for Capital Gains Tax purposes.
More information about our general approach to complaints involving financial promotions is available on our online technical resource.Investment Date (Date policy was purchased as a TEP).If there was any likelihood at the time the advice was given that the return would be less than the amount the consumer would be investing, the reasons behind the choice of policy will be particularly important.The consumer's age Charges tend to be higher for older consumers - possibly because a greater deduction is made for the cost of life assurance.It is likely that your endowment will provide a better return if you keep it running until maturity.The good news is that you are very unlikely to have a tax liability if you surrender your endowment.
If the reduction in yield is large but it is not being caused by the cost of life assurance, then we will look at what other charges might be responsible - and whether these lake of the ozarks casino mean the plan is unsuitable.
If we decide the consumer needed life assurance, we will work out the actual cost of the life cover as a percentage of the premium.
The difference between the projected return and the projected return after costs have been are applied is known as the "reduction in yield".
Sometimes we find a consumer has complained about the amount the policy has returned - but the more significant issue is the suitability of the plan from the outset.However, there are absolutely no guarantees of that, especially if your current surrender value of 21,500 includes terminal bonuses, as these can potentially be taken away if your underlying endowment investments perform badly over the next 18 months.Most plans have a fixed maturity date, although some policies do allow for the maturity date to be extended for a further specified period.But even where the consumer started the plan as a result of a mailshot or an illustration, we must be satisfied that the information provided was sufficiently clear, fair and not misleading for the consumer to make an informed choice.But in most cases, we would expect the business to be able to provide or recreate an illustration.Although the consumer's age is not by itself evidence that a plan was unsuitable, we need to look closely at what was explained to the consumer at the outset.The most common types of products we see are: ten year savings plans; endowment savings plans; and maximum investment plans.Some plans allow for the policy proceeds to be converted by the product provider to provide an annuity.Our general approach to putting things right is to place the consumer in the position they would be in if they had not been given the incorrect advice to take out the plan.The idea was that you took out a mortgage and a separate endowment policy.
We always consider what the consumer would have done with their money if they had not taken out the savings plan.
In other words, Capital Gains Tax will be due should the proceeds at maturity, after deducting the purchase price, premiums and tapering relief, exceed the tax free allowance.
Life cover is needed for the plan to be "qualifying" and the proceeds to be tax free.