Designed to keep costs down for the client on a monthly basis, with the hope the investment plan would pay off the mortgage, plus an additional lump sum, these are often referred to as Endowment Mortgages.
Endowment mortgages became an attractive policy with millions sold at the peak of their popularity in the 80’s. However, for many that bought an Endowment mortgage, their policies didn’t pay out as much as they had expected or been suggested at the point of sale. Unfortunately this meant many found themselves without a lump sum when the mortgage matured and with part of their mortgage still to pay off.
Many of these policies were mis-sold with policy holders being mis-led by their financial advisor regarding how much the potential return may be. Endowments usually offered high commission potential for financial advisors and as a result were often incorrectly sold.
At EMCAS, we believe in getting what you deserve, and striving for fairness, helping clients reclaim what is rightfully theirs. Across 12 years’ experience, and the 700,000 people we have helped, we have witnessed first-hand that many clients were unaware and/or unsure that they had been mis-sold, despite having grounds for complaint.
This is why we have put together a list of the 3 most common signs that you may have been affected by endowment mis-selling to help you find out if you are eligible to make a complaint.
1. Guarantee of unrealistic returns
You should always be very wary of a financial advisor who assures you that a policy or investment will definitely make you money. There are no guarantees of returns on any investments, as market rates change over the years and more often than not drift from predictions.
Unfortunately, as with any sort of investment, the instability of a downfall in returns cannot be entirely eliminated. Financial advisors were not always mentioning or explaining the possibility that the policy would not pay out anywhere near as much as predicted or expected. This left many policyholders unaware this could happen.
These actions could be motivated by the fact that advisors are often focused on sales, and as a result potentially overlooking the issues with the product and the needs of the individual client.
2. No Financial or Risk Assessment
If a financial advisor failed to undertake a thorough financial evaluation or risk assessment with you when trying to assess your suitability for an endowment policy, this should be a red flag. Without completing a full financial review the advisor may recommend an endowment policy that isn’t suitable to meet the amount required to repay the mortgage.
If there hasn’t been some sort of assessment of your financial circumstances and your attitude towards risk discussed, then there’s a possibility you could have been misadvised and subsequently mis-sold.
A clear sign that you could have been mis-sold an endowment mortgage, is that it has underperformed exceeding the worst case scenario that was expected, leaving you in a worse financial situation. If this is the case, it is clear that your financial advisor has not undertaken the necessary research and assessment at the time the policy was sold to you as well as taking your own financial situation into account. By not taking into account your needs and circumstances, your financial advisor has been “gambling” with your savings and your future.
3. Cashing in an Existing Policy
A common mis-selling practice is being advised that you should be cashing in your current endowment policy and investing in another. Essentially, your financial advisor has made two sales from you, made twice the commission and unnecessarily put your future at risk.
This could be to the client’s detriment, with better policies exchanged for lesser options as a result of commission clouding advisors judgement.
If any of these signs describe your situation, or you think this may be the case for your endowment, it is likely that you have been mis-sold. EMCAS operates on a no win no fee basis* with no hidden costs or upfront fees, so don’t hesitate to contact us to start reclaiming what you could be owed.
*Fees may be payable in the event of cancellation of services.