Related provisions for DISP App 1.2.24

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To access the FCA Handbook Archive choose a date between 1 January 2001 and 31 December 2004 (From field only).

12Example 1Example 1 Capital shortfall and higher endowment mortgage outgoingsBackgroundCapital sum of £50,00025 year endowment policyDuration to date: 5 yearsEndowment premium per month: £75Established factsEndowment surrender value:£3,200Capital repaid under equivalent repayment mortgage:£4,200Surrender value less capital repaid:(£1,000)Cost of converting from endowment mortgage to repayment mortgage: (£200)Total outgoings to date Equivalent repayment mortgage (capital + interest
12Example 2Example 2Capital shortfall partially offset by lower endowment mortgage outgoingsBackgroundCapital sum of £50,00025 year endowment policyDuration to date: 5 yearsEndowment premium per month: £60Established factsEndowment surrender value: £2,500Capital repaid under equivalent repayment mortgage£4,200Surrender value less capital repaid under equivalent repayment mortgage:(£1,700)Cost of converting from endowment mortgage to repayment mortgage (£300)Total outgoings to
12Example 3Example 3Capital shortfall more than offset by lower endowment mortgage outgoingsBackgroundCapital sum of £50,00025 year endowment policyDuration to date: 8 yearsEndowment premium per month: £65Established factsEndowment surrender value: £7,300Capital repaid under equivalent repayment mortgage:£7,600Surrender value less capital repaid:(£300)Cost of converting from endowment mortgage to repayment mortgage: (£200)Total outgoings to date: Repayment mortgage (capital +
12Example 4Example 4Capital surplus more than offset by higher endowment mortgage outgoingsBackgroundCapital sum of £50,00025 year endowment policyDuration to date: 8 yearsEndowment premium per month: £75Established factsEndowment surrender value: £7,800Capital repaid under equivalent repayment mortgage:£7,600Surrender value less capital repaid:£200Cost of converting from endowment mortgage to repayment mortgage: (£250)Total outgoings to date: Repayment mortgage (capital + interest
12Example 5Example 5Capital surplus partially offset by higher endowment mortgage outgoings BackgroundCapital sum of £50,00025 year endowment policyDuration to date: 10 yearsEndowment premium per month: £75Established factsEndowment surrender value: £11,800Capital repaid under equivalent repayment mortgage£9,700Surrender value less capital repaid:£2,100Cost of converting from endowment mortgage to repayment mortgage: (£300)Total outgoings to date: Repayment mortgage (capital +
12Example 7Example 7Low start endowment mortgageBackgroundCapital sum of £50,00025 year endowment policyDuration to date: 10 yearsEndowment premium per month: starting at £35 in first year, increasing by 20% simple on each policy anniversary, reaching £70 after five years and then remaining at that level. Established facts:Endowment surrender value:£8,200Capital repaid under equivalent repayment mortgage:£9,700Surrender value less capital repaid:(£1,500)Cost of converting from
12Example 8Example 8Term extends beyond retirement age and policy reconstructionBackground45 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 policy anniversary.It has always been the intention of the complainant to retire at State retirement age 65.Term from date of sale to retirement is 20 years and the maturity date of the mortgage is 5 years after
12Example 9Example 9Term extends beyond retirement age: example of failure to explain investment risksBackground45 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.It has always been the intention of the complainant to retire at state retirement age 65.Term from date of sale to retirement is 20 years and the maturity date of the mortgage