Endowment Mortgage- Disaster?

A friend of mine took out an endowment mortgage 15 years ago through First Active. They were led to beleive that this form of mortgage would leave them with their loan paid off & a lump sum at the end of the term.

They have now been informed by First Active that the endowment will be anything up to €7-10k short, which on an original mortgage of €40k seems miles out. They are very annoyed, and regret taking the advice of the building society, especially since the same society now wants them to increase their endowment premium to meet any shortfall.

This whole situation seems ridiculous. Do they have any legal recourse to the lender for poor information/advice? What about the financial regulator or consumers association?

It's always possible that they have grounds for a case of misselling against the lender. They probably need to make a formal complaint (in writing) to them in the first instance clearly and concisely setting out their grievances and grounds for them. Once they have exhausted the lender's complaints process if they are not satisfied they can take the matter to the [broken link removed] if necessary. They could also try getting legal advice if they so choose.

Very difficult case to bring unless they have documented evidence of mis-selling.

If they have any of their original documentation from the lender (unlikely, I know after 15 years) it may help with proving that they were told the endowment would pay off their mortgage.

There's also an AAM key post
and a previous thread.

I had the same experience in England and abandoned the endowment as a bad job after selling the house.

The Ombudsman is precluded from looking at these cases because they were sold more than 6 years ago.

Brendan

Brendan said:

The Ombudsman is precluded from looking at these cases because they were sold more than 6 years ago.

Brendan

Click to expand...

OK - I didn't realise that.

In that case, as per Brendan's advice in the key post, don't up the premium, you may just pay more charges for it. Get a statement of all charges on previous and current contributions and see whether it is worth continuing to pay into it or to find an alternative means to save the money.

In the meantime for the short-fall, a regular saver high-interest account might be the way forward?

you could contact the Insurance division of the Financial Regulator - endowment mortagages were very popular in the 80's and in the early '00s was widespread media coverage warning householders who had taken out these mortgages that they would fall short. It is something that ALL mortgage providers were extremely aware of.

Before your friends contact First Active again, do a thorough search on media coverage for Endowment Mortgages from 1999 to present date - sunday tribune, sunday business post, indo, time, financial times etc - you may find First Active contributed to these articles (comments etc) - this would illustrate that FA must have been aware of your friends situation and should have notified your friends earlier.

Also, research the parent company of First Active - they will also have been aware of the risks FA was carrying on their books..

don't forget that local libraries and the Central Library in the Ilac Centre (dublin city) will also have these newpapers archived.

Although this is outside the Ombudsman's time slot, you should be able to address this issue (with supporting documentation) to the Finacial Regulator.

Am shocked FA only telling your friends now..

good luck!