This couple were sold a product called the Integrity Maximiser. It left them with a huge loan they
can’t pay

By Richard Dyson

Retirement seemed pretty good for Mike and Peggy Newman after successful careers as opera singers.

There was only one slight niggle – although they owned a valuable property that was virtually mortgage-free, like so many pensioners they lacked income.

Mike and Peggy Newman

Trapped: The Newmans unwittingly signed up to risky investments

So they sought financial advice from an authorised and apparently respectable firm, Mint Financial Services. Six years on, the couple have a £132,000 mortgage that is growing by the month. Astonishingly, even though the Financial Ombudsman Service declared 18 months ago that Mint was in the wrong, the company is still haggling over the amount of compensation it must pay.

In 2005, Mint encouraged the Newmans to use a scheme called Integrity Maximiser. The leaflets described the scheme as low risk, rating it four out of ten. And it was linked to ostensibly solid organisations such as Bank of Scotland. Encouraged by Mint's assurances, the Newmans signed up without fully grasping the complexities of the deal.

'We told the adviser our vow was to keep the house for our sons,' recalls Peggy, 76. 'We made this clear. We couldn't risk the house.'

Whatever was said, the Newmans were persuaded into a complex string of arrangements that involved borrowing about £200,000 from Bank of Scotland and Bradford & Bingley.

About £90,000 of this was secured against their £280,000 home in Cardiff. A small portion of the money raised – £15,000 – was used to clear their old mortgage.


The rest, unbelievably, was invested in risky second-hand endowment policies. These were supposed to generate returns big enough to cover loan costs and deliver the couple a tidy monthly profit. But like similar schemes (see below), it failed.

The income dwindled and by 2008 it had dried up entirely. The endowment policies were eventually sold last March with the proceeds used to pay down the loans.

Even so, the Newmans are left today owing £132,000 to Bradford & Bingley, a sum that is growing. The couple now have little income and scant savings. 'I wake up at night, frightened about what could happen,' says Mike, 73.

The Financial Services Authority last year concluded its investigation into the company that devised Integrity Maximiser – a business called Integrity Financial Solutions. The regulator would have fined it £350,000 for a range of offences relating to the deal, but by then Integrity had gone bust. A total of 659 homeowners used Integrity Maximiser.

Mint sold about 30 such schemes to its clients. The individual adviser who sold most of these, including the one bought by the Newmans, died in 2006 from a heart condition.

Since 2008, Mint has been owned by a bigger firm, Intrinsic, which is backed by South African insurer Sanlam and chaired by City grandee Sandy Leitch, a Labour life peer. Intrinsic told Financial Mail: 'All of the Integrity Maximiser cases in question were transacted before the Intrinsic Group acquired Mint Financial Services in 2008.

Intrinsic has never authorised its advisers to sell these products. While we cannot comment on individual cases, we have already settled a number of claims. We do work with and accept the findings of the FOS in all cases.'

But the problem with such fiendishly complex plans is that compensation is hard to calculate. The FOS first found in favour of the Newmans against Mint in 2009. Since then Mint has waged a dispute over how the compensation should be calculated.

It has offered several settlements, none of which would put the couple back in the position they would have been in had they never been given the advice.

Their lawyer throughout this nightmare has been financial expert Gareth Fatchett of Regulatory Legal in Lye, West Midlands.

He is representing 19 Mint clients in similar situations and believes they have losses of between £40,000 and £340,000, totalling £3.6 million.

In nine out of ten cases the FOS has sided with the investors, with the remainder of cases yet to be adjudicated, he says.

Fatchett calls the delay in payment 'unacceptable and callous' and has written to the FSA. 'Calculating redress is complicated, but there is no reason whatever for it to take months,' he says. 'Our clients want the FSA to investigate Intrinsic's complaints-handling procedures.'

Mike Newman says: 'This is a firm that has been found against repeatedly by the FOS and which, apparently, can afford to settle its liabilities. We have been through a great deal. Why won't it pay up?'

Monster nightmare: The key ingredients of a 'Frankenstein' investment

'Frankenstein' investments are those where several, disparate financial elements are stitched together to form a dangerous whole. In the case of the inaptly named Integrity Maximiser (see above), savers had to take out a mortgage to raise money that they then invested in risky life insurance policies.

This nightmare concept mirrored almost exactly the Home Income Plans mis-sold by West Bromwich Building Society in the early Nineties. Disgraced West Brom urged elderly homeowners to take out mortgages and invest the money in the stock market.

Frankenstein investments often carry hefty commission to incentivise salesmen. In the case of Integrity Maximiser, sales staff were explicitly encouraged to 'maximise' THEIR earnings.

Commission often attaches to all the components of a Frankenstein scheme – on the mortgage element, for instance, and then again on the investment part.

Frankenstein investments are inevitably complex, so that real risks are often obscured. The Financial Services Authority passed this verdict on Integrity Maximiser deals in a report in May 2010: 'These effectively use the strategy of borrowing to invest, which can be high risk.'