22/1 firm’s loss of customers’ marriage certificate – claim for compensation

When Mr D and his wife applied for life assurance, the firm asked to see proof of their ages. They sent in their birth certificates by recorded delivery.

The firm returned the certificates after scanning them into its computer system. It then asked to see the couple’s marriage certificate, which they duly sent – again by recorded delivery. Unfortunately, the firm completely lost track of the certificate after sending it to be scanned. The firm apologised for losing the certificate and asked the couple for details of when and where they were married. It said it would arrange and pay for a replacement certificate. It also offered the couple £25 for the distress and inconvenience it had caused.

Mr D said that the firm’s offer was not acceptable. He asked it to organise a thorough search and to provide him with evidence that it had done so. He said that the loss of the certificate could not be ‘satisfied with a paltry sum’ and that no copy could ever replace the original, which he considered ‘unique’ and the only document he had to ‘commemorate’ his marriage.

Mr D then replaced the marriage certificate himself and claimed a total of £361.52 from the firm as compensation, itemised as follows:

• £11 – cost of replacement certificate
• £100 – time off work
• £250 – distress and inconvenience
• 52p – postage.

When the firm refused to pay, Mr D brought his complaint to us.

complaint upheld in part
We noted that the firm had admitted and apologised for its mistake and had offered to replace the certificate at no cost or inconvenience to Mr D. So we thought it unreasonable of him to claim £100 for taking time off work to replace it himself. We also thought he was unreasonable to claim as much as £250 for distress and inconvenience. However, we thought that the £25 that the firm had offered was insufficient in the circumstances. The firm agreed to increase this sum to £75 and to pay the cost of replacing the certificate. Mr D accepted this offer.

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22/2 mortgage endowment policy – mis-selling alleged

Together, Mrs A and her brother took out a mortgage endowment policy. When she discovered that the policy might not produce enough to pay off their mortgage, Mrs A complained to the firm. She claimed that the adviser had never mentioned this possibility to them but had told them the policy was ‘guaranteed’ to produce enough of a surplus for them to have a holiday or buy a car.

In her view, the adviser’s only reason for recommending the mortgage endowment policy was that he would benefit from substantial commission on the sale.

complaint rejected
When the firm rejected her complaint, Mrs A came to us. There was no documentary evidence of the guarantee she described. But there was evidence (in the form of the ‘fact find’ completed at the time of the sale) that the adviser had assessed the pair’s attitude to risk. On the basis of that assessment, the mortgage endowment policy had been a suitable choice for Mrs A and her brother.

Mrs A contested this, saying that the assessment was incorrect. However, she and her brother had both signed the ‘fact find’, confirming that its contents were correct. They had also been given policy documents explaining the risks involved in this type of investment. We therefore rejected her complaint.

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22/3 mortgage endowment policy – mis-sold and ‘churned’

Mr and Mrs O complained to the firm that its representative should not have advised them to surrender the two mortgage endowment policies they had taken out with the firm some 10 years earlier.

When the firm looked at the complaint, it concluded that the policies had been mis-sold, since the couple had not wanted to take any risk with their investment. The firm offered them redress in accordance with guidance provided by the regulator. However, Mr and Mrs O refused this offer. They felt that the firm had ignored the main point of their complaint – that they had been wrongly advised to surrender the two policies. The firm reviewed the case and concluded that the policies had been ‘churned’, (in other words that the adviser had persuaded the couple to surrender the policies simply to get more commission for himself by selling them new ones).

The firm then withdrew its previous offer and sent the couple a revised offer of redress, calculated according to its standard formula for cases of ‘churning’. At this point, Mr and Mrs O referred their case to us. They thought that the firm should offer them compensation for the original mis-selling of their policies, as well as for the subsequent events.

complaint upheld
We agreed with the firm that the policies had been ‘churned’, and that a repayment mortgage would have been a more suitable option for Mr and Mrs O. But we did not think the firm should have withdrawn its original offer of compensation. We asked it to reinstate that offer and to offer the couple additional compensation for the churning of both policies.

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22/4 portfolio bond – surrender value misquoted

As Miss C needed a deposit to buy a house, she decided to cash in her portfolio bond. She telephoned the firm to ask how to do this. During the conversation, the firm’s representative quoted a surrender value – the amount she would get when she cashed in the bond.

But when Miss C received the cheque for the proceeds, she was alarmed to find she had got much less than the amount the firm quoted on the telephone. It was so much less that she did not now have enough money for the deposit.

The firm told her that she had been charged a substantial surrender penalty and that it had applied a market value adjustment (MVA). This is a reduction that can sometimes be made if stockmarkets have fallen sharply and investments are cashed in early.

Miss C blamed the firm for her inability to go ahead with her house purchase. She said that since it had not told her about the deductions it would make, it should honour the figure it had quoted over the telephone.

The firm accepted it had made a mistake in not mentioning the amounts it would deduct. But it did not think this mistake was as significant as she claimed. It offered to reinstate the portfolio bond at the value it had before Miss C cashed it in. It also offered her £150 for distress and inconvenience. Dissatisfied with this, Miss C brought her complaint to us.

complaint rejected
The firm should have quoted the correct amount. However, it was within its rights to make the deductions. Its policy documents made clear the circumstances in which customers might have to pay a surrender penalty and/or an MVA when they cashed in their bonds. And Miss C had been sent these documents when she first took out the investment. Her inability to proceed with her house purchase was not directly attributable to the firm and we considered the firm’s offer of redress for its mistake was adequate, in the circumstances.

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22/5 unit-linked savings plan – alleged promise of additional bonus

After consulting a financial adviser, Mr and Mrs P took out a 10-year unit-linked savings plan. They were very disappointed at the end of the 10-year period to discover that there was no bonus for customers who held on to their savings plans for an additional year. They complained to the firm, saying they had only chosen the plan because the adviser told them they would get a sizeable bonus if they kept it for 11 years.

Initially, the firm appeared to agree that Mr and Mrs P were entitled to expect a bonus and it said it would look into the matter. However, it then rejected their complaint. It said that no bonus was on offer and there was no evidence that they had been misled into thinking otherwise.

complaint rejected
At the outset, the couple had been given written details of the plan, clearly setting out its features. There was no mention of any bonus payable after an 11th year. None of the other documents they had received over the time they held the investment referred to a bonus. And there was no evidence to support their claim that the adviser had told them they would get one.

Although we did not uphold this complaint, we thought the firm had handled it badly. Since Mr and Mrs P had suffered some distress and inconvenience as a result, the firm agreed to make them a modest ex-gratia payment.

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22/6 pre-A day mis-selling of mortgage endowment policy – whether product literature misleading
Mr J complained to the firm when he found there was a risk that his mortgage endowment policy would not produce enough to pay off his mortgage.

He had originally had a repayment-only mortgage with the firm, but had switched to the mortgage endowment policy early in 1986, after receiving promotional literature from the firm.

The firm rejected his complaint on the grounds that it had not given Mr J any advice, and that the information it provided had not included any guarantee about the plan’s performance. Mr J had taken out the policy before the Financial Services Act 1986 came into effect. At that time, the firm would have been obliged simply to provide information and explain the advantages and disadvantages of endowment mortgages, so that Mr J could make an informed choice.

Dissatisfied with the firm’s response, Mr J brought his complaint to us.

complaint upheld
We agreed with the firm that its literature did not provide a guarantee. However, we thought that, when read as a whole, it was highly misleading. It mentioned the possibility of an additional lump sum. But it made no reference at all to the fact that the policy might not produce enough to repay the mortgage.

We concluded that the information was not balanced enough for Mr J to make an informed choice. We required the firm to compensate Mr J by putting him back in the position he would have been in if he had kept his repayment mortgage.

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22/7 personal pension mis-selling – whether early retirement penalty appropriate

Miss G believed she had been mis-sold a personal pension and she complained to the firm. It offered her compensation, calculated in accordance with the Pension Review guidelines. However, it deducted an ‘early retirement’ penalty because she had taken the benefits before she reached the age of 60.

Miss G said it was not appropriate for the firm to deduct this penalty, because it was the firm that had advised her to take the benefits early. When the firm insisted she should pay the penalty, she brought the complaint to us.

complaint upheld
We noted that Miss G had never expressed any wish to take early retirement and she had no immediate need for the pension income. There was every indication that, had she stayed in her occupational pension scheme, she would have chosen to wait until her normal retirement date before taking any benefits.

It was only because the firm had advised her to do so that she had taken the benefits from the personal pension scheme before she was 60. The firm had told her that falling annuity rates would mean her income from the personal pension would become even smaller if she waited until her normal retirement date.

We told the firm that it should pay Miss G the full amount of redress it owed her, without deducting the early retirement penalty.

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