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Last Updated: Monday, 3 October 2005, 13:43 GMT 14:43 UK
Q&A: Clock ticks for endowment complaints
A stopwatch
The clock is ticking on endowment complaints

The clock is ticking if you believe you were mis-sold an endowment policy. If you do not act, you may find your complaint has been "time-barred". BBC News explains the rules.

What is a time bar?

A time bar is a time limit on making a complaint about an endowment.

The bars are based on rules set out in the Limitation Act 1980 and the Financial Services and Markets Act 2000.

An estimated 700,000 of the UK's 8.5 million endowment policyholders' complaints may already be time-barred., according to the Financial Services Authority (FSA),

Insurers do not want the endowment issue to dog them for decades to come, so it is not surprising they want to draw a line under the issue.

They have books to balance and businesses to run.

But for policyholders who find they are time-barred, the practice can seem very unfair.

Some can miss out on their right to complain by weeks and, sometimes, even days or hours.

What are the rules?

1. Making an initial complaint:

People have either six years after being sold their policies in which to complain or three years from the receipt of their first "red" warning letter in which to complain. The later date applies.

The "red" letter informs policyholders if there is a "high risk" that their endowment policy is unlikely to pay off your mortgage.

The FSA and the Financial Ombudsman Service (FOS) have ruled that this is when the three-year period should start.

However, the FSA has recently imposed stricter rules on financial firms.

These new rules apply from 1 June and could mean policy holders have more time to make a complaint.

The first re-projection letters were sent by firms between April 2000 and June 2001, which means some people may now be time barred
The time rules for endowment complaints are dictated by the Limitation Act 1980 and the Financial Services and Markets Act 2000

Policyholders that receive red letters after June should then receive another letter six months before their right to complain expires.

In other words, these complaints can only be rejected for being too late if the policyholder has been advised of a final date for making a complaint by the firm.

2. Complaining to the Financial Ombudsman Service (FOS):

If the company you bought the policy from has rejected your endowment complaint, you can then complain to the Financial Ombudsman Service ( FOS), an independent complaints scheme, within six months of receiving the rejection letter.

The company should have informed you that you can take your complaint to the ombudsman.

The ombudsman is a free service and the consumer does not bear costs even if the ombudsman finds in the company's favour.

Which companies time bar?

Not all companies time bar complaints but many do.

Norwich Union, the UK's largest life insurer, recently announced it will introduce a time limit on mis-selling complaints for its 1.1 million endowment policyholders.

Financial Ombudsman Service: 0845 080 1800
The Financial Services Authority: 0845 606 1234 (from UK) 020 7066 1000 (from overseas)
Financial Services Compensation Scheme: 020 7892 7300

However, it will give customers at least 12 months' warning, twice the level prescribed by the FSA, before the time bar is imposed.

In contrast, Legal & General and the Prudential, two other big insurance companies, say they have no plans to begin time barring.

Individual companies' policies vary widely and policyholders are advised not to wait around - especially as insurers are within their rights to change their policies.

What if I bought my policy through an independent financial adviser (IFA)?

Complaints must be addressed to the person or firm who sold the policy.

If you bought your policy through an IFA, then your complaint must be directed to the IFA.

However, this could mean that even when an insurance company is not imposing a time bar, you may still miss the deadline because your IFA has decided to enforce one.

Is there any chance of redress if I have been time-barred?

Even if the firm has rejected your complaint, it may be worth pursuing it with the ombudsman.

"If you are not happy and you think that the firm is unfair or wrong in applying time bars, you can still go to the ombudsman," says the ombudsman's David Cresswell.

In particular, a policyholder may disagree with when the firm started the three-year countdown.

If you make a complaint to the ombudsman, it is up to the firm to inform the ombudsman within 21 days that the complaint is subject to a time bar and is therefore not within the ombudsman's jurisdiction.

If it fails to do this, then the ombudsman can look into your mis-selling complaint.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.

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