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Last Updated: Tuesday, 9 May 2006, 11:10 GMT 12:10 UK
The Pru sets endowment time limit
Millions of homeowners are facing endowment shortfalls
Life insurer Prudential has become the latest insurer to introduce a time limit on mis-selling complaints from its endowment customers.

Many policyholders facing an endowment shortfall will have six months to lodge a complaint for mis-selling.

Time barring, as it is called, is meant to avoid open-ended endowment complaints.

Consumer groups have criticised time barring, suggesting it means many mis-selling cases are ignored.

We do not think that an open-ended complaints procedure for mortgage endowments is fair to our 4.5 million with-profits policyholders
Nick Prettejohn, Prudential

They add that many people are ignoring warnings about their endowment and are also unaware they may be eligible to claim compensation for mis-selling.

Red letter

The general rule is that people must complain within three years of receiving their first 'red letter' - outlining a likely shortfall - from their insurance company or lender.

Under industry rules, insurers are allowed to ignore complaints made after the time bar comes into play.

Over the past three years, 110,000 Prudential and Scottish Amicable customers have been warned that they face a shortfall.

Many of these warnings were issued nearly three years ago.

The insurer said that in all instances policyholders will have a minimum six months to lodge a mis-selling complaint.

People who have received a red letter more recently will have at least three years from receipt of the warning to lodge a compliant.


The insurer said a time bar would protect the financial well-being of its with-profit fund.

"We do not think that an open-ended complaints procedure for mortgage endowments is fair to our 4.5 million with-profits policyholders," Nick Prettejohn, Prudential chief executive, said.

Mr Prettejohn added that more than 100 staff were employed dealing with endowment complaints.

Overall, it has been estimated that up to 3.5 million UK households face endowment shortfalls of more than 5,000.

Many borrowers were told their endowments were guaranteed to pay off their mortgages, but some of those promises have fallen well short.

Many UK insurers, including Norwich Union, have introduced time bars.

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