I will give you some information that will tell you what people who were told that their endowment would not mature with enough value to pay their mortgage should have done, instead of accepting what all companies said, and being forced into being pushed down the road to complain to the FSA for being a victim of ‘the miss-selling scandal’ as it became known.
What I did for clients of mine was to tell them all the information I have just given you, and advised them not to accept that it was miss-sold, but to accuse the Co. of false accounting; a charge which takes into consideration any money a Co. makes from false advertising, and that the use of the word ‘endowment’ was illegal, and was used to give false information to the clients.
And as a direct result of this advice, clients of mine had their AIMP (accelerated investments mortgage policy) honoured by the Co., and were also guaranteed that their sum assured would be paid as a minimum pay-out upon maturity, providing they kept up their monthly payments. And that is what is known in law as setting precedence, and that I will explain further on in this story.
I may seem to have done what I said I would try not to do, and have become a bit technical in my explanation of these matters; but believe me this really is a simplified version of the way insurance companies and banks ripped everyone off, and how thus far, they have managed to get away with it. So bear with me while I explain just one more policy.
Well what can I say about this one? It was supposed to do everything except make you a cup of tea in bed! The brochure had a sign post on its front cover showing the client everything it could be used for — school fees, mortgages, retirement, savings and investment, weddings, and of course valuable life cover. And if that wasn’t enough, you could have it with, or without the life cover, and there was a withdrawal facility in case you needed money and didn’t want to cash the policy in, and you could, if you wanted, pay whatever you withdrew back at any time. Mind you, that facility came with this warning, and I quote: ‘If you use this facility and choose not to repay the loan, this may affect the maturity value, and produce less than was quoted.’
This was probably the worst and most illegal policy ever produced by any insurance company in the world, and eventually caused panic the like of which you could not imagine in the London & Manchester Assurance Company, that I would laugh at, if it wasn’t so serious.
So in my attempt to explain what I have just written without getting too technical, I will try and explain it like this: First, there was no maturity because it was a whole of life policy. Second, a lot of mortgage lenders and banks would not accept it as a mortgage policy. Third, it wasn’t a savings and investment policy. Fourth, it was illegal to have been sold without life cover; it certainly wasn’t a policy that would benefit you in retirement. In other words, this policy was completely useless and an utter rip-off for the clients!
And it gets worse. When the FSA started tightening up the way insurance companies sold and advertised policies, ‘The Lifespan’ was condemned by them and the company ofLondon&Manchesterwas told that the clients that had purchased this policy had to be informed that it was a life cover policy on a ‘Whole of Life Term’.
And what did the Company tell its sales force? They used every guttersnipe trick they could think of to stop people being made aware of all the facts. Let me tell you how they did this.
The first thing was, we were told that the policy had been sold wrongly, and that it had to have life cover attached to become legal, so get out there and tell those clients who have taken out the policy without life cover, that we would convert it into a ten year savings plan. But, and this is the sneaky part, we were also instructed not to tell any client that had any life cover at all attached to the policy, that there was anything wrong with it.
That for me was the final straw, because most clients had put the minimum life cover on the policy, because it made little difference to the growth rates being quoted to them.