Not upheld: mis-selling - alleged misleading growth rate projections complaint against Wesleyan Financial Services Ltd

Decision detail

Summary

Mr W complained that a Standard Life mortgage endowment policy sold by Wesleyan in 1999 was mis-sold because he was misled about its likely performance. The policy was targeted to return £118,000 based on 6% annual growth but matured in 2025 with a shortfall of approximately £7,000 and a net return of only 2.3%. The ombudsman rejected the complaint, finding that the 6% was a gross growth rate (including costs and charges) set by the Regulator and was reasonable at the time, whereas the 2.3% was a net figure after all deductions. The illustration clearly stated figures were not guaranteed, and the relatively small shortfall suggested the actual gross growth was likely close to the 6% target.

The Ombudsman's reasoning

The ombudsman distinguished between the gross 6% growth rate used at sale (which included costs, charges, and benefits) and the net 2.3% return calculated after maturity (which deducted all costs). The 6% was a Regulator-set median figure that was reasonable to use at the time of sale. The illustration clearly stated figures were not guaranteed and showed scenarios at different growth rates. The relatively small shortfall suggests the gross growth rate achieved was likely close to 6%. Wesleyan could not have known in 1999 that 6% growth was unachievable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website