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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3471
Experience:  Solicitors 2 years plus PQE
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Im not sure if this falls under property law but it seemed

Resolved Question:

I'm not sure if this falls under property law but it seemed the most appropriate ...

In a nutshell, my parents took out a 20 year repayment mortgage in 1989. In 1992, they wanted to add an additional amount onto the repayment mortgage but were convinced by the bank to switch to an endowment mortgage. After 10 years, they were informed there would be a shortfall and were told to either increase their endowment payments (with no guarantee that the endowment would pay off the mortgage in 2009) or switch back to a repayment mortgage.

They switched back to a repayment mortgage which will now end in 2017.

The bank and the financial ombudsman have stated that the endowment was mis-sold and have offered compensation.

The financial ombudsman's usual method of dealing with a situation like this is to calculate what would have happened had the mis-selling not taken place and restore the customer to that position.

In my parents case, the ombudsman is saying that they are only going to look at the period 1992 - 2002. The ombudsman will not give an answer as to why they are not following their usual standard of dealing with such a claim.

I understand that if we are unhappy with the ombudsman's decision we can reject it and it isn't legally binding upon us. If we do this and go to court, do you think we would stand a good chance of having the bank calculate the compensation based on what would have occurred if no mis-selling had taken place?

My parents are not trying to obtain compensation. They just want the money back that they should not have paid in the first place (upwards of £20K).

Also, could you recommend a good solicitor (not a no win, no fee, ambulance chaser) who may be able to help us with a court claim?
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.

Thank you for your question and welcome.

My name is XXXXX XXXXX I will assist you.

Have the bank admitting the misselling?

What is the difference between what the Ombudsman has offered and what you parents actual loss is?

Kind regards

Customer: replied 2 years ago.



Basically, the bank and the ombudsman have agreed that the endowment should not have been sold. We have been offered compensation but they are only looking at the period 1992 - 2002.


The timeline of events is as follows:


1989 - 20 year repayment mortgage taken out with Lloyds to end in 2009


1992 - my parents wanted to take out an additional sum against their repayment mortgage but were advised to switch to an endowment, this is where the mis-selling has taken place.


2002 - Lloyds advised that there would be a shortfall on the mortgage and gave my parents 2 options - switch back to a repayment mortgage (to end in 2017) or increase their payments to the endowment mortgage with no guarantee that it would clear the mortgage in 2009.


2002 - my parents switched back to a repayment mortgage. At this point, they had paid £14k into the endowment and were given £10k back. My father had a business overdraft which the manager at Lloyds demanded repayment of out of the £10k they received back on the endowment. This left them virtually nothing to pay back into the new repayment mortgage resulting in the new repayment mortgage being taken out to end in 2017.


2013 - I found out what had happened and started the complaints process.


2014 - the bank and the ombudsman have agreed that the endowment should not have been sold to my parents and have offered compensation. However, they are only looking at the period of time when the endowment wasn't performing (1992 - 2002).


I believe, and according to the ombudsman website I am correct, that the compensation should be calculated as follows:


Calculate the payments which should have been made in line with the original mortgage agreement i.e. 1989 to 2009. Compare this to what my parents have actually paid from 1989 to 2014. The difference (less the £10k that the bank manager took for the business overdraft) should be refunded to my parents. I also believe that any fees that the bank received in respect of my parents mis-sold endowment should be refunded to them.


The ombudsman website clearly states that this is their standard method of calculating compensation but the person my father has been dealing with is refusing to do this and is simply looking at the shortfall during the period 1992 - 2002. This person can't/won't explain why they are not following their own standard.


I have done a bit of research and the courts don't appear to look favourably upon financial mis-selling so I feel we have a good case if we have to take this to court. I did some cases where the courts have found in favour of the claimant when they've not agreed with the ombudsman/bank ruling but the cases weren't exactly the same as my parents situation.


Any advice would be appreciated.



Expert:  Alex J. replied 2 years ago.

Thank you.

You are correct if your parents have been mis sold then the banks have various duties towards them, the most obvious one being S.13 Supply of Goods and Services Act 1982 and the duty to exercise reasonable care and skill. While doubtless as the bank have already admitted that the product was mis sold, any claim to court would just be a matter of agreeing quantum for the damages.

Before proceeding to this, you have to determine whether the cost of going to court is going to make it worthwhile it relative to the time you will spend and the offer you already have from the Ombudsman. This is because you may not get all your costs back at the county court. Also a Court may be even more restricted because depending on the terms of the deed any claims for sums paid before 2002 may be statute barred under the Limitations Act 1980.

I would contact the law society as a starting point ( they will recommend a solicitor that has expertise in consumer bank claims. You need them to look at all the paper work and correspondence and determine whether your claim going back to 1989 will be within the limitation period. The limitation period generally for a claim under a deed is 12 years.

If it is not then I would take the Ombudsman offer. The Ombudsman has probably taken the view that in 2002 when your parents switched mortgages this was done to mitigate any future losses they might suffer.

I look forward to hearing from you.

Kind regards

Alex J., Solicitor
Category: Law
Satisfied Customers: 3471
Experience: Solicitors 2 years plus PQE
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