Endowment complaints 'to soar'

More endowments are expected to be in shortfall

The number of complaints about mortgage endowment policies could more than treble this year, according to the finance ombudsman.

The Financial Ombudsman Service - the body responsible for investigating complaints against financial service firms - expects to receive more than 50,000 complaints in 2003, up from 13,500 last year.

The recent stock market slump has piled pressure on endowment investors, forcing more policies into the red.

The City watchdog told BBC News Online it was planning an "awareness raising campaign" in the autumn to help people whose policies were expecting to be in shortfall.

Market woes

With an endowment mortgage, the borrower pays off only the interest on the loan each month.

The mortgage holder invests money into a separate endowment fund to pay back the underlying debt.

What can you do if you have an endowment shortfall, or believe you were mis-sold your policy? Read story here

The hope is that the endowment fund will raise enough money to pay back the debt, and even generate an additional return.

The Financial Services Authority (FSA) has ordered insurers to issue letters to consumers, warning them of any potential shortfall.

All people who have an endowment should by now have received at least one or two "re-projection letters".

These are colour coded according to the level of the potential shortfall.

Green letters indicate the endowment is currently on track to re-pay the mortgage, although the value of the endowment must continue to increase by at least 6% a year.

Amber letters indicate there is a risk that your endowment will not generate enough money to pay your mortgage.

If you receive a red letter, the endowment policy is already in shortfall.