Endowment action campaign falls short

Just under half of people who have complained that they were mis-sold an endowment mortgage have been offered compensation, research claimed today.

The Consumers' Association found that 47% of people questioned who had complained about mis-selling to the company from which they bought their policy had been offered compensation. Furthermore, 14% of those offered redress did not accept it, and nearly three-quarters of these consumers did not pursue their complaint further with the financial ombudsman service.

Around half of people who had their complaints rejected also chose not to take them further.

The research, which was based on an online survey completed by 2,086 people, comes a year after the Consumers' Association launched its endowment action campaign.

The association said that during the past 12 months over 500,000 people had visited its web site, and 46,000 people used its letter generator to help write their own complaints to the firm from which they bought their policy.

An overwhelming majority - around 91% - of people who complained about their endowment policies attributed their complaints to the fact that they were told their mortgage would definitely be paid off by their policy and they would probably also receive a lump sum. Around 86% of people said they were not warned that the endowment might not be large enough to pay off their mortgage.

Just over three-quarters of people said they were not asked about their attitude to risk when they were sold their policy.

Sheila McKechnie, director of the Consumers' Association, said: "It is particularly worrying to see the number of people who are not going on to the ombudsman despite the fact that they are clearly unhappy with the way their complaint has been dealt with.

"It is clear from our survey that more needs to be done by the financial services authority and industry to inform people about their right to take their complaint to the ombudsman if they are unhappy with the way their complaint has been dealt with by companies."

But Alan Woods, head of life and pensions at the Association of British Insurers, said: "The industry is committed to communicating clearly with its customers and to handling complaints fairly and consistently. Where cases of mis-selling have been identified and consumers have lost out financially, compensation has been paid.

"All customers are told about the role of the financial ombudsman service and the options open to them. But it should be remembered that the existence of a potential shortfall is not by itself evidence of mis-selling."