Are we being offered enough compensation for mis-selling?

Q We took out an endowment policy in 1992 linked to a mortgage of ?30,000 over 25 years. The insurance company have admitted we were mis-sold the policy as it was unsuitable due to the nature of the risks involved. We have been offered ?8,443 as redress. The policy would be cancelled and we would lose the life cover. Does this represent a reasonable offer? If we accept the offer what would be the best option for the new mortgage.

CF



A A lot of people are asking me whether they have been awarded a fair amount of compensation for miss-sold endowments. Unfortunately it is very difficult for me to give an opinion since individual circumstances vary considerably. If you are really unhappy you can try referring the matter to the Financial Services Ombudsman.

However it is a long and tedious business, since the Ombudsman is swamped at the moment and has a huge backlog of cases to be dealt with. As a result it could be months before you even get an acknowledgment let alone a verdict that you may or may not find acceptable.

In your case, the ?8,443 received could be used to fund another more cost effective and tax efficient savings method to repay the existing interest-only mortgage, such as individual savings accounts (Isas).

Alternatively you could switch to a repayment mortgage using the ?8,443 to reduce the amount borrowed and , therefore, the cost of the monthly repayments. Life cover can be arranged separately quite cheaply, especially if you use decreasing term insurance for the period until the mortgage matures.