The IFA Defence Union
From: The IFA Defence Union []
Sent: 16May200513:16
To: ‘David Kenmir’
Subject: Complaint
- Built-in shortfalls
Importance: High

Dear Mr Kenmir

I would like to know what the FSA is going to do about the mortgage endowment shortfalls created by providers using LAUTRO ‘assumed expenses’ to set premiums at outset.

In a case I have before me Standard Life has admitted there was a £2,700 shortfall on a target amount of £25,500 from the very beginning, in their original documentation they said they would need a premium of £36.24 per month to achieve that target amount at 7.5%, now they tell me the premium should have been £40.16 at 7.5%. This policy would never have been recommended had I known this to be the case.

To compound my misery Standard life say they acted ‘legally’, I would like the FSA to clarify who is responsible for:

1. The risk being misrepresented to my client and myself
2. Making up any potential shortfall

If you supply the ammunition I will put my claim in to the Court.

Almost every provider did this so if they are guilty of misrepresentation the FSA should force their hand, if it is the FSA’s fault via the DTI and GAD they should foot the bill.

My complaint against the FSA was turned into a complaint against LAUTRO, my argument is that the SIB controlled LAUTRO and passed down policy from the DTI, the SIB was renamed FSA in 1997 so I cannot see how the directors and officers of the SIB can be allowed to escape liability, particularly when most of them are still on the Board of the FSA.

While we are at it I would like to once again bring up the subject of my own pension transfer with Scottish Amicable where the critical yield calculation was misrepresented in accordance to the LAUTRO fiasco.

See Section 47 of The Financial Services Act 1986: “Any person who makes a misleading false or deceptive statement or dishonestly conceals any material facts or recklessly whether dishonestly or not makes [such a statement etc]
. . . is guilty of an offence” if he does so to induce anyone to enter into an investment agreement. This includes an endowment policy.

Standard Life and the other providers misled us; you need to sort them out now.

Evan Owen
The lEA Defence Union