Stephen Bates spent a year on his quest to discover why his Irish Life endowment payout was £1,200 less than expected
* Stephen Bates
* guardian.co.uk, Friday 16 July 2010 11.47 BST
It's fair to say that when I took out an endowment policy on my flat in west London in 1984 I never thought that, 25 years later, the Irish financial authorities would get involved in my little transaction.
But such are the labyrinthine complexities of financial regulation that this is exactly what happened after I had the temerity to appeal against my insurance company's decision to slash the final bonus payment on my policy on the very day it matured, effectively leaving me £1,200 out of pocket.
All those years ago, when I moved to London and bought a flat, I was – like millions of others – seduced into taking out an endowment mortgage, in my case with the UK arm of insurer Irish Life. Back in those days, endowment companies were promising untold riches: as well as the prospect of eventually paying off the loan and getting insurance cover, you'd hopefully have a little cash bonus at the end to boot.
Well, for the next 25 years I abided by my side of the bargain, month in, month out: 300 payments in all, long after my flat had transmogrified into first one house, and then another. When I moved, I told the company, and eventually reassigned the policy from my former mortgage lender to myself.
Then – happy day! – in late November 2008, Irish Life wrote to say that my policy was expected to mature on 1 January 2009 with a value of £15,977, with very small print at the bottom conceding that the bonus was not guaranteed. Indeed not: the cheque which dropped through my letterbox five weeks later was for £14,779: a cool £1,198 less than predicted, with the terminal bonus all but halved. No apology, no explanation, not even a cheery hard luck, begorrah and goodbye.
Now, I had spotted there was something of a financial slump going on – journalists tend to notice these things – but it all seemed a bit steep and I thought I'd write for an explanation, just to give them a pause for thought about their long-term customers. The reply I got was brusque and perfunctory. If I didn't like it, I could appeal to the UK Financial Ombudsman Service.
I tried again, writing direct to Irish Life boss Denis Casey, a figure who I just couldn't help picturing in a diamond-patterned golfing jersey. He, of course, didn't reply, but a minion did. Appeal to the ombudsman, they said, here's the address in London.
So I did. The ombudsman took up my case and then, a little later, decided he didn't have any jurisdiction over my British endowment policy, taken out on a property in London, with a company based in Cheltenham. Irish Life, he'd noticed, had its headquarters in Dublin, so fell outside his jurisdiction. I'd need to appeal to the Irish ombudsman's office instead. He even, conveniently, provided the address.
Thank goodness, I thought, the company that sold me the policy wasn't based in Hong Kong, Abu Dhabi or Caracas, or hadn't been sold on in the course of the last quarter-century to one that was. Whatever would I have done then?
I could have left it there, of course. Having been misdirected by Irish Life to appeal to an adjudicator that it should have known had no jurisdiction over its activities, I now had the bit between my teeth. I wrote to Dublin. Did I really want to appeal, Dublin asked back? Yes, I said, otherwise I would not have bothered writing. We're very busy, said Dublin, it might take a while. That's fine, I said, I'll wait. Six months later I emailed to inquire how things were coming along with my footling little appeal. We're very busy, was the gist of the response, you'll get a reply in due course.
In the course of all this, a small nugget emerged from Irish Life's correspondence. Terminal bonuses had been cut with effect from 1 January 2009. In other words, the very day my policy matured. Had I died the previous day, or had the policy matured on 31 December 2008 – when, after all, my cover persumably ceased – I'd have been paid the full whack. That extra £1,200 would have been mine or, at least, my dependents'.
The cut was a decision Irish Life had made shortly after it had written its previous letter with the original figure, but the board's decision had, naturally, not been made public for unspecified reasons. "It is not possible to announce a bonus change in advance of the effective date," one letter said. And "once agreed by its board, the changes should take effect immediately but a short time is required to implement the necessary administration …" stated another missive.
The cut was needed "to safeguard remaining policyholders," which was good to know. I wondered if the board's bonuses had also been cut to safeguard the company's remaining customers, but decided to not even go there.
In May this year, a whole year minus two days since I had appealed to the Irish financial ombudsman, another letter arrived from Dublin. Did I agree to the ombudsman making an adjudication? Please sign and return a form saying so. I did.
And then – hooray – a neatly typed five-page letter from William Prasifka, the Irish ombudsman. It gravely set out the case I had made in the course of the correspondence, including my more colourful epithets about Irish Life's behaviour towards me after 25 years of loyal monthly payments: vexatious, discriminatory, unfair, inequitable ("and I meant it to sting" as Bertie Wooster would say). Just little aggravating things: like the fact that Irish Life had demanded to know who my policy was assigned to, 10 years after acknowledging receipt of my solicitor's letter reassigning it to me – good job I kept a copy, as it clearly hadn't; the misdirection of my complaint to the British ombudsman; and the oversight in not bothering to tell me at the time that the terminal bonus cut came into effect on the day my policy matured. Just stuff like that.
Prasifka gravely enumerated all these points over several pages and then concluded, briefly, the company had not mismanaged or maladministered my account. "I am satisfied the terminal bonus was not guaranteed … Therefore, the complaint is not upheld." The finding is legally binding, but, he added, I could appeal to the Irish High Court within 21 calendar days. Drat it. I seem just to have missed the deadline.
A spokesman for the insurer told Guardian Money: "We would apologise for Mr Bates being misdirected to the Financial Ombudsman Service in the UK. At the end of the day, due process has been followed, and the ombudsman has ruled."
From guardian.co.uk published on Friday 16 July 2010 11.47 BST
