New hope for endowment victims

The FSA has not revealed how many firms could be fined

By Paul O'Keeffe BBC Radio 4's Money Box

The Financial Services Authority is investigating a number of firms for the way they have handled endowment mis-selling complaints.

The regulator's moves mean that some people who have had their complaints rejected by firms could still receive compensation.

Last year, John Tiner, managing director at the FSA warned firms of the need to handle endowment complaints properly.

He sent a letter to company chief executives that has been obtained by Money Box Investigates.

In the letter, Mr Tiner wrote, "There are some firms who are not assessing some or all of their consumer complaints fairly."

Enforcement process

Mr Tiner told Money Box Investigates:

"We are currently looking at cases of complaints handling in our enforcement process, and if those cases are upheld, then consumers will get redress if they were improperly considered prior to my letter."

Tens of thousands of people have had their endowment complaints rejected since firms were forced to write to customers warning them that their policies may not pay off their mortgage.

Only around 31% of endowment complaints were upheld by firms between April 2000 and 31 March 2002.

But that had leapt to 55% by the end of 2002 after the FSA's warning to firms.

Six month window

People who complain about their endowments can go to the Financial Ombudsman Service when a firm rejects their complaint.

But they only have a six month window to do that.

Only 1 in 5 people, go to the Ombudsman Service once their complaint is rejected.

This means there could be thousands of people whose complaints have been unfairly dismissed.

The FSA has not revealed how many firms could be fined for dealing with customers unfairly.

And Mr Tiner said that the regulator's moves did not mean everybody who has been rejected will now get compensation.

"I think that we were not going to open up or re-open every case where the complaint has been denied on perfectly reasonable grounds."

He added, "If they do not hear from the firm again then they will have to accept that the case was not satisfactorily made."

Money Box Investigates the FSA was broadcast on Tuesday, 15 April, 2003 on BBC Radio 4 at 2100 BST.