The endowment injustice…

In the early 90’s I bought a house. There is nothing unusual there; neither is there anything unusual with the fact that I took out an endowment mortgage at the time too. After all, endowment mortgages were all the rage, combining slightly lower repayment rates with life assurance that guaranteed to pay your mortgage off if anything happened to you.

At the time of buying my house I was directed towards the “independent financial advisor” who worked at the estate agents for some mortgage advice. The advisor duly gave his advice recommending a step down mortgage with Britannia Building Society (with whom the estate agents had strong links) and an endowment policy with Legal and General.

Around this time, endowment policies had started getting a bit of bad press so I asked what I thought were pertinent questions, naively believing that the answers were actually worth anything.

The advisor went to great pains to point out the potential returns on my investment, which were forecast to give me an excess of around £15k when my mortgage was paid off. Yes this was the highest forecast return but this figure was concentrated on and when questioned what the likelihood of this return being achieved was, the financial advisor assured me that this return was not only achievable but should really be regarded as the lowest return I should expect.

How could I go wrong? So I bought the policy. What I didn’t realise at the time was that the “Independent” financial advisor was actually a Legal and General employee!

Anyway by 1988 I have got my self my own PC and I start putting my endowment details onto a spreadsheet. Once I’d done this it quickly becomes apparent that there is no way on gods green earth that the bonuses paid on my policy since day one were going to allow me to repay my mortgage at the end of the term, let alone give me an excess!

I contacted Legal and General about this and they initially played the problem down saying that it would all be OK in the end as they pay a large termination bonus. When I pointed out to them that this bonus would, in all probability, have to be equal to all previous bonuses for the mortgage to be repaid they agreed to review the performance of my plan for me. This they duly did and surprise, surprise, they came back and told me that the plan would not repay my mortgage for me!

In fact, if you look at the bonuses paid on my policy it was never on target to pay off my mortgage!

As you can imagine, I feel a little aggrieved at this. After all, I had taken the advisors advice in good faith (he was the expert when all said and done, not me) only to find out that it was a crock of sh1t (sorry).

I have since spent many a happy hour arguing the toss with Legal and General about whether the advice given to me by their employee was any good at all. So far their only response has been to say that they have reviewed the paperwork associated with my file and everything is in order. They usually throw in a couple of red herrings and then say that they were “not present at the time of the sale” and thus “cannot comment on what may or may not have been said”. Obviously it is exactly what was said that forms the basis of the complaint and thus this response is totally unacceptable to my mind.

I am a simply man and I expect to get what I pay for. After all, when someone sells me something and makes rash claims about it I’m afraid that I expect these claims to be upheld. It seems that this is not the case with the Financial Services sector in this country.

Yes, at the time of the sale it was pointed out that there was the potential for my endowment not to perform as predicted but this was very much played down by the advisor. As I said above, he even went as far as to assure me that I really should be viewing the higher forecast as the minimum I can expect at maturity!

Anyhow, the upshot of all this is that Legal and General have basically held two fingers up to me (and thousands like me). They ripped us off with endowment policies that were never on course to perform as said and alas there is nothing you can do about it other than bend over and take it like a man!

And the moral of this story? Trust no one, especially anyone associated with the financial services industry. They make simple things far more complicated than they need to be in order to hide pitfalls and small print and when it all goes wrong they’ll stand there with two fingers raised and dare you to do something about it.

Me, I’m cutting ties with Legal and General at the first available opportunity and won’t go back!