When a policyholder came to us to complain, we weighed up the evidence carefully to make a fair, impartial decision.
What happened
Yohannes is a stockbroker. He took out a loan against the future value of an endowment policy he’d taken out several years earlier. He agreed to repay it no later than the date when the policy matured.
However, he didn’t pay any of the interest on the loan, so by the time the policy reached maturity, the accrued interest, together with the capital amount he had borrowed, made up a very substantial sum.
Yohannes claimed that, until the policy matured, he’d been unaware of the amount of interest he owed. Yohannes had taken independent financial advice some five years earlier, resulting in his making increased payments into a personal pension plan. He alleged that the adviser should, instead, have advised him to repay the outstanding loan.
What we said
We looked at the available evidence on both sides. We found no evidence that Yohannes had told the adviser of the existence of the loan and, from the information he gave the adviser about his personal circumstances, the advice Yohannes received appeared to have been entirely appropriate.
Yohannes confirmed that he’d received annual interest notices, setting out the amount of interest due, and he admitted that he had misread them. Yohannes enjoyed considerable earnings and we were satisfied that he had sufficient disposable income to be able to pay both the outstanding interest on the loan and the pension contributions. So we didn't uphold his complaint.