Time for review on mortgage shortfall

Three years ago, when Jobs & Money broke the story about the impending disaster of shortfalls on mortgage endowments, industry insiders accused me of exaggerating the scale of the problem.

Yes, there might be the odd one or two that fall off track, but the press and the regulators were being far too dramatic. They argued that the "reprojection" letters, forcing them to predict future growth at 6% a year, were too pessimistic.

The 6% figure was indeed wrong. What has actually happened is that markets have dived by around 20% since then. The one million endowments thought to be off track soon rose to three million, and by our estimate may now be as high as six million.

That many endowments were mis-sold by building societies, banks and insurance agents bent on picking up commissions typically worth £1,500 a go is beyond doubt.

What is surprising is the very limited evidence we have so far of compensation. When regulators targetted personal pension mis-selling, huge numbers of people were found to have been wrongly advised, and the industry was forced to shell out £16bn.

The industry must have better political lobbyists this time round, because they have managed to sidestep compensation on anything like that scale.

The regulators have obdurately refused to institute a formal review of endowment mis-selling. Yet there are whole classes of buyers who were missold because the endowment was designed to run long into their retirement, when they cannot continue to afford paying.

It is time for the FSA to revisit its decision not to order a general review.