Press Article
Endowment holders feel cheated
By David Pawsey
Mortgage Adviser,
Thursday , August 14, 2008
Almost nine out of 10 endowment policyholders felt they were mis-sold the investment, according to Fairinvestment.
The financial comparison website conducted a survey that revealed 87 per cent of UK residents with an endowment policy believed it was sold under false pretences.
Fairinvestment also found 49 per cent of respondents said they had been given a guarantee the policy would cover their mortgage.
Sharon Bratley, chartered financial planner for Fairinvestment.co.uk, said: "Our results show almost half of people questioned felt they had bought their endowment policy on a false promise.
"This is not just a case of a small purchase. This is thousands of pounds for a house we are talking about."
A further 27 per cent of those polled believed the risks of an endowment policy were not made clear at the time the investment was taken out.
Ms Bratley said: "There are several reasons somebody may have been mis-sold an endowment policy, including a lack of adequate explanation.
"An endowment policy is not a short-term commitment and this should have been made clear when the policy was bought as should the fees and risks involved.
"Without this information people were unable to make an informed decision and should be able to claim some compensation depending on the circumstances."
Of those questioned, only 10 per cent said they were not mis-sold their endowment policy because they were made fully aware of the risks involved and the fact it may not pay off the mortgage in full at the end of the policy.
In its annual review for the year 2007 to 2008 the Financial Ombudsman Service reported endowment complaints had fallen from 46,134 for the year ending 31 March 2007 to 13,778 for the following year, a reduction of 70 per cent.
Martyn James, press office for the ombudsman, said consumers had three years to make a complaint once the endowment provider had notified them their policy was unlikely to pay off their mortgage.
He said: "Since the FSA introduced a requirement for firms to notify the date they would be time barred the majority of complainants have already complained."
James Carter, proprietor of London-based adviser Independent James, said he agreed with the ombudsman that endowment complaints had peaked.
He said: "Of those who were going to complain the majority have done so by now. The furore certainly seems to have died down a little."