Standard shapes up with time bar

Standard Life today became the latest insurer to impose a time limit for customers who want to complain about being mis-sold an endowment mortgage.

The move will give an estimated 350,000 policyholders until mid-2006 to claim compensation if they face a shortfall against the target amount at maturity.

Friends Provident and Norwich Union are also in favour of time-barring and Standard Life said it believed the move was fairer to all policyholders.

The move - in place of an open-ended complaints process - is among changes being made by UK life and pensions chief executive Trevor Matthews as Europe's largest mutual insurer gets into shape for demutualisation and a likely flotation in 2006.

As well as product changes designed to protect its financial position, Standard has so far realised annual savings of ?87 million, including a reduction of 1,700 jobs. It had originally targeted a figure of around 1,500, mainly through staff turnover.

Standard also announced changes to its mortgage endowment promise, a pledge introduced in 2000 to top up payouts at maturity when there is a shortfall between claim value and the amount targeted.

Under the scheme, Standard Life made provisions of ?100 million a year but said the poor investment conditions meant it was no longer sensible to continue.

The existing provisions already set aside almost ?400 million, which will be used to fully pay customers with policies maturing between now and December 31, 2005. Payments on policies maturing after that date will be reduced to a level of between 40% and 60% of the maximum.

Standard Life said the move protected its financial position and ensured that policyholders were not disadvantaged generally. It pointed out that it never guaranteed the payments at the time of making the promise.

The group also said it would change its bonus policy to reflect underlying investment values and the phasing out of mutuality benefits.

Mr Matthews, who joined Standard Life from Manulife in Japan on July 1, said the changes strengthened the position of the company and balanced the interests of all policyholders.

He added: "Maximising the value of the business for members now and in the future is a dominating focus."