More bad news on endowments

Endowment mortgage holders should brace themselves for more bad news when policy providers send out the third round of projection letters in as many years, the Consumers' Association warns today.

Some of the financial services industry's biggest names have delivered the worst performances, the research suggests. In the CA's survey of almost 5,000 people Abbey Life customers report an average shortfall of £12,910. The average shortfall across all companies is £8,680, a quarter of the value of an average endowment at the end of its term.

CA director Sheila McKechnie said: 'If you were sold an endowment policy and you are shocked at the size of your shortfall, you may not have been properly advised. If you think you may have been mis-sold, you cannot afford to delay. You need to get your letter of complaint in the post. It is very concerning to see that 70 per cent of the endowment policyholders with shortfalls we surveyed have not yet complained.

'Consumers who got red letters in spring 2000 may only have a few days left. If you delay, you could lose your right to complain.'

Fresh CA figures show that almost two thirds of consumers with shortfalls have done nothing to reduce them - although the watchdog is more worried about the 11 per cent who have increased their payments. 'People should complain rather than potentially throwing good money after bad,' added a CA spokesman.

A CA website set up in September, www.endowmentaction.co.uk, has received almost 500,000 hits, excluding repeat visits. More than 35,000 people have downloaded a complaint letter that must be sent to the firm that employed the salesman. If no satisfactory reply arrives within eight weeks, the complaint can go to the Financial Ombudsman Service. The Ombudsman received 15,000 complaints in 2001. The Financial Services Authority insists CA estimates of millions of mis-sold endowments are exaggerated.

But the CA says the response to its campaign shows the financial services industry failed consumers who deserve compensation.