Time-barring scandal

A new report shows that Britons missing out on thousands of pounds as a result of mis-sold endowment mortgages are still being denied compensation.

Millions of consumers were sold endowment mortgages in the 1980s, which they were informed would mature and pay off their mortgages as well as probably delivering a surplus.

Yet, many people are left with a shortfall between the value of the loan and the value of the endowment policy due to the under-performance of the stock market. If this risk was not fully explained (as was the case in an estimated 80 per cent of cases at one point) consumers are entitled to compensation from the institution that sold them the policy.

It has been discovered that some policy holders are actually being denied compensation because they waited too long to ask for it.

This contradicts guidance from the Financial Services Authority (FSA), which states that consumers must be notified of any potential shortfall.

However, the recent (FSA) 'time bar' ruling means policyholders have limited time to claim compensation. An estimated 2.2 million homeowners still have endowment policies, which may well have been mis-sold.

The minute they receive a 'red letter' explaining that their endowment may not reach its target rate, the clock begins to tick.

Sources reveal that some policy holders are still being blocked despite being sent a 'red letter' under old rules, while others have simply not been sent their letter, yet are still being time barred. Some mortgage holders are even being blocked as letters sent out by insurance companied did not meet regulations.

Sep 29, 2005
Email this article


Previous Page