Adviser claims they were misled by Norwich Union over endowment maturity value
In twist on the usual mis-selling claims, a financial adviser is asserting that a change in Norwich Union’s calculation of estimated maturity values has led the IFA to become subject to an endowment mis-selling claim.
In the case, outlined by the FT, the IFA reveals that improvements in calculating estimated maturity values led to a £6000 fall in value their client’s policy. They claim that original projections were taken as being accurate and where used to advise clients on the suitability of endowment products. The IFA complains it is “unfair” to blame them for selling endowments with inaccurate projections of maturity values as this is the responsibility of the providers.
Unsurprisingly, both endowment providers and the FSA disagree with the IFA. A Norwich Union spokesman explained that projected maturity values are not guaranteed and methods for calculating Estimated Maturity Values (EMV’s) improve over time. The calculation of EMV’s are governed by Projection Rate Rules prescribed by the FSA and the providers must adhere to these rules when calculating their projections. The Financial Ombudsman also made a general observation that liability for recommending a product lies with the adviser.
When it come to the reliability of projections, the FSA’s Director for the Conduct of Business Standards previously offered this perspective: “For their financial planning, consumers can find it useful to have some idea of potential returns but it is important that they appreciate the uncertainties. No-one can predict the future. Projected returns are not promises.”
