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Networks will stab you in the back

Money Marketing last week contained four separate articles which were connected by a central theme.

Ivan Massow’s experience with Sesame over compen-sation for endowment selling should serve as a warning to all advisers that a network, like many life offices, will gladly stab you in the back. The nature of the network beast is that it is self-serving and motivated by profit first, second and third.

Tom Kean’s observations provided an excellent riposte to the burgeoning hordes of ambulance-chasers. Like his own firm, we have also suffered numerous attempts by opportunists and chancers intent on their own private windfall courtesy of the compensation gravy train.

One claimed misselling as the plan matured after her retirement, yet she had taken early retirement. Another bought an endowment as a savings plan and later chose to use it to repay a mortgage. This matter proceeded to the Financial Ombudsman Service which found against him.

This leads nicely to David Cresswell’s Ombudsman column. The above complaint was refuted by FOS, not because it was never intended as a repayment vehicle but because it was deemed “suitable” for his circumstances. I may have been fortunate because if FOS believed the plan unsuitable, I would now be asked to pay compensation where no “loss” has occurred.

As James Salmon’s article made clear, the majority of endowment providers chose to misrepresent the plan charges during the period 1988-1994.

This was to the detriment of policyholders and advisers. Standard Life, via its solicitor, explained to me that the matter of correct charges at the outset is redundant – the rationale being that charges can change during the life of a policy.

For an organisation that has been very proactive at searching out indiscretions and rule breaches it is alarming to see the FSA standing well back from this matter. As with Equitable Life the stable door remains open even though most of the beasts have bolted.

Alan Lakey

Partner,

Highclere Financial Services,

Hertfordshire

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