Complaint about a mortgage endowment policy

This set of articles from FSA is for you if:
_ you have a complaint about the way your endowment mortgage was sold to you.
It sets out:
_ what you can complain about and how to do it;
_ the time limits within which to make your complaint; and
_ how compensation is worked out.

This article from FSA explains what may give you grounds for complaint and tells you how to make a complaint about a mortgage endowment policy. But time may be running out, so if you want to complain, do it now. Otherwise you may be too late, or the amount of compensation you can claim may be limited.

If your endowment policy is not expected to pay out its target amount, you may be left owing money on your mortgage (known as a shortfall).


Making a complaint

Before you can get compensation you need to show that you have grounds for a complaint (see below) and that you have lost out financially as a result.

If you haven’t lost out, but are still unhappy with the risks of an endowment policy, you may be able to switch to a repayment mortgage. If the firm that sold you the policy has upheld your complaint it should help you switch and ensure that you don’t lose out if you have to pay any charges, such as transfer charges.

An endowment policy includes life insurance cover so that the mortgage loan will be paid off if you die early. If you stop the endowment when you move to a repayment mortgage and you need life cover, you should make other arrangements through a mortgage protection plan or a separate life insurance policy.

Do I have grounds for a complaint?

You may have grounds for complaint if your adviser did not:

_ tell you how your money would be invested and explain the risks involved; or

_ explain that an endowment policy is a longterm commitment that often gives a poor return if you cash it in early; or

_ check you were comfortable with the risks of your money being linked to investment performance, including the stockmarket; or

_ check there was a reasonable expectation you would be able to keep up payments until the end of the term; or

_ explain any fees and charges and how they would affect the return on your savings. If you bought your endowment policy between 29 April 1988 and 31 December 1994, you should have been given ‘product particulars’ including charges and surrender values for the first five years. If you bought your policy on or after 1 January 1995, you should have been given a Key Features document with details of fees and charges and their effect on your savings over the longer term.

Remember:

_ if you want to make a complaint, do it now – time may be running out; and
_ take your complaint to the Financial Ombudsman Service (FOS) if you’re not happy with the firm’s response – but do it quickly because time limits apply.

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