Mortgage endowment shortfall letters are arriving through letter boxes all over the country, and the bad news is that quite a few of the letters are stating that the endowment policies are not on course to pay off the mortgage. A number of options are outlines in these shortfall letters, and anyone receiving such a letter would be well advised to read it carefully and take note of what it has to say.
The contents can be easily summed up, even if it may not seem so at first reading.
Basically the options are to take action and either seek a way of compensating for the shortfall by taking out a top up endowment, ISA, or other investment, or to make up the difference by converting the shortfall in to a repayment mortgage .
Many mortgage endowment holders, however, will be tempted to cash the policies in, use the money to reduce the mortgage, and convert the whole thing in to repayment so they know for certain that as long as they keep up the regular payments the mortgage is guaranteed to be paid of at the end of the term.
There is an alternative to cashing in the policy, but the warning letters seem to pay little, if any regard to this, with their legal responsibility apparently catered for by the insertion of a Financial Services Authority leaflet that makes mention to the fact that you can sell your endowment policy instead of surrendering it back to the life insurance company.
Should you decide to investigate the option of selling your endowment, you can use the links on this page to get it valued. You should receive a response within 48 hours.
The information on this web site is intended as “information only” and should not be taken as “advice”. If you are unsure about what to do if you’ve received an endowment mortgage letter, or anything else about your endowment policy, you should consider taking advice from an independent financial adviser who is regulated by the Financial Services Authority
Latest news on endowments
Insurer rapped for blocking claims
Sunday Times January 15th 2006
CONSUMERS who are pursuing endowment mis-selling claims received some good news last week when the Financial Services Authority (FSA), the City watchdog, censured a life insurer for wrongly blocking complaints, writes Kathryn Cooper.
Guardian Assurance and a sister company, owned by the Dutch insurer Aegon, were fined £750,000 by the FSA for “serious systemic flaws” in their procedures for handling mortgage endowment complaints.
Up to 5,600 customers may have had their complaints wrongly rejected between January 2003 and late 2004 as a result of the flaws, according to the FSA. Guardian will now be forced to review their cases.
The number of claims that were upheld by Guardian fell from 71% in the second half of 2002 to just 23% in the first half of 2003, the FSA said.
There was also a big increase in the proportion of complaints upheld by the Financial Ombudsman Service after being rejected by Guardian.
The FSA hopes its tough action will ensure other endowment firms consider claims fairly.
Margaret Cole, its director of enforcement, said: “Guardian failed to treat its customers fairly. Those with a valid complaint risked having it rejected inappropriately and may not have received the compensation to which they were entitled.
“Firms must have robust complaints-handling procedures in place. The FSA will continue to monitor this area to protect consumers and promote good practice and we will not hesitate to take action where we see these rules being breached.”
Many consumers do not realise that there is a time limit, laid down by the FSA, on claims. You must lodge your complaint within three years of first receiving a “red” letter from the endowment firm. This letter would have informed you that there was a high risk that your policy would not pay off your mortgage.
Since July 1, endowment providers have had to send a letter reminding you of the time limit, six months before the deadline.
However, Guardian, along with Friends Provident and Royal & Sun Alliance, have barred customers who passed the three-year deadline before July 1, even though they may never have been told the limit existed.
You must complain first to the firm that sold you the endowment, which could be a financial adviser or the endowment provider itself, and go through its complaints-handling procedures.
If you are not satisfied with the result, you can then complain to the ombudman (0845 080 1800).
You should still be able to claim even if you sold the endowment in the second-hand market or surrendered it to the life insurer — as long as you are within the three-year limit.