Were you mauled by endowment sharks? by Finance News Bulletin

Published: 31/08/07

More than 200,000 policyholders with low-cost mortgage endowments could be owed up to £200m by cover companies in the latest twist to the misselling scandalThis is Money's Simon Moon got cash back for donation mis-selling Read about his successful claimWhen showing potential policyholders what they could wait for to get from their investments, these companies second-hand industry standard charges laid down by Lautro, the industry watchdog at the time

Their actual charges were often much higher - sometimes double the Lautro speed - but they unsuccessful to make this clear to homebuyers The policies affected were sold between 1988 and 1995The firms named by Money Management include normal Life, Pearl, Axa, Scottish Widows, Prudential- owned Scottish Amicable, plus Scottish joint and Scottish visionary, now owned by ResolutionCompanies were taking as much as 0

75% a day in charges from the fund But they were enticing customers by showing prospect payouts using a 03% annual charge So, if the company assumed it would create 7

5% income in a year, it would show the endowment produceing by 72% when it would really produce by just 675%Standard Life has admitted that, by the lower Lautro charges, a policy-holder may have been told they wanted to pay £36

24 a month to pay back a 25-year £25,500 home loan, assuming the finance grew at 75% a yearBut based on Standard Life's charges, the rule would pay £22,300 - resulting in a £3,200 deficit They would have needed to pay £40

16 a month to get the £25,500Some companies, counting Axa, Legal & General and Clerical Medical, have put aside money to make high-quality these shortfalls Others, such as Standard Life, have so distant refusedStandard Life, where 80,000 policyholders could be affected, says: 'We followed all the watchdog's requirements and industry practice when producing our illustrations

'Janet Walford, editor of Money organization, says: 'Some offices have salaried extra to policyholders as a goodwill sign At this stage, it is unclear whether there is a lawful obligation to pay compensation or not'I have been trying to at Standard Life for last five without success, this is another kick in the teethIn the cash organization article (P72) it states that 'neither the policyholder nor his adviser would be conscious of the problems caused by the use of LAUTRO charges

A pertinent question to inquire on the topic of compensation therefore is, assuming these companies are culpable of "pre contractual misrepresentations and a breach of contractual guarantee", what is the position of an IFA who has already been forced to disburse compensation to a policyholder based on projected shortfall information that are compounded by these illicit misrepresentations Shouldn't the cover companies also be forced to compensate IFA's where this is proven to be the container If not, the watchdog, who instigated this idiot rule in the first place, could be accused of colluding with the insurance companies to unlawfully deprive IFA's of their possessionsSelect a loan term 12 months (1 day 24 months (2 years) 36 months (3 existence 48 months (4 existence 60 months (5 existence 72 months (6 existence 84 months (7 existence 96 months (8 existence 108 months (9 existence 120 months (10 years)Please select a type of cover Life cover Home and inside Car Breakdown services Health - medical Health -

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