From: Nick 
Newsgroups: uk.finance
Subject: Re: The =?ISO-8859-1?Q?=A317=2C000_loan_that_mounted_int?=
 =?ISO-8859-1?Q?o_a_debt_of_=A3116=2C000?=
Date: Thu, 09 Aug 2007 10:50:40 +0100
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Virgils Ghost wrote:
> "Nick"  wrote in message 
> news:5huo7gF3m8eteU1@mid.individual.net...
>> Virgils Ghost wrote:
>>> "Robin T Cox"  wrote in message news:LrJti.12540
>>> <
>>>> Unfortunately, as in sport these days, there are those who seem to think
>>>> that it is clever or smart to cheat, provided you have the small print 
>>>> in
>>>> place first. They are shooting themselves on the foot, and 
>>>> short-changing
>>>> the rest of us.
>>> Except there is no evidence of misselling, such SAMS schemes would have 
>>> been subject to clearance from their own solicitor or independent advice. 
>>> It would have been made very clear that their interest free loan is 
>>> contingent upon giving up a set proportion of equity in the property.
>>>
>> It is very easy to say this but once an unfamiliar financial product 
>> becomes even slightly complicated the financially naive fail to appreciate 
>> the consequences.  This is definitely true of large financial 
>> organisations, one only has to look at the financial derivative disasters 
>> of the 90's, e.g. Orange County etc. So it is unsurprising that it is also 
>> true of normal old people.
> 
> This isn't a re-run of endowment misselling, such SAMS schemes required 
> interested parties to seek independent advice to ensure it was suitable, not 
> to mention the countless disclaimers that had to be signed and verified by 
> their own solicitor. Even so, the sums are pretty clear, 25% of the current 
> equity interest free in exchange for 75% of any future capital growth.
> 

The sums are clear are they? How would you have priced (calculate an 
expected value or if you like an expected return) for such a deal at the 
time it was initiated.

Were a set of potential scenarios presented to the clients?

Was the potential loss of ability to purchase a replacement house 
explained or was it purely presented in terms of money rather than a 
utility value.

I doubt solicitors or even "independent" advisors would know how to 
value or explain such a deal. These deals would appear to have just as 
much (if not more) potential for misselling than the more familiar 
endowment products.


> There's no such thing as a free lunch, or a one way bet, people seem to 
> think housing should be both those things. 
> 

There is a difference between no free lunch and usury. When banks have a 
chance to confuse the client with a bit of math they tend to take the p#ss.

I normally support freedom but having seen what "independent" advisors 
do to confused old people I'm in favour of a few more rules.
>