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Showing posts with label Complain for Mortgage. Show all posts
Showing posts with label Complain for Mortgage. Show all posts
How the Standard Compensation is calculated
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The FSA document have a nice example of how the Standard Compensation is calculated in case of endowment policy.
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Click on the image below to have a bigger view of the figure:
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Time limits for mortgage endowment complaints
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Here are some common questions from FSA documents about time limits for complaining:
When should I complain to the firm?
You should complain to the firm that sold you the endowment policy as soon as possible after you realise that you have cause for complaint. If you delay making a complaint, you could lose the right to some or all of any redress that may be due to you, as there are time limits within which you must make your complaint. An important time limit is that you usually have three years from the time when you became aware (or ought reasonably to have become aware) that you have cause for complaint.
A firm can usually reject your complaint as being out of time – known as ‘time barring’ –
if you are outside these time limits. It can also ask the Ombudsman to reject the complaint on similar grounds.
Firms can choose not to apply time bars but most do so.
How do I know when the three-year time limit ends?
Since 1 June 2004 a firm can usually only time bar an endowment complaint if:
_ you complain more than three years after receiving a red reprojection letter (or a similar letter warning you that there is a high risk that the policy will not reach the target amount); and
_ it has given you six months’ notice of the date after which the complaint would be time barred.
I made a complaint but the firm told me it was time barred by the end of 2003. I wasn’t told that the time limit for my complaint ended then. Why?
Between 1 February 2003 and 31 May 2004 our rules allowed a firm to time bar an endowment complaint if you made the complaint more than three years after the first red reprojection letter and more than six months after you received a second similar warning or reminder of the need to act. So during this period firms did not have to warn you of the actual date after which your complaint would be time barred.
When should I complain to the Ombudsman?
If you are unhappy with the firm’s decision, you should complain to the Ombudsman within six months of the firm sending you a ‘final response’ letter. Even if your complaint is rejected by the firm as being out of time, you can still refer your complaint to the Ombudsman if you think there are exceptional circumstances or that the time bar was wrongly applied, or otherwise unfair. Ultimately it is for the Ombudsman to consider what is fair and reasonable in the circumstances of the case.
Taking your complaint to court
If you cannot resolve your complaint with the firm and the Ombudsman cannot help, you may still be able to pursue your complaint through the courts. There are costs in doing this, and time limits for taking a claim to court. This is a complex area of law and the exact time limit will depend on what your claim is for and the particular facts of your case.
It is important that you do not delay if you are considering taking any action through the courts – seek legal advice as soon as possible.
Mortgage endowment compensation
If you have a valid complaint, you may be due compensation. The FSA has set out how this should be calculated.
How is compensation calculated?
The calculation of any compensation involves comparing:
_ the mortgage interest and endowment policy premiums you have actually paid and the current surrender value of your mortgage endowment policy; with
_ the mortgage interest and capital repayments you would have paid on an equivalent repayment mortgage, and how much capital you would have paid off the mortgage.
In some cases other factors need to be considered in the overall calculation, for example:
_ whether life assurance was needed;
_ whether the policy ran past your retirement date;
_ the type of endowment policy (for example, low start); or
_ the extent to which you could reasonably have avoided or reduced the loss by taking prompt action. This is also called mitigation.
No compensation is due if you are not worse off – for example, if your endowment policy has grown and is now worth more than the capital you would have paid off on an equivalent repayment mortgage.
I have been offered compensation. How do I know it is a fair offer?
When calculating mortgage endowment compensation, firms are required to follow guidance issued by the FSA. So, if the firm has offered compensation in accordance with our guidance, you can assume it is a fair offer.
However, if you have received an offer of compensation, but don’t understand how the firm calculated it, or you think there may be a mistake in the calculation, contact the firm and ask for a breakdown of the figures.
I have been offered compensation but it doesn’t amount to my shortfall; why is that?
The compensation is usually based on what your position would have been now, if you had not been sold the policy but had taken out a repayment mortgage instead. Compensation is not based on what you expected the policy to be worth.
What if I have already surrendered my endowment policy and changed to a repayment mortgage? How will the firm calculate compensation?
The calculation involves comparing:
_ the mortgage interest and endowment policy premiums you had actually paid, up to when you surrendered the policy, and the amount received when the policy was surrendered; with
_ the mortgage interest and capital repayments you would have paid on an equivalent repayment mortgage, and how much capital you would have paid off your mortgage, up to the point when you changed to a repayment mortgage.
Again, the precise calculation may vary if other factors need to be taken into account.
If you get compensation from making a complaint about the sale of your endowment policy, you should consider using it to reduce the amount you owe on your mortgage.
I changed to a repayment mortgage after receiving a reprojection letter but still have an endowment policy in place. The advising firm has agreed that I was mis-sold the policy but has only calculated compensation up to the date when I changed to a repayment mortgage. Is this correct?
Yes, because the endowment policy was originally taken out to repay your mortgage.
Therefore, the compensation is calculated up to the point when the endowment policy ceased to be used to repay your mortgage.
I have been offered compensation by the firm. If I take my complaint to the Financial Ombudsman Service, could the Ombudsman award more?
Firms and the Financial Ombudsman Service use the guidance issued by the FSA to decide how much compensation is due. Therefore, if the firm has offered compensation in line with our guidance, it is unlikely that the Ombudsman would require the firm to pay more unless, for example, the firm has made an error in its calculation, or new factors come to light which require the Ombudsman to use a different method of calculation.
If you have received an offer for compensation, but don’t understand how the firm calculated it, contact them and ask for a breakdown of the figures.
Do I have to pay tax on any compensation I receive?
Compensation is intended to put consumers back in the position they would have been in had they not received the ‘wrong’ advice. Where the calculation does not contain additional interest, tax will not be due on a compensation payment. However, in some cases (for example if the policy is sold, surrendered or varied) tax may be payable.
Consumers in this situation should not lose out, so our guidance to firms is that it may be appropriate for them to pay any personal tax liability that might arise (for example, following the surrender, sale or variation of the policy).
Where the circumstances of the case mean that the compensation calculation includes an amount of interest, you will usually have to pay tax on the interest in the normal way.
If you are not sure where you stand, or need help with calculating the amount of tax that
may be due, you should contact HM Revenue and Customs – see Useful contacts
When should I complain to the firm?
You should complain to the firm that sold you the endowment policy as soon as possible after you realise that you have cause for complaint. If you delay making a complaint, you could lose the right to some or all of any redress that may be due to you, as there are time limits within which you must make your complaint. An important time limit is that you usually have three years from the time when you became aware (or ought reasonably to have become aware) that you have cause for complaint.
A firm can usually reject your complaint as being out of time – known as ‘time barring’ –
if you are outside these time limits. It can also ask the Ombudsman to reject the complaint on similar grounds.
Firms can choose not to apply time bars but most do so.
How do I know when the three-year time limit ends?
Since 1 June 2004 a firm can usually only time bar an endowment complaint if:
_ you complain more than three years after receiving a red reprojection letter (or a similar letter warning you that there is a high risk that the policy will not reach the target amount); and
_ it has given you six months’ notice of the date after which the complaint would be time barred.
I made a complaint but the firm told me it was time barred by the end of 2003. I wasn’t told that the time limit for my complaint ended then. Why?
Between 1 February 2003 and 31 May 2004 our rules allowed a firm to time bar an endowment complaint if you made the complaint more than three years after the first red reprojection letter and more than six months after you received a second similar warning or reminder of the need to act. So during this period firms did not have to warn you of the actual date after which your complaint would be time barred.
When should I complain to the Ombudsman?
If you are unhappy with the firm’s decision, you should complain to the Ombudsman within six months of the firm sending you a ‘final response’ letter. Even if your complaint is rejected by the firm as being out of time, you can still refer your complaint to the Ombudsman if you think there are exceptional circumstances or that the time bar was wrongly applied, or otherwise unfair. Ultimately it is for the Ombudsman to consider what is fair and reasonable in the circumstances of the case.
Taking your complaint to court
If you cannot resolve your complaint with the firm and the Ombudsman cannot help, you may still be able to pursue your complaint through the courts. There are costs in doing this, and time limits for taking a claim to court. This is a complex area of law and the exact time limit will depend on what your claim is for and the particular facts of your case.
It is important that you do not delay if you are considering taking any action through the courts – seek legal advice as soon as possible.
Mortgage endowment compensation
If you have a valid complaint, you may be due compensation. The FSA has set out how this should be calculated.
How is compensation calculated?
The calculation of any compensation involves comparing:
_ the mortgage interest and endowment policy premiums you have actually paid and the current surrender value of your mortgage endowment policy; with
_ the mortgage interest and capital repayments you would have paid on an equivalent repayment mortgage, and how much capital you would have paid off the mortgage.
In some cases other factors need to be considered in the overall calculation, for example:
_ whether life assurance was needed;
_ whether the policy ran past your retirement date;
_ the type of endowment policy (for example, low start); or
_ the extent to which you could reasonably have avoided or reduced the loss by taking prompt action. This is also called mitigation.
No compensation is due if you are not worse off – for example, if your endowment policy has grown and is now worth more than the capital you would have paid off on an equivalent repayment mortgage.
I have been offered compensation. How do I know it is a fair offer?
When calculating mortgage endowment compensation, firms are required to follow guidance issued by the FSA. So, if the firm has offered compensation in accordance with our guidance, you can assume it is a fair offer.
However, if you have received an offer of compensation, but don’t understand how the firm calculated it, or you think there may be a mistake in the calculation, contact the firm and ask for a breakdown of the figures.
I have been offered compensation but it doesn’t amount to my shortfall; why is that?
The compensation is usually based on what your position would have been now, if you had not been sold the policy but had taken out a repayment mortgage instead. Compensation is not based on what you expected the policy to be worth.
What if I have already surrendered my endowment policy and changed to a repayment mortgage? How will the firm calculate compensation?
The calculation involves comparing:
_ the mortgage interest and endowment policy premiums you had actually paid, up to when you surrendered the policy, and the amount received when the policy was surrendered; with
_ the mortgage interest and capital repayments you would have paid on an equivalent repayment mortgage, and how much capital you would have paid off your mortgage, up to the point when you changed to a repayment mortgage.
Again, the precise calculation may vary if other factors need to be taken into account.
If you get compensation from making a complaint about the sale of your endowment policy, you should consider using it to reduce the amount you owe on your mortgage.
I changed to a repayment mortgage after receiving a reprojection letter but still have an endowment policy in place. The advising firm has agreed that I was mis-sold the policy but has only calculated compensation up to the date when I changed to a repayment mortgage. Is this correct?
Yes, because the endowment policy was originally taken out to repay your mortgage.
Therefore, the compensation is calculated up to the point when the endowment policy ceased to be used to repay your mortgage.
I have been offered compensation by the firm. If I take my complaint to the Financial Ombudsman Service, could the Ombudsman award more?
Firms and the Financial Ombudsman Service use the guidance issued by the FSA to decide how much compensation is due. Therefore, if the firm has offered compensation in line with our guidance, it is unlikely that the Ombudsman would require the firm to pay more unless, for example, the firm has made an error in its calculation, or new factors come to light which require the Ombudsman to use a different method of calculation.
If you have received an offer for compensation, but don’t understand how the firm calculated it, contact them and ask for a breakdown of the figures.
Do I have to pay tax on any compensation I receive?
Compensation is intended to put consumers back in the position they would have been in had they not received the ‘wrong’ advice. Where the calculation does not contain additional interest, tax will not be due on a compensation payment. However, in some cases (for example if the policy is sold, surrendered or varied) tax may be payable.
Consumers in this situation should not lose out, so our guidance to firms is that it may be appropriate for them to pay any personal tax liability that might arise (for example, following the surrender, sale or variation of the policy).
Where the circumstances of the case mean that the compensation calculation includes an amount of interest, you will usually have to pay tax on the interest in the normal way.
If you are not sure where you stand, or need help with calculating the amount of tax that
may be due, you should contact HM Revenue and Customs – see Useful contacts
Link to Previous article : Steps to make Complain for Endowment Mortgage
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Steps to make Complain for Endowment Mortgage
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Here is graphical representation of the steps one must take to make a complain for Endowment mortgage
You may click on the image to see a clear and enlarged picture
You may click on the image to see a clear and enlarged picture
Link to previous article How do I make a complaint about endowment policy?
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How do I make a complaint about endowment policy?
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Step 1 – First, complain to the firm that sold you the endowment policy.
This may be a financial adviser, the endowment company or your mortgage lender. Check with the endowment company if you are not sure who you should complain to as they would have the details.
Firms must have a proper complaints procedure and tell you how to use it.
Try to find all the paperwork and any notes you made at the time. You are entitled to copies of the sales paperwork from the firm that sold you the endowment policy.
It is usually best to make your complaint in writing. You can phone to make a complaint, but if you do, make sure you keep detailed notes. Record the name of the person you spoke to and the date and time you called. Keep these notes in a safe place as they are a record of your complaint.
When you make a complaint, the firm may send you a questionnaire (commonly known as an endowment mortgage questionnaire) to complete and return to them. Fill this in to the best of your ability – it will speed up the process.
Step 2 – Then, if you are unhappy with the firm’s decision, you can usually take your complaint to the Financial Ombudsman Service
(the Ombudsman) – see Useful contacts.
You must do this within six months of the firm sending you a ‘final response’ letter. The Ombudsman provides a free, effective, straightforward process for resolving disputes.
If you are thinking of taking a complaint there, you can call its Contact Centre for help. You can choose whether or not to accept the Ombudsman’s decision. If you accept, it is binding on both you and the firm. If you don’t accept, you can take your case to court. There will be a charge for doing this, and depending on what your claim is for, time limits may apply.
See the FSA guide to making a complaint about financial services for more detailed information about the complaints process (including ‘tips for effective complaints’ and ‘taking a complaint to court’).
In some cases the complaints process may be slightly different:
_ If you took out your endowment policy on advice from a solicitor before 1 December 2001, see page 5.
_ If you were advised before 29 April 1988 to take out your endowment policy
This may be a financial adviser, the endowment company or your mortgage lender. Check with the endowment company if you are not sure who you should complain to as they would have the details.
Firms must have a proper complaints procedure and tell you how to use it.
Try to find all the paperwork and any notes you made at the time. You are entitled to copies of the sales paperwork from the firm that sold you the endowment policy.
It is usually best to make your complaint in writing. You can phone to make a complaint, but if you do, make sure you keep detailed notes. Record the name of the person you spoke to and the date and time you called. Keep these notes in a safe place as they are a record of your complaint.
When you make a complaint, the firm may send you a questionnaire (commonly known as an endowment mortgage questionnaire) to complete and return to them. Fill this in to the best of your ability – it will speed up the process.
Step 2 – Then, if you are unhappy with the firm’s decision, you can usually take your complaint to the Financial Ombudsman Service
(the Ombudsman) – see Useful contacts.
You must do this within six months of the firm sending you a ‘final response’ letter. The Ombudsman provides a free, effective, straightforward process for resolving disputes.
If you are thinking of taking a complaint there, you can call its Contact Centre for help. You can choose whether or not to accept the Ombudsman’s decision. If you accept, it is binding on both you and the firm. If you don’t accept, you can take your case to court. There will be a charge for doing this, and depending on what your claim is for, time limits may apply.
See the FSA guide to making a complaint about financial services for more detailed information about the complaints process (including ‘tips for effective complaints’ and ‘taking a complaint to court’).
In some cases the complaints process may be slightly different:
_ If you took out your endowment policy on advice from a solicitor before 1 December 2001, see page 5.
_ If you were advised before 29 April 1988 to take out your endowment policy
Link to Previous article : Complaint about a mortgage endowment policy - 2
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Complaint about a mortgage endowment policy - 2
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I’ve surrendered my policy – can I still complain?
Yes, you may have a valid complaint and be due some redress – as long as you can show that you were not properly advised at the time of the sale and you lost out financially as a result.
Should I complain if:
_ My endowment policy finishes after I retire?
You may have a valid complaint if the adviser did not check that you were likely to be able to afford to carry on paying the premiums after you retired.
_ I was advised to cancel one endowment policy and take out another?
You may have a valid complaint. An endowment policy is a long-term investment that often gives a poor return if you cash it in early. You should usually avoid cashing in one policy and taking out another for the same purpose.
_ My endowment policy runs on after my mortgage loan is due to finish?
You may have a valid complaint. An endowment policy sold to repay a mortgage loan will not normally be suitable if it finishes after the date when the loan has to be repaid.
_ I was given a guarantee that the endowment policy would pay off my mortgage loan?
You are likely to have a valid complaint if you can show that you were told that the endowment policy was guaranteed to pay out enough to pay off your mortgage loan and that this was part of the legal contract between you and the firm. This is likely to be rare.
Will I be charged for making my complaint?
You will not be charged if you complain to the firm that sold you the policy.
If you need to refer your complaint to the Ombudsman, this service is also free.
Complaints management companies
Some companies offer to help consumers pursue their complaints with financial services firms and with the Ombudsman. In return, the consumer has to pay the company a fee, usually in the form of a fixed share of any compensation that is awarded for a successful complaint.
Some companies ask for a fee upfront, and you may still have to pay a fee if you decide not to use them. So make sure you understand what you may have to pay and when you would have to pay it.
A number of these companies are currently focusing on mortgage endowment complaints, where the ‘success fee’ you would have to give them can amount to hundreds or even thousands of pounds. This is money that you obviously won’t then be able to put towards paying off your mortgage. And using these companies does not necessarily increase the chances of your complaint succeeding or of your getting compensation.
Your own circumstances may mean that you would find it helpful to use one of these companies to handle the complaint for you.
But think carefully about the likely costs and benefits of this and do check the fees and conditions before you sign any contract.
From April 2007 complaints management companies operating in England and Wales must be authorised by the Department for Constitutional Affairs – see Useful Contacts .
What if I can’t trace the firm that sold me the endowment policy, or the firm has ceased trading?
If you bought your endowment policy through an independent financial adviser, your endowment company should have the details of who sold it to you. If you’re not sure the firm still exists, contact the FSA Consumer Helpline or use the Check our Register service – see Useful contacts .
If you cannot trace the firm because it has ceased trading, you can contact the Financial
Services Compensation Scheme (FSCS) – see
Useful contacts.
The FSCS is a ‘fund of last resort’ for consumers who have a claim against a firm that has been authorised by the FSA but is unable (or likely to be unable) to pay claims against it, often because it has ceased trading. But the FSCS is unlikely to be able to help you if the advice was given before 28 August 1988.
Yes, you may have a valid complaint and be due some redress – as long as you can show that you were not properly advised at the time of the sale and you lost out financially as a result.
Should I complain if:
_ My endowment policy finishes after I retire?
You may have a valid complaint if the adviser did not check that you were likely to be able to afford to carry on paying the premiums after you retired.
_ I was advised to cancel one endowment policy and take out another?
You may have a valid complaint. An endowment policy is a long-term investment that often gives a poor return if you cash it in early. You should usually avoid cashing in one policy and taking out another for the same purpose.
_ My endowment policy runs on after my mortgage loan is due to finish?
You may have a valid complaint. An endowment policy sold to repay a mortgage loan will not normally be suitable if it finishes after the date when the loan has to be repaid.
_ I was given a guarantee that the endowment policy would pay off my mortgage loan?
You are likely to have a valid complaint if you can show that you were told that the endowment policy was guaranteed to pay out enough to pay off your mortgage loan and that this was part of the legal contract between you and the firm. This is likely to be rare.
Will I be charged for making my complaint?
You will not be charged if you complain to the firm that sold you the policy.
If you need to refer your complaint to the Ombudsman, this service is also free.
Complaints management companies
Some companies offer to help consumers pursue their complaints with financial services firms and with the Ombudsman. In return, the consumer has to pay the company a fee, usually in the form of a fixed share of any compensation that is awarded for a successful complaint.
Some companies ask for a fee upfront, and you may still have to pay a fee if you decide not to use them. So make sure you understand what you may have to pay and when you would have to pay it.
A number of these companies are currently focusing on mortgage endowment complaints, where the ‘success fee’ you would have to give them can amount to hundreds or even thousands of pounds. This is money that you obviously won’t then be able to put towards paying off your mortgage. And using these companies does not necessarily increase the chances of your complaint succeeding or of your getting compensation.
Your own circumstances may mean that you would find it helpful to use one of these companies to handle the complaint for you.
But think carefully about the likely costs and benefits of this and do check the fees and conditions before you sign any contract.
From April 2007 complaints management companies operating in England and Wales must be authorised by the Department for Constitutional Affairs – see Useful Contacts .
What if I can’t trace the firm that sold me the endowment policy, or the firm has ceased trading?
If you bought your endowment policy through an independent financial adviser, your endowment company should have the details of who sold it to you. If you’re not sure the firm still exists, contact the FSA Consumer Helpline or use the Check our Register service – see Useful contacts .
If you cannot trace the firm because it has ceased trading, you can contact the Financial
Services Compensation Scheme (FSCS) – see
Useful contacts.
The FSCS is a ‘fund of last resort’ for consumers who have a claim against a firm that has been authorised by the FSA but is unable (or likely to be unable) to pay claims against it, often because it has ceased trading. But the FSCS is unlikely to be able to help you if the advice was given before 28 August 1988.
Link to Previous article : Complaint about a mortgage endowment policy - I
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