By Paul Lewis
BBC Radio 4's Money Box
Insurers have been told to warn people about time-bars on claims
Up to 700,000 people who had left it too late to complain about their mortgage endowment may now be able to seek compensation.
People who were sold the policies without having the risks explained to them may be able to get financial redress, but only if they act within three years of being sent a warning letter by their insurance company.
The companies have to write to all their customers with mortgage endowments at least once every two years giving an assessment of whether the money invested will be enough to repay the mortgage at the end of its term.
In most cases it will not. And more than five million people face a collective shortfall of around £30 billion.
But only around half a million have complained. And some are now too late. They were first warned more than three years ago and have still done nothing.
Anna Bradley, a director of the Financial Services Authority (FSA) told BBC Radio 4's Money Box that they wanted concessions from the industry for these people.
"There are going to be a maximum of around 700,000 who might already have been timed-out.
"We sat down this week with the industry bodies and some of the key players to discuss what they can do to allow people to complain.
"We have the power to make them, but what we hope is they will implement a voluntary agreement and we understand that on the whole they are willing to consider this.
"If they do not do that we will consider our position."
This warning was given after the FSA had already acted to force the companies to explain the time limit more clearly.
From 1 June everyone must be told by letter when the three year time limit begins, and be warned again six months before it ends.
But some of the companies seem reluctant to do more for the 700,000 for whom this change is already too late.
Asked specifically if his members would waive the time bar for these people, Chris Kenney, Head of Life and Pensions at the Association of British Insurers, told Money Box:
"There are a large number of firms who are going to do that, and we know most of the 700,000 have chosen not to complain, or were not mis-sold, so the numbers involved are very small.
"The vast majority of endowment policy-holders are getting a better deal as a result of these changes."
Research by Money Box has found that four major companies are waiving the time-bar, HSBC, Legal & General, Prudential, and Standard Life.
But most of the smaller companies are imposing the three-year rule strictly and throwing out cases that are out of time.
Louise Hanson, Campaigns Director of the Consumers Association spoke of her concern on the issue:
"The fact there are 700,000 people who are timed-out we think is a key opportunity for this industry to say it will not impose time-bars.
"People have been treated badly already by being mis-sold. Can you imagine - in terms of ruining confidence in the industry still further - what would happen if people were time-barred?"
BBC Radio 4's Money Box was broadcast on Saturday, 29 May, 2004, at 1204 BST.
The programme was repeated on Sunday, 30 May 2004, at 2102 BST