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.