120 Blythswood Road
Ilford IG3 8SG

Email: andy.walker@talk21.com
Tel: 07956 263088

Is this the next endowment scandal?

I say that with profit endowment policyholders at Co-operative Insurance Society (CIS) and Standard Life are being treated unfairly which has been a factor in poor returns. CIS endowments are paying out less than the premiums paid in over 10 years. The insurers pay/have paid commissions of up to 27 times the annual charge which can be as low as 1%. This means a large subsidy is taking place which must be to the detriment of with profit policyholders. A sample illustration is attached.

The CIS managed to get my latest claim struck out on 6th May 2010 with the judge terming the claim as fanciful and vexatious. On 29th June 2010 the FSA published a report into the management of with profit funds. At page 29 the FSA write:

"5.38 Specifically, firms are prevented from writing products priced on terms that are not self-supporting (i.e. 'loss leaders')"

This is nine years after I first complained to the FSA about the practice. Why is the CIS still apparently writing loss leading business? And why is no compensation being arranged for policyholders who have lost out? These appear legitimate questions to put to the FSA.

Adam Phillips, chair of the Financial Services Consumer Panel says:

"This report shows policyholders are still not being treated fairly by the FSA's own measures. It is totally unacceptable that firms' failure to play by the rules is still potentially exposing substantial numbers of consumers to risk. We have said for some years that the rules are inadequate, and this report shows firms are not even conforming to those rules."

I agree with Mr Philips and hope the High Court grants me permission to appeal in my case. If the FSA will not police insurers, the courts should do their job for them.

The attached commentary goes into detail. However, the most important reason for my claims being struck out in the Cowell and Irwin judgments is that the judges say they are too small and so must be rejected. Judge Cowell says this is the case even if my claim were to be worth £5000. This seems unfair; a wealthy person's claim would be heard, but not a person of more modest means. This seems one law for the rich and another for the poor.

I was elected a Labour councillor in Redbridge earlier this year. If I lose my claim, I could be made bankrupt and so disqualified from office. It also seems wrong to that judges, rather than juries, can make decisions which mean elected representatives could lose office. If ultimately successful; I will campaign for the right of policyholders to take insurers to the small claims court without the fear of large costs being awarded against them.

Yours sincerely

Andy Walker