I think Gina hits the nail on the head. How is it possible, during
the longest continuous stock market rise in history, that the lenders
are saying they haven't made enough profit to cover the loan? The investments
are "linked to stocks and shares" according to the FSA. The
whine from the lenders is that this has been a period of low interest
and low inflation. But that is a canard: any glance at the Stock Market
figures up to 2 months ago before the crash as compared with the figures
for, say, 8 years ago would show what favourable circumstances these
were for investing.
I simply do not believe the lenders when they say that market conditions
determined the poor investment returns. We should ask them to prove
it, not to us as individuals but in Parliament. It seems to me that
these people have incompetently invested this money and are attempting
to make individual homeowners pay for it.
Maybe borrowers did know that there was some risk when they took out
their mortgage, but I'm sure that none of them thought they might end
up with a shortfall of 25%. That is not bad luck, as the lenders might
have it, but it is bad advice. Imagine if those people had not been
advised to take out that endowment mortgage. They would end up 25 or
so per cent better off. That is not only an economic but it's also a
political scandal. How many people has this happened to?
Surely in the first instance, we need to write to our lenders requiring
them within the week to explain in detail the reasons for the shortfall
- not to be fobbed off with the low interest, low inflation story -
and requiring them to confirm their confidence in their investments
office. We should also cite to them the Standard Life pledge to guarantee
repaying mortgages if its endowment policies grow at 6% a year at least.
In my opinion, this could be the biggest financial scandal since Maxwell
and for it to be handled in a purely individualistic, economic way as
opposed to a political manner is not enough.
Then shouldn't we send copies of the no doubt inadequate reply to
our MPs requesting them to raise the matter urgently, with a view to
getting the lenders to pay for the bad advice they gave us in the first
place. The aim would be to get Parliament to instruct the lenders to
guarantee to repay the mortgages - they advised badly, they pay.
