Endowment mortgages: Your experiences

The financial services industry has been criticised in the strongest possible terms over its selling of endowment mortgages.

A Treasury Select Committee report says that companies have been slow to improve sales methods, failed to inform customers of their right to compensation and have flawed complaints procedures.

Millions of UK homeowners are relying on an endowment - a type of investment policy - to pay off their loan at the end of the mortgage term.

ASK THE EXPERT Chairman of the Treasury Committee, John McFall, answered your questions WATCH NOW

Many were promised the endowment would be enough to pay off the mortgage, but 80% of policies are now falling short by an average of £5,500.

MPs say insurers made the problem worse by encouraging savers to put more money into underperforming funds.

Have you been affected by an endowment mortgage shortfall? Send us your experiences.

---

This debate is now closed. Read your comments below.

The following comments reflect the balance of opinion we have received so far:

I listened to my Dad and went repayment Alistair, Wakefield, UK

My father told me in 1995, when I got my first mortgage, only to go for repayment. In '95, the various mortgage lenders I spoke to all tried to convince me endowment was best. They all said that I would be able to pay off my mortgage AND have a cash sum. I listened to my Dad and went repayment. Thanks Dad, I owe you one.
Alistair, Wakefield, UK

I was pushed in 1992 to buy an endowment policy by an independent financial adviser who never gave me any other option for mortgage. I received a letter from the insurers that my policy was well short of target which the agent told me was going to give me extra cash upon maturity.
Saghir Ahmed, Glasgow, UK

The financial services are continually being criticised about their investments by various MPs. Isn't it time the government was criticised for plundering pension funds and the mis-selling of pension schemes i.e. those relating to the old married woman's NI contributions.
Anonymous

What I do not understand is why the financial institutes don't help push long term mortgages. Surely they could use the stability of these agreements to lower the up-front cost to make them as attractive as any other mortgage.
Steve Cooper, Letchworth, Herts

My wife and I recently received notification that our endowment would fall short to the tune of £12,000. When we took it out in the early eighties we were young and inexperienced, so we believed to smooth sales talk that the policy would pay off the mortgage and give us a lump sum. We have since re-negotiated our mortgage and have transferred the majority of it into a capital and interest. This means that we now have slightly higher payments, but we at least have the comfort of knowing that our mortgage will be paid off and the money from the endowment will go into our pockets when it matures. My advice would be that if you can afford it, transfer to a capital and interest ASAP and keep paying the endowment as a savings pla.n
Kenny, Scotland

The one point that seems to have been missed here is that the endowment mortgages were usually cheaper than the repayment mortgages, and people were led to believe that they would be in the money when the endowment matured. These endowment mortgage lenders were relying on the greed of many people to sell their products - pay less, get more. Only a mug would fall for that!
Gary W, UK

How did they manage to miscalculate so badly when until recently the stock market had been making huge gains? Big shortfalls were predicted for my endowment before the recent crash. Yet now they are trying to blame that for poor performance. And why should we lay people be expected to understand financial products? You don't expect to understand what a mechanic is doing when he fixes your car. You are paying for his expertise. Likewise in financial matters, you expect to get good solid advice, and to be able to take that advice.
Neil, UK

If you buy any other product, and the salesperson tells you it will do something, and it doesn't, you are entitled to your money back. I was told my endowment "would" pay off my mortgage. Why should the lying company that sold it to me not make good my losses?
Amy, UK

Another example why I think commission based selling is wrong.
Chris Davies, Chippenham, UK

The endowments themselves are fine, it's what the mortgage industry asked them to do that is the problem John Watson

As an ex-adviser I think some balance is required. The endowments themselves are fine, it's what the mortgage industry asked them to do that is the problem, i.e. achieve high growth rates. My endowments are based on assumed growth rates of 4% and I am more than happy with them. Remember also these are long term commitments, you do not have a shortfall of £X000, you might have if performance does not pick up, but who knows what markets are going to do over the next few years. The excuse of "dodgy" advisers frankly is just a way of a lot of people jumping on the burgeoning compensation band wagon.
John Watson

When I first took out a mortgage 12 years ago I had to be very forceful that I didn't want an endowment mortgage as all lenders were pushing them as hard as they could. It seemed obvious to me that their main intent was to earn the commission on selling the policy, just like all the dodgy financial "advisors" in the late 80's. Any product that was unproven, instantly benefited the seller, and left the buyer with long term uncertainty was a high risk. Your mortgage is the biggest financial undertaking most of us will make - why would you even contemplate such huge unknown risks - you only have yourselves to blame for gambling with your future.
Graeme, UK

Why should endowment mortgage holders be compensated? Endowment mortgages were gambles that equity growth would outstrip interest which obviously could not be guaranteed. Those with endowment mortgages enjoyed huge tax rebates which those with repayment mortgages did not enjoy. If holders of endowment mortages are given compensation for the shortfall, holders of standard repayment mortgages should also be given similar compensation for the huge interest rebates that they did not receive. Misselling by the financial institutions is one thing but compensation for making the wrong choice of endowment/repayment mortgage needs to be fair to all mortgage holders.
John M, LyneMeads,UK

I thought steering clear of endowments (in recent years) was common knowledge. I got a mortgage in '95 and the "independent" broker I used really tried to twist my arm into an endowment, even belittling me for my option to go the repayment route. Independent advisors are anything but. People must do their own research on these kind of things.
Anthony, Huddersfield, England

I have an endowment which not only has underperformed but also the value has been reduced significantly by the company over the last 12 months to deter cashing in the policy. This is nothing short of fraud. If the policy was worth a figure a year ago how does it go down by 15% during 2003?
Alan Walker, Whitby

It all depends on when you took out the facility. Our endowment mortgage matured a couple of years ago and it paid off the mortgage and produced a nice surplus. While that was the hoped for result, nobody gave any guarantees. Of course the market has changed, so why is advice given in good faith decades ago, expected to be permanently relevant?
Another Expat, Atlanta

Get real, take action and stop blaming everyone else Nick Marshall, Chesterfield

I continue to be fed up with those who bleat about this topic. Endowment policies are good for the right consumer. They include an element of life insurance and are a long-term vehicle. This is clear at the start of the contract. I've got a shortfall but am clearing it. Get real, take action and stop blaming everyone else.
Nick Marshall, Chesterfield

I briefly sold insurance in the early 80s. The company I worked for offered endowment mortgages. We were taught that full repayment of the mortgage was guaranteed. If that company mis-sold, then it is clearly responsible for the way it trained its sales staff. A few years later, when I was applying for a mortgage, my bank manager flatly refused to support an endowment mortgage, and said I could have a repayment mortgage or nothing. Good advice as it turned out.
David, London, N1

While I do feel for people who have been misled about their mortgage products, the reality is that if you purchased a property over ten years ago the value of your house has increased ostensibly - so much so that hard working first time buyers could never afford to own what you have now. The housing market and the mortgage industry need to be regulated. If you think you have problems, spare a thought for an increasingly large amount of the population who, at this rate don't have a hope of even owning a home!
C.M., London

I worked in the insurance industry briefly (around 1995) and the salespeople at the time would get something like a couple of thousand pounds commission for selling an average endowment mortgage, and about a couple of hundred pounds commission for selling a repayment. Is it any wonder they pushed this product.
Carl E

I can't understand why people are bleating about being mis-sold an endowment mortgage. I took one out in 1994 and was clearly told basically that if rates stayed around 7% I would be OK, any higher I'd make some money, any lower and I wouldn't have enough to pay off the mortgage. Quite simple really. The idea behind the endowment mortgage isn't hard to understand. Perhaps some people are conveniently forgetting the advice they were given in the hope that someone else will end up paying for their gamble.
JP Rochdale, Rochdale, England

Compensation comes indirectly from the rest of us David Sayer, London

In 1977 when my future wife and I were applying for a mortgage on getting married, Nationwide tried to push an endowment on us, but I was suspicious, thinking that it was too risky. I took a repayment and cleared my mortgage in 1992, so I would have been ok. I do not think that others should be compensated for being greedy and wanting something for nothing. Compensation comes indirectly from the rest of us. I have lost a fair bit in shares, but I don't seek compensation. What's the difference?
David Sayer, London

As a young first-time buyer in the early 1980's I was sold an endowment policy which the advisor stated was guaranteed to pay off my mortgage. In those days before regulation advisors could and did say anything they wished to obtain their commissions. I have now complained about this mis-selling and have received several thousand pounds in compensation to reduce my mortgage to the level it would have been at if I had taken it out on a repayment basis.
Cliff Mark, UK

My husband and I took out our first endowment mortgage 18 years ago.... this will not provide us with the amount promised, nor will the one we were sold 17 years and 15 years ago respectively! We are so far down the line now that are reluctant to plough more funds in and have asked the building society to look at repayment calculations instead. We both feel really cheated.
Angie, Canterbury, Kent

When I bought my first house I was tempted to take an endowment, because the Building Society said that the mortgage could be paid off, leaving me with a lump sum, but they could not guarantee that, so being cautious I took a repayment mortgage. The people who have lost out are whining because they only listened to the part where the salesman said "you could get a large lump sum". If they had read what they had signed, they would have been fully aware of the risk. Sadly most people just sign on the dotted line and do not read financial documents in full.
Tracey, UK

I was clearly told, in 1997, that there was a risk involved L J Staggs, UK

I was clearly told, in 1997, that there was a risk involved. I had a choice of how risky I wanted my policy to be. I chose to be mildly cautious and to assume the stock market would not grow at the rate it was. My caution was rewarded - last year I cashed in my endowment and paid off my mortgage. The Moral, don't be greedy. Stocks go up, and stocks go down... they just go down so much faster than they rise.
L J Staggs, UK

We were sold an endowment in 1999. We knew of problems then with endowments and wanted a repayment mortgage. The house we were after was a new build. The building company had links with a firm of mortgage brokers. We were only permitted to go through this firm of brokers - if we didn't we didn't get the house. As there was (and still is) a shortage of housing around that we could afford we were limited to going with them or not getting a place to live. Needless to say this company mainly dealt with endowment mortgages. There was no way this broker would even consider a repayment as an option. At the end of the day we had no choice about the mortgage we had. We were highly pressurised into getting an endowment or not getting the home we needed. And yet this is not mis-selling!
Julie, Stockton

Members of my family took an endowment in the early 90s, having been told that upon its maturity it would be worth £250,000. It is now worth £9,000 and since its demise they have been forced to sell their house to cover long term losses. Mis-sold and cheated.
MS, Manchester

At no time were the risks properly explained to me Bryan Bruce, Inverness

I took out an endowment policy 5 years ago and was told that once matured it would pay off my mortgage and with the money left over "I would be able to afford to send my children to university". At no time were the risks properly explained to me and I am now going to be £8k short by the time the policy matures.
Bryan Bruce, Inverness

When I received mortgage advice in 1996 I was only offered an endowment policy - a repayment option was not event mentioned. Its not fair to blame the public for this.
Eddie, Lincoln, UK

I took out an endowment with the Friends Provident 19 years ago for £37,000 to mature in February 2007 just before my 60th birthday. Although I was warned about a shortfall in the past few years the latest statement that I received, this morning, now gives a massive shortfall of £12,000.
Pam Rayner, Enfield, Middlesex, UK

I am in the process of representing my complaint to the company who pushed our Endowment policy in the late 80's. I still have the original printout provided to me at the time which shows a maturity value that would not only pay off my mortgage but would also result in a lump sum of over £16,000.
Steve, UK

It's the product that secures your house, how can you have gone into it without reading the small print? Phillip Holley, UK, Cambs

The comments here just show how the blame culture has gripped the UK. It's the product that secures your house, how can you have gone into it without reading the small print, understanding it properly or monitoring it's performance!? Everyone, whether they were a financial advisor or a customer, was blind. Even if the risks were pointed out I'll bet most of us given the historical performance statistics of the stock markets at the time would still have made the same decision. Just because you now have the benefit of hindsight don't suddenly decide that you would have made a different choice.
Phillip Holley, UK, Cambs

It's true that when I took my endowment policy in 1992 I was aware that the sums weren't guaranteed. But its performance hasn't been helped by the substantial front-loaded charges and commission. We heard this week about a certain high street bank's record profits. Maybe they can now afford to reduce their ongoing charges for these dismally performing policies. I doubt it'll happen, though.
John, Birmingham, UK

Since I was originally informed that I would have an endowment shortfall of £13,000, the projection has risen to £26,000. As I did not complain in the three year period following the receipt of my original letter my complaint has been rejected. It seems very unfair that the shortfall can double and I can do nothing about it. Is there anything I can do?
Ian Lochray, Romsey, UK

I used to work for a large insurance company. The only way I could qualify for the staff mortgage allowance was to take out a company endowment policy to cover the mortgage. It is now falling many thousands short.
Mark, Norfolk

I was offered a mortgage and then 'pestered' to take out an endowment policy Geoff Turner, Bury UK

I recall that when I was young, newly married and inexperienced in financial matters, I was offered a mortgage and then 'pestered' to take out an endowment policy. At first I declined and then it was made quite clear to me that I wouldn't get the mortgage without an endowment. As mortgages were vary hard to come by in those days, I really had no choice but to take out the endowment policy. It was definitely high pressure selling which pushed me into buying the policy. If only I knew then what I know now!
Geoff Turner, Bury UK

I think the government should step in to ensure that anyone who has a shortfall in an endowment mortgage should have an assisted change to another mortgage of their choice without loss of already accrued bonuses on their policy. Also, for anyone doing this, there should be a cut off point above which interest is not allowed to rise (say for anyone who is already halfway through their existing mortage) until they sell.
Carol Mason, Manchester, England

The attitude of some individuals writing here that people should have known they were taking a risk is at the very least infantile - and they are completely missing the point. Firstly its quite clear that when selling these policies financial firms did not make it clear there was a risk - in fact I doubt there was ever any mention that policies might not reach target figures - the emphasis was that these were savings vehicles that over the period of a policy could be expected to make significantly higher returns than those required to satisfy the original loan amounts they were intended to cover. This was not a case of individuals gambling in a similar way to horse racing. These were individuals receiving investment advice and participating in long term savings schemes with respected institutions. In most cases the fact that these policies are now suffering shortfalls is also not down to the performance of their current investments but rather the mis-management by these (so called) regulated financial companies.
Terry Marsh, London

I have three mortgage endowments. I can't prove I was misold the first two but the FSA are investigating the third. However, all of them were sold on the basis that they would pay the loan amount and provide a lump sum as well. The Government should also look into the question of those companies that offer to assist in remortgaging. They have links with Financial Advisors and Solicitors, all of whom make money on the deal. However, these mortgage arrangers do not come under the jurisdiction of the FSA or Ombudsman. In my case I am trying to prove that I did not get direct financial advice as the advisor was working as an agent of the re-mortgage company and not on my behalf.
David May, Glossop England

I was told... that my endowment policy was "guaranteed" to reach the target L Millington, Warrington

I was told by the well-dressed young man at the Leeds building society that my endowment policy was "guaranteed" to reach the target and that any money left over would be a nest egg for me. He must have known at the time that what he was telling me was not true and I feel very let down by them.
L Millington, Warrington

In 1999 we talked to 2 financial advisers who both said that Endowment mortgages would be best for us since we stated we wanted a 'low risk' product. One actually told us that endowments 'had never failed to cover the mortgage' implying that they never would. Luckily, I was sceptical - I think I'd heard rumours about problems even then. So we got a flexible repayment mortgage instead, after calculating payments etc. We're so glad we didn't believe the advisers.
A Rimmer, Reading

Because we had our endowment before the critical watershed of late 1987, we are unable to receive assistance in claiming against our provider; Scottish Amicable. This is unfair and should be resolved.
Nick Barnes, Sheffield, England

I had a policy with an Scottish Amicable with profits endowment scheme. I couldn't work out how they were attributing the with profits bonus and when I raised it with them, neither could they nor could a forensic accountant. They advised me to invest a further £20.00 a month on top of the £118.00 they were already getting. I surrendered the policy, at a loss, and moved onto a repayment mortgage - thank goodness I did.
James, London

When I was first sold an endowment policy, there was no mention whatsoever that there was any possibility that the endowment could fail to pay off the mortgage - the only talk was of how much extra money the policy would deliver. OK, at the time I was young and knew little about financial affairs, but that's no excuse for companies to sell policies on the basis of misleading information - which also yield very high commission rates for the sellers and high fees for the assurance companies!
Tim Bounds, Stockton UK

I learned later that those who sold endowment policies received £1,000 in commission for each one Lynne, Southampton, Hants

I was advised that endowment was the best possible deal when I bought my house. I didn't consider the lump sum particularly important; paying the mortgage was the point. However, I learned later that those who sold endowment policies received £1,000 in commission for each one. Had I known that at the time, I would have considered it a lot harder; it's clearly far too much to the lender's benefit to be of much to me as well.
Lynne, Southampton, Hants

If I go into a betting shop, bet on a horse, and then the horse doesn't win, have I been mis-sold a bet? Should I claim "compensation" because there wasn't a poster on the wall saying "Warning: not all horses win the race, and you may not win your bet"? Everybody over the age of 6 knows that the equity markets go down as well as up. These people made a bet and they lost. Why should they expect anyone to "compensate¿ them?
Alan Fisk, London, England

I am another Endowment victim having been sold my Policy in 1989. Like everyone else I was told I would be a mug to stick to a normal repayment mortgage, this policy would cost a little more each month but would pay off the mortgage and give me a big bonus on top. How could we refuse? I complained last year about the policy once I was told it was going to fall short. I got told basically I should have read the small print! When you have a salesman in the financial services industry, employed by a huge reputable Insurance company why should you still have to read the small print? I cannot believe they can now hide behind small print. Like everyone else I am gutted and feel like a complete greedy idiot for being taken in.
Kevin Parker, Kent UK

My wife and myself have a endowment mortgage with Northern Rock ,which we took out on good faith in 1983. The short fall which we have is not very large at present, but I must commend Northern Rock as they have agreed to pay our shortfall on the policy. However, we'll get no compensation for the loss of money from the endowment policy at the end of the term - which would have been a great help towards our retirement.
David Bowen, Northallerton ,North Yorkshire

I had an endowment policy that I cashed in after five years in the early 90's. I only got back what I had paid in. I found out that the building society had got £800.00 commission for selling it to me. We have this Select Committee, the Ombudsman and so on, the executives of the insurance companies and the pensions funds make millions but the average person always pays. When are we going to see dishonesty within the financial services industry in the UK punished by the government for once? These are people are not clever at running these big institutions, they are just extremely dishonest.
pcunningham, Leeds UK

I naively thought that whatever advice I would be given by the financial adviser would be correct MC Shaw, Glasgow

Many people seem to think that the buyer is responsible for this mess as they should have known that there were risks. However when I took out my endowment policy it was for my first flat, I was only 22 years old and had no experience of financial matters. I naively thought that whatever advice I would be given by the financial adviser would be correct. So when he told me that an endowment policy was best for my circumstances and that there was a "very good chance" that I would be left with a large lump sum at the end, I believed him. Now I am left with a projected shortfall of £13,000 on a policy that was for £45,000. As an added insult I now have found out that the growth rate that I was quoted included the insurance companies charges at a much lower rate than the actual ones. If they had shown growth rates predictions including their actual charges the policy would not have looked quite so enticing. Apparently this was perfectly legal.
MC Shaw, Glasgow

It would seem that my endowment mortgage which was sold to me in 1986 falls into a blacker shortfall-hole than most. The date the policy was sold is the key, I cannot claim mis-selling via the ombudsman as pre-1988 policies are not covered by FSA rules - therefore any claim I make I have to take to a court, prove mis-selling, and worst of all fund the legal costs myself. You are advised to go to a financial advisor for advice, then they wash their hands of you after claiming the commission.
Paul Atkin, Chester UK

What's the problem here? Most homeowners have made massive profits over the past 10 years due to rising house prices. These profits can be used to cover the endowment shortfalls.
Chris, UK

You always know where you are with a repayment mortgage. If you want to gamble with any other type of mortgage then you must accept the risk and the potential negative consequences. While not defending the Financial Services Industry (because they have a lot to answer for), it is time people took responsibility for their finances and realised that if the deal sounds too good to be true it probably is just that!
BR, Essex

In my case I was told I would be guaranteed a profit if I opted for an endowment mortgage Lance Morgan, Grantham, Lincs

I cannot believe the attitude of some of the comments here. The whole point is some of us were not told about risk when we took out an endowment mortgage, in fact in my case I was told I would be guaranteed a profit if I opted for an endowment mortgage.
Lance Morgan, Grantham, Lincs

I have a number of with profit policies with the Prudential covering my mortgage. Each policy has a built in safeguard whereby the Prudential automatically increases my premiums as they see fit based on their projections. Do other companies do this?
Richard Page, London, UK

I have recently learned that my interest-only endowment mortgage was arranged incorrectly 5 years ago. The FSA regulated independent advisor failed to set up the endowment policy and I now find that I have only been paying the interest, with no chance of ever reducing the balance. I must now go through the arduous process of complaint and resolution through the Financial Ombudman, who I am sure will have many more cases like mine to deal with before this year is out. Why should the customer be financially slated for the trust they placed in their advisors?
D.Williamson, Stockport, England

My wife and I were sold an endowment on the assumption it would pay off our mortgage and give us almost the same again in a lump sum, we find ourselves currently with an estimated shortfall of £6000.00 So not only is there the shortfall but our actual outgoings must now be increased disproportionately to catch up
Andy Cooper, Derby, UK

The comments being made here about homeowners being to blame for their inability to pay off their mortgage are clearly coming from people who haven't missed out in this way. My parents took out an endowment mortgage without being fully informed of the risks and now don't know what's going to happen. Homeowners have been misled and deserve answers.
SB, UK

I would suggest that a legal approach may be the best solution Robert Matthews, Scarborough, UK

I found a straightforward solution after I was mis-sold an endowment mortgage in the early 90s. I wrote to the lender alleging misrepresentation, which would make the contract voidable, and said that I wanted to rescind it. This legal argument seemed to work like a charm and the bank agreed immediately. Recession meant the bank would put me in the position I would have been in but for the mis-selling. It did this by calculating where I would have been if I had originally been sold a repayment mortgage, and then offered me the difference between the two as compensation. It then altered my mortgage to a repayment one, without my being liable for any administrative charges or redemption penalties.

I would suggest that a legal approach may be the best solution. Apart from alleging misrepresentation, one could try alleging negligent mis-statement. Some people might like to contact a solicitor. The only other advice I would give from my experience is to be persistent and, if successful, continue to be very watchful as the different departments of banks will all try to contradict each other as you try to steer the agreed solution through to completion.
Robert Matthews, Scarborough, UK

When I joined the Royal Navy in 1984 we were given a presentation by someone selling endowment policies as a way of paying off any future mortgage early and having a lump sum left over. Fortunately I'm a cynic who firmly believes that if something sounds too good to be true then it probably is - but I know lots of others signed up for it. They'd all be about 20 years in now & are probably only now waking up to the problem. I wonder if any other members of the forces had similar experiences - the company giving the presentation certainly had the approval of the higher ups.
David Morgan, UK

If I hadn't taken an endowment in 1989 when interest rates were around 15% I wouldn't have been able to afford my house in the first place. Since then I have moved on to another property and thanks to house prices rises the value of my property is about £200,000 over and above the amount my endowment is scheduled to provide. OK, so unless I win the lottery I will have to sell when I'm 65 or so, but the amount of profit I'll make by then will provide me with a cottage by the sea. And that's what most people aim for in retirement isn't it?
George, UK

These shortfall figures often represent worse case scenarios James, London

People who complain about the shortfall in endowment policies, have over the same period their endowment policies have been in force benefited from a huge rise in the value of their properties and low interest rates. For this reason they should easily be able to afford to pay more per month than when they started their mortgages. In addition to this these shortfall figures are based on very low projected growth rates and often represent worse case scenarios. So people should stop moaning - it could be worse.
James, London

When I took out a mortgage in the early '90s we were sold an endowment and in retrospect it was clear the mortgage "adviser" had only one thing on his mind - his big fat commission, not my best interests. I urge everyone facing a shortfall to complain to the FSA. In my case I won as it was deemed I had been sold a policy far too risky for my financial status at the time, despite the company concerned insisting it had done no wrong. Take 'em for every penny you can get!
Jon W, Chelmsford Essex

Anyone who has been sold an endowment as a guaranteed investment and can prove this, will get compensation. But that won't be many. No one has the right to expect an endowment to reach it's target value. You don't get something for nothing without any risk. I have just got rid of two endowments, but when I took them out I did not have unreasonable expectations. The terminal bonus is where all the gain is, or has been. Maybe we are all too cynical to trust these companies. I call it prudence.
Rhyd, Chepstow

The vast majority of people involved have not claimed compensation as they are often left dealing with the same lender to arrange alternative arrangements to pay back their mortgage and are avoiding potential conflict. The only fair way to deal with this huge problem is to have a compensation package for all. e.g. No more than 5% shortfall allowed, the rest to be made up by the selling organisation.
Doug Mealey, Kirkcaldy, Scotland

I was sold a good policy from a good company. Others have not been so lucky Margaret Salsbury, Eastbourne, England

We took out a low cost endowment to run for 20 years with Standard Life. They told us the cost would be £26.19 a month. We signed and exchanged contracts. Standard Life then told us they had given us the wrong amount to pay monthly. As we had already exchanged contracts they honoured the the agreement we had made. We paid monthly and when it came about that some policies were having a problem, we found ours on target to pay the mortgage off on time. A year ago my husband died. I sent the Death Cert off to Standard Life and within days they had paid off our mortgage.

I was sold a good policy from a good company. Others have not been so lucky. They were misled and their money not wisely invested for them to pay off the mortgage.
Margaret Salsbury, Eastbourne, England

I have just taken out a mortgage. I have to accept that no one knows what the financial markets and state of the economy will be in this country in 2029 when I finish paying it off.
Paul Sealey, Cannock, England

My wife & I took out a with profits endowment mortgage 21 years ago with a major mortgage company. We did not take independent advice as we had been with them for our previous home. The options I recall were only positive, never the possibility of a shortfall, only a question of the exact amount of profit at the end of the period. We have been 'over paying' for years to cover the potential shortfall, I just hope it will be enough. I don't think we were being greedy - it was only as if we'd taken a modest independent policy. It was supposed to simply give us a boost at the end of the 25 years.
Dave Jones, Liverpool, UK

I got an endowment mortgage five years ago. I was surprised to see that after only a year the projected shortfall was in the thousands! I cut my losses after the 4 year tie-in period, used what we had saved to redo the driveway and moved to repayment.
TB, UK

Endowments are a form of gambling Martin, England

Endowments are a form of gambling. If they rise enough you have a windfall after paying your mortgage, or you have a shortfall. At the end of the day people signed on the dotted line. Would people be giving money back to companies if their endowment had overperformed?
Martin, England

We were forced to accept an endowment mortgage in 1985 as the building societies would not issue repayment mortgages to those dependent on income support. We were told that the endowment would cover the repayment at the end of the term, however warnings from the insurer since have been more realistic. We have since moved our mortgage to a repayment mortgage to guarantee that we will not be left with a lump sum to pay. When the endowment matures it will pay for a holiday and a new car, not the repayment of the mortgage as was promised.
Ben, Cambridge

We have only 7 years to run and at the moment on a £55,500 mortgage we have a shortfall of £18,000. We would never have accepted the risk that we might lose our home at the time of taking out the endowment policies because the endowment at the end of the 25 year term would not cover the mortgage. We have complained to the financial companies involved but basically it stinks that at the end of 25 years we will probably have to take out a further loan to cover the shortfall.
Jane Mansley, Manchester

I have an endowment mortgage. I remember the salesperson pointing out the risks associated with investing in shares. At that time I thought shares represented the best investment. I made a mistake and so did most other endowment mortgage customers. I will certainly not be asking for compensation for a decision I made freely. There is no recourse to compensation for investors in shares except in the case of fraud. There is no fraud in this case.
Meyrick, London

My refusal to follow some of the sales practices... cost me my job Nigel, Bristol, UK

Speaking as an ex financial advisor, I used to work for Barclays Bank. I was under enormous sales pressure to sell endowments, we were almost brainwashed into the endowment culture. I was constantly being warned that I did not sell a high enough proportion of endowments compared to other advisors who selling as much as 90%. In the end my refusal to follow some of the sales practices of the high earning and in my opinion unscrupulous advisors cost me my job.
Nigel, Bristol, UK

Instead of fining the insurance companies for mis-selling (and to who's benefit is this?), make them make good the shortfall between realised value and the original "insured" value, e.g. the mortgage, in each case. This way, the policyholders will be made whole, although without any capital growth, and the insurance companies will pay the actual price of their mis-selling. Seems fair and simple.
David Hall, Melton Mowbray, UK

I heard reports on TV that Financial Advisors were aware during the 80s that endowment mortgages wouldn't be effective to raise the amount plus a cash fund. Yet they still sold them?! Mine was sold in 1996 as a PEP financed mortgage, when the government stopped PEPs it was transferred to an FMISA (small ISA, stocks and shares). It still has a shortfall.
Colin Bartlett, Abingdon Oxfordshire

There were warnings of potential problems with endowment mortgages as far back as about 10 years ago, as a result of which I switched to a repayment mortgage when I moved house in 1996. Since then I have received a number of letters from my insurers about possible shortfalls in my endowment policies. So, no, I do not believe there has been a lack of warnings. There are, however, an awful lot of people who go through life with their heads in the sand over matters such as this, and who don't act on the advice they get until it's too late.
David Hazel, Fareham, UK

The average shortfall of £5,500 will typically easily be paid off in another year by most homeowners Anonymous

Most people who are complaining about endowment shortfalls have made huge profits on their property values, which make the endowment shortfalls look tiny. Also, the average shortfall of £5,500 will typically easily be paid off in another year by most homeowners. The acid test of value is to compare the cost of an endowment vs. a repayment mortgage over the lifetime of the mortgage, as repayment mortgages are generally more expensive, if capital is not reduced early.
Anonymous

I took out an endowment mortgage some 20 years ago. I was fully informed that there was a possibility that it would not fully cover the amount I required. It was my decision taken in the full light of day. The mortgage company cannot be held to blame in any way for failing to inform me of what could happen. It may upset many but we who took out endowment mortgages are all adults, not children. If financial products fail to perform we are grown up enough to decide for ourselves whether to buy or not. No doubt many products were wrongly sold, but in the end the fault and responsibility must lay with the purchaser. AS it stands my mortgage will fail to pay out by about three percent on my expectations, I can take that as I also had a repayment mortgage for the majority of my house costs.
Barry P, Havant England

These companies are clearly deliberately misleading people and it is outrageous that anybody should be misled regarding something so fundamental as housing and paying for mortgages!
DS, Glasgow, Scotland

People invested in these products based upon greed. Instead of obtaining a normal repayment mortgage, people chose to take a risk in the hope of a lump sum at the end of their mortgage term. Some gambled and won, some gambled and lost.
Stephen Blyth, Northampton, England

When I last lived in the UK I bought a house with a mortgage and an endowment policy. I knew from the start that the possibility existed that the projected bonuses might not accrue in full, if at all, leaving a potential gap to fill at maturity. I accepted that risk and set about saving what I thought should be enough of a buffer. In the end my savings were untouched as the policy more than covered the principal payment. If other policyholders weren't told this, then lock up the miscreants - that's fraud. On the other hand, if, like me, it's a risk they took, then don't cry about it - you had a choice of repayment methods and picked the wrong one.
Gareth, Bermuda

I was offered endowments, and it was always clear that they were a punt on the stock market Stefan, London, UK

I was offered endowments, and it was always clear that they were a punt on the stock market. The salesmen were obliged to show projections based on different stock market growth rates. It seemed fairly obvious to me what was being offered, and I declined on the basis that if I wanted to invest in the stock market I didn't see the need to tie it in to my mortgage (so I opened a tracker ISA, and lost money there). There was no mis-selling - the stock market fell, that's all. Would there be all this hue and cry if the gamble had paid off? This is just the ugly face of compensation culture which will slowly stifle risk based enterprise.
Stefan, London, UK

I sold Endowment Mortgages years ago, and at the time they were the best form of mortgage to have. The problem is that interest rates, inflation, and the economy ultimately decide how the plan performs. With such an unstable economy and the lack of trust in the Government to fix it, policies like this will always under perform to the detriment of the policyholders.

While some blame lies with the companies themselves, most of these problems have only occurred in the last 6 or so years, so perhaps the Treasury Select Committee would do well to re-evaluate their own performance before levelling charges at what will ultimately amount to be scapegoats.
Ian, Brit in USA