Related provisions for DISP App 3.2.3
Schedule to the Recognition Requirements Regulations, Paragraph 9
2(1) |
The [UK RIE] must have effective arrangements for the investigation and resolution of complaints arising in connection with the performance of, or failure to perform, any of itsregulatory functions. |
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(2) |
But sub-paragraph (1) does not extend to - |
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(a) |
complaints about the content of rules made by the [UK RIE], or |
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(b) |
complaints about a decision against which the complainant has the right to appeal under procedures of the kind mentioned in paragraph 8(2)(b). |
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(3) |
The arrangements must include arrangements for a complaint to be fairly and impartially investigated by apersonindependent of the [UK RIE], and for him to report on the result of his investigation to the [UK RIE] and to the complainant. |
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(4) |
The arrangements must confer on thepersonmentioned in sub-paragraph (3) the power to recommend, if he thinks appropriate, that the [UK RIE] - |
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(a) |
makes a compensatory payment to the complainant, |
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(b) |
remedies the matter complained of, |
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or takes both of those steps. |
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(5) |
Sub-paragraph (3) is not to be taken as preventing the [UK RIE] from making arrangements for the initial investigation of a complaint to be conducted by the [UK RIE]. |
Example 9 |
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Term extends beyond retirement age: example of failure to explain investment risks |
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Background |
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45 year old male non-smoker, having taken out a £50,000 loan in 1998 for a term of 25 years. Unsuitable sale identified on the grounds of affordability and complaint raised on 12th anniversary. |
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It has always been the intention of the complainant to retire at state retirement age 65. |
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Term from date of sale to retirement is 20 years and the maturity date of the mortgage is five years after retirement. |
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In addition, an endowment does not meet the complainant's attitude to investment risk and a repayment mortgage would have been taken out if properly advised. |
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Established facts |
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Surrender value (on the 25 year policy) at time complaint assessed: |
£12,500 |
Capital repaid under repayment mortgage of term to retirement date (20 years): |
£21,000 |
Surrender value less capital repaid: |
(£8.500) |
Difference in outgoings (repayment - endowment): |
£5,400 |
Cost of converting from endowment mortgage to repayment mortgage: |
£200 |
Basis of compensation: |
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The surrender value of the (25 year term) endowment policy is compared to the capital that would have been repaid to date under a repayment mortgage arranged to repay the loan at retirement age, in this example, a repayment mortgage for a term of 20 years. The complainant has gained from lower outgoings of the endowment mortgage to date. In calculating the redress, the gain may be offset against the loss unless the complainant's particular circumstances are such that it would be unreasonable to take account of the gain. The conversion costs are also taken into account in calculating the redress. |
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Redress generally |
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Loss from surrender value less capital repaid: |
(£8,500) |
Gain from total lower outgoings under endowment mortgage: |
£5,400 |
Cost of converting to a repayment mortgage: |
(£200) |
Net loss: |
(£3,300) |
Therefore total redress is: |
£3,300 |
Redress if it is unreasonable to take account of gain from lower outgoings |
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Loss from surrender value less capital repaid: |
(£8,500) |
Gain from total lower outgoings under endowment mortgage: |
Ignored |
Cost of converting to a repayment mortgage: |
(£8,700) |
Therefore total redress is: |
£8,700 |