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Moneybox Friday, 27 September, 2002, 12:55 GMT 13:55 UK
Call for action on endowments
Millions of people are facing an endowment shortfall

Millions of people who may have been mis-sold endowment mortgages are being urged to 'get even' and claim compensation.

The Consumers' Association has launched a campaign to help up to five million people who may have been victims of mis-selling.

New research found 61% of consumers claim they were told their endowment policy 'would definitely' or even 'was guaranteed' to pay off their mortgage.

In recent years the industry has been forced by poor investment returns to warn many customers this will probably not be the case.

The findings indicate that a very large number of people appear not to have been given realistic advice about the risks associated with taking out such a policy.

Upheld complaints

The financial services industry has sold more than 10 million endowment polices over the years to help people pay off their mortgages.

According to the FSA, 112,000 complaints have been made so far, of which 39,000 or around 35% have been upheld.

In addition, 23 firms have agreed proactively to compensate their customers, setting aside 330m to recompense 238,000 consumers.

Launching the campaign, Consumers' Association Director Sheila McKechnie said:

"Endowment mis-selling is nothing short of a national scandal that has shaken the lives of millions of people.

"Our 'endowment action' campaign is designed to help the five million people that we believe could have been mis-sold, get financial compensation.

"We are urging consumers to get even."

Grounds for complaint

The consumer group explained people may have grounds to complain if the risks were not explained; if they were told the policy would definitely pay off their mortgage; or if other options for repayment were not discussed.

Other grounds for complaint would be if the adviser did not explain what impact fees and charges would have on policy returns, or if people were advised to cash in an existing policy and to take out another to cover their mortgage.

But they added people did not have grounds for compensation if their policy had simply underperformed and was unlikely to be large enough to pay off their mortgage.

Making a complaint

If you think you may have been mis-sold, the Consumers' Association Endowment Action website will show you how to complain and claim compensation.

The web site offers free downloadable information, including a fact sheet and a helps you to draft a complaint letter.

When making a complaint, in the first instance you should write to the company that sold you the endowment policy, explaining why you think you were mis-sold.

If the company concerned does not deal with your complaint within 8 weeks, or you are not satisfied with its reply, then you should take your complaint to the Financial Ombudsman.

The Financial Ombudsman helpline is: 0845 080 1800

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