2006 05:27:59 -0700, "Bob_Cratchit"
><> wrote:
>
>>Your IFA must have been a silly billy.......contrary to popular myth,
>>endowments paid half of the commision that a straight life insurance
>>policy paid.......and during my time in the Life Insurance business, I
>>never met a widow who said her husband had too much Life Cover!
>
>I've often wondered how an adviser can be called 'independent' if he
>gets a commission on sales, whatever the percentage.

To be called 'Independent' the adviser must offer advice and products
from the whole of market AN must of remuneration terms which must
include a fee only option.
--
John Boyle

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

Bob_Cratchit <> wrote:

> IanAl wrote:
> > What's to stop the agencies from competing with one another to give
> > the most commission? In fact, what's the point in giving commission if
> > they don't do this? Commission is given to a salesman as an incentive
> > for them to sell more of a product.
>
> They were and still are told by the regulator (Currently the FSA) how
> much they are allowed to pay expressed as a percentage of the yearly
> premium. So they were all within a narrow range.
>
> Regulators have come and gone. Each one was a Limited company and each
> one dumped their responsibilities on the next one after they shut down.

No, regulators were (& are) funded by those they are supposed to protect
public against.

> FIMRA, PIA, LAUTRO MBBC they have all come and gone and taken their
> knighthoods with them..........but only the IFA's are STILL answerable.

Did you sell more than 20 pensions?

If so, at 5% initial commission, that's a decent start to your own
pension.

Did you sell more than 200 pensions?

If so, at 0.5% trail commission, you needn't bother paying in to your
own pension.

At least horse-racing tipsters don't continue to take a percentage of
punters throwing good money after bad.

If you (or, your estate) had forgone *all* comission/fees in return
for, say, 5% of any gains after the 25 years were up, then I might have
had more sympathy for you.

rgds, Alan
--
99 Ducati 748BP, 95 Ducati 600SS, 81 Guzzi Monza, 74 MV Agusta 350
"Ride to Work, Work to Ride" SI# 7.067 DoD#1930 PGP Key 0xBDED56C5

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

John Boyle <> wrote:

> In message <>, IanAl
> <> writes
> >On 14 Jul 2006 05:27:59 -0700, "Bob_Cratchit"
> ><> wrote:
> >
> >>Your IFA must have been a silly billy.......contrary to popular myth,
> >>endowments paid half of the commision that a straight life insurance
> >>policy paid.......and during my time in the Life Insurance business, I
> >>never met a widow who said her husband had too much Life Cover!
> >
> >I've often wondered how an adviser can be called 'independent' if he
> >gets a commission on sales, whatever the percentage.
>
> To be called 'Independent' the adviser must offer advice and products
> from the whole of market AN must of remuneration terms which must
> include a fee only option.

True, but IMO, it would be cheaper for many folks to study for CII
'qualifications' themselves rather than squander that money on fees *or*
commission.

OK, above G60 level, it might be worth paying for, but at that level one
could consider hireing one's own actuary rather than paying
barrister-level hourly rates for a glorified salesman.

rgds, Alan
--
99 Ducati 748BP, 95 Ducati 600SS, 81 Guzzi Monza, 74 MV Agusta 350
"Ride to Work, Work to Ride" SI# 7.067 DoD#1930 PGP Key 0xBDED56C5

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Alan Frame" wrote
> ... one could consider hireing one's own actuary rather than
> paying barrister-level hourly rates for a glorified salesman.

Just how cheap do you think an actuary's time is? ;-)

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Bob_Cratchit" wrote
> Regulators have come and gone. Each one was
> a Limited company and each one dumped their
> responsibilities on the next one after they shut down.
>
> FIMRA, PIA, LAUTRO MBBC they have all
> come and gone and taken their knighthoods with
> them..........but only the IFA's are STILL answerable.

.... only those stupid enough to set up
as a "sole-proprietor" / "sole-trader".

Why didn't *you* set up as a Limited Co?

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

On 14 Jul 2006 00:36:05 -0700, Bob_Cratchit wrote:

> Does Anyone have any experience of this situation
>
> I worked in the Life Insurance Industry as a self employed agent (IFA)
> from 1994 until 2001.
>
> I have recently been told by the Financial Ombusdsman Service that I am
> personally liable for every life insurance based investment (Endowment)
> that I sold as an agent of a Life Insurance Company.........that fails
> to perform well enough to pay the investors mortgage.
>
> Doh.......How long am I liable?

To me that is the most interesting question here. It seems that according
to the FSA and the FOS the answer is, "Forever." Usually section 14A of the
Limitation Act 1980 puts an absolute limitation cap on professional
negligence claims (in the absence of proven fraud) at 15 years from cause
of action accrued. However, the FSA/FOS claim that their rules are not
bound by that legislation. Which means that solicitors who sold a given
dodgy endowment mortgage 16 years ago get away with it (they are not
regulated by FSA) whereas an IFA is held liable for selling an identical
scheme. There could be a Judicial Review/Human Rights Act challenge on
this, I reckon.
--
Adrian Kelf

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

Bob_Cratchit <> posted
>
>
>Where are the crusading journalists?

I expect a lot of them bought endowment schemes and are now bitterly
regretting it. The last people they are going to crusade for are the
people who sold them down the river.

That's the trouble with making your money by pissing on everybody.
You've got nobody to help you when the chickens come home.

--
PeteM

--
Posted via a free Usenet account from

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"John Boyle" <> wrote in message
news:yqNM9HG32SuEFw+
> In message <>, IanAl
> <> writes
>>On 14 Jul 2006 05:27:59 -0700, "Bob_Cratchit"
>><> wrote:
>>
>>>Your IFA must have been a silly billy.......contrary to popular myth,
>>>endowments paid half of the commision that a straight life insurance
>>>policy paid.......and during my time in the Life Insurance business, I
>>>never met a widow who said her husband had too much Life Cover!
>>
>>I've often wondered how an adviser can be called 'independent' if he
>>gets a commission on sales, whatever the percentage.
>
> To be called 'Independent' the adviser must offer advice and products from
> the whole of market AN must of remuneration terms which must include a fee
> only option.
> --

Maybe nowadays.

At one point an IFA only had to show that he/she had compared the product
with 'one' other.

Neb

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

In message <>, Nebulous
<> writes
>>>I've often wondered how an adviser can be called 'independent' if he
>>>gets a commission on sales, whatever the percentage.
>>
>> To be called 'Independent' the adviser must offer advice and products from
>> the whole of market AN must of remuneration terms which must include a fee
>> only option.
>> --
>
>Maybe nowadays.

Yes, I should have made it clear that I was referring to what is only
the current definition of IFA.
>
>At one point an IFA only had to show that he/she had compared the product
>with 'one' other.
--
John Boyle

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Andrew McGee" <> wrote in message
>>
>> You should be aware that commissions on Endowments were half the amount
>> of commissions on straight Life Insurance, but against the advertising
>> at the time the majority of customers opted for endownments and now
>> regret it. And expect IFA's to take the blame for falling for the Life
>> Insurance Companies mis-advertising.

Ooh, Bob-Cratchit speak half-truths here, as he's not taking account of the
different size of the premiums. Commission for term assurance was around
100% of the first year's premiums, whilst the endowment commission was
around 50%, but based on a much larger premium.

The premium for a typical term assurance might be say 10 or 15 Pounds a
month, yielding say 150 Pounds in commission. The typical endowment premium
might be say 200 Pounds a month, yielding say 1200 Pounds in commission.

There was a huge financial incentive for salesmen to sell endowments.

>
> surely the way forward in this is to defend individual cases on the basis
> that they were not missold i.e. customer was properly informed of risks,
> sono non-disclosure or lack of understanding, plus, crucially, the policy
> as it stood was suitable AT THE TIME.
>

Clearly, that would be a proper defence. The problem that IFAs face is
threefold:-

1. Their records were often inadequate. As a breed, salesmen are generally
more suited to talking rather than writing things down. So, the required
warnings were not always put in writing. Bob C does not say whether he has
kept all his records from his IFA days. As a self-employed individual, he
should of course have done so.

2. They may indeed have been too optimistic about future returns and may
have failed themselves to understand the risks. Bob C puts himself in this
category, saying that he was misled by the life assurance companies.

3. Sadly, some clients appear to be prepared to 'remember' the salesman
saying things that the salesman simply did not say.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Bob_Cratchit" <> wrote in message

Or if anyone knows of a IFA's NewsGroup or Blog where these things are
discussed.

------------------------------------------------------------ -------------------------

Yes, here:

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Bob_Cratchit" <> wrote in message

> But if you
> didn't, then a client might well feel aggrieved that a professional whom
> he
> had consulted did not do his job properly.

Hindsight is a wonderful thing..........who would recommend endowments
now? but at the time......All financial pundits said how great they
were and had past results to back them up.

------------------------------------------------------------ ----------------------

I worked as an actuary throughout that period (not in the life assurance
industry) and I actively counselled people against taking out endowments.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Bob_Cratchit" <> wrote in message
>
> Your IFA must have been a silly billy.......contrary to popular myth,
> endowments paid half of the commision that a straight life insurance
> policy paid.......

That statement alone speaks volumes against you.

Half the commission rate but on say 20 times the premium = 10 times as much
commission for selling an endowment.

If you used the same half-truths in selling life assurance, no wonder you
are in trouble.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"John" <> wrote in message
news:

>>
>
> It was a bet that the stock market would outperform the mortgage rate
> (which averages maybe 2 to 3 % points above bond rates). On top of this
> were the endowment management charges and penalties for early redemption.

This was precisely the argument I used at the time. However, you can also
factor in the tax that the life assurance company had to pay on its
investment returns, which simply reinforces your point.


>
> To base a decision upon a couple of years of a boom market was ludicrous.
>

Absolutely.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

GB wrote:
> Half the commission rate but on say 20 times the premium = 10 times as much
> commission for selling an endowment.
>
> If you used the same half-truths in selling life assurance, no wonder you
> are in trouble.

That may be true in the inflated house price South East, but it
certainly was not true in the rest of the UK and certainly not 12 years
ago.

No! Real men did real jobs and bought houses to provide homes for their
families based on 3.5 times a working mans income.........not as
speculation.

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

Post removed (X-No-Archive: yes)

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"legal eagle" <> wrote in message
news:44bba63d$0$22697$
> "Bob_Cratchit" <> wrote:
>
>>
>>GB wrote:
>>> Half the commission rate but on say 20 times the premium = 10 times as
>>> much
>>> commission for selling an endowment.
>>>
>>> If you used the same half-truths in selling life assurance, no wonder
>>> you
>>> are in trouble.
>>
>>That may be true in the inflated house price South East, but it
>>certainly was not true in the rest of the UK and certainly not 12 years
>>ago.
>
> Er, wrong. Life assurance was always fixed term, usually 10 years and
> fairly low premium. Endowments were usually a 25 year term with a much
> higher premium even in the freezing cold north. Endowments always
> attracted much higher commision, even in the north in the 80's.
>
Err no life assurance wasn't. A common one was a 25 years decreasing term
assurance to roughly follow the amount you would be due on a repayment
mortgage. Ten years would be stupid to cover a 25 year mortgage as your
circumstances might change and you could find it difficult to get more after
10 years.

Neb

Re: Endowments The Forgotton Scandal (how big Insurance Companies Unloaded their responsibilties)

"Bob_Cratchit" <> wrote in message

> The Huge bonuses/commission fees you mention are spread out over a 4
> year period during which customers are bombarded with literature from
> the Life Insurance companies re-inforcing the belief that they are not
> only going to pay off their mortgage but have money over to "realise
> their dreams"

Ah, so your defence is that you were a mere servant of evil, rather than the
evil master mind?

I agree that it is not just IFAs (who are really just sales people not
advisors), but it is that most of the entire industry is rotten at its core.