Not so well endowed

Your leader on the mis-selling of endowment mortgages (November 2) is only about 10 years too late. As a retired independent financial adviser, I can tell you that the message about the inappropriateness of endowment policies was well known at least a decade ago and widely promulgated within the industry. Alas, because of their profitability as commission generators, this was suppressed by the sales managers.

Two points stand out. Firstly, that the buyers of endowments have to an extent contributed collectively to their own downfall, by rejecting a logical move to fee-based independent advice. You don't expect your solicitor or surveyor to do other than charge you a fee; why rely for unbiased advice on someone who only gets paid after they've got you to sign a contract?

Secondly, nobody should panic and be frightened into adding another dubious life assurance policy to the one they already have, or into cancelling it. Shop around, be prepared to pay a reason able fee for professional advice, and top up your mortgage-related savings with a direct investment into a series of ISAs, or a spread of suitable regular investments - unit or investment trusts.
Christopher Purser
Thirsk, N Yorks



Many endowments were probably once sold corruptly. In the days when the mortgage market was closed, and one might beg for a mortgage, a friendly insurance man found me a mortgage from a branch of a building society in a town I had never visited, for a house in a third town. I assumed that the commission on the endowment policy oiled the wheels, but I wanted the mortgage.

Endowments were made much more attractive by the tax relief on mortgages, which meant that never paying off the debt until the very end, using the proceeds from the endowment, meant more of the mortgage was paid by the tax man. The erosion of tax relief means this is no longer the case.

If government tax policy is to change the financial benefits of insurance and mortgages, as well as pensions, it may not be fair to put all the blame at the door of the financial services sector. Are ministers prepared to guarantee that the tax terms stay the same on any long-term financial contract I enter? Perhaps financial products should also carry a warning that says: "The benefits from this policy depend on the tax system. Tax rates can go up as well as down. Tax relief can go down as well as up. You should seek the advice of a political consultant before entering a long-term financial agreement."
Dr Peter West
London



Some of us worked out a long time ago that endowment mortgages were a mistake and took out repayment mortgages with mortgage protection insurance policies. If those who fell for the endowment mortgage sales pitch are compensated, the cost effectively falls on those who made the right choice - so what incentive is there for making good financial decisions?

The series of "mis-selling scandals" is an inevitable problem when the public is expected to enter into contracts which are longer than the probable lifetime of the company that sells the product. Today's 20-year old starting a pension plan may well still be collecting the result in 2070, and how many financial decisions made in 1930 would look sensible today? I am convinced the only approach in the long term is the demise of the whole financial services industry and a return to state pensions paid from current income.
Chris Chaloner
Bristol
Chris.Chaloner@ukgateway.net