Endowment Complaints

We were one of the first companies in the UK to go on public record with our concerns about problems with endowment policies. In 1991 we questioned their suitability for all borrowers and later that same year we published an article in which mortgage types we contrasted which stated

"Repayment mortgages were guaranteed to repay a mortgage" but an endowment policy merely "should produce a lump sum."

In 1992 we published a hard hitting article which the opening paragraph stated

"Endowment disaster, up to a million borrowers face the concerning prospect that their endowment policies will not pay off their loans."

We suffered a lot of anonymous abuse and threats after this article, but undeterred we continued to publish many articles about the problems with endowment policies. As a company we feel that we contributed greatly to the general public awareness that

"Repayment mortgage do offer something that endowments don’t. The certainty that the mortgage will be paid off" (Sept '92 article published).

Over the next few years we provided clients with a neutral approach to home buying in accordance with the Office of Fair Trading recommendations. We provided research which took many days to compile on endowment and repayment mortgages from 1993 to 1999. The Endowment Report's opening paragraph even back then stated

"Endowment policies have come in for a fair degree of criticism and there are some fears that they will not pay enough to pay off the mortgage."

This is 10 years ago.

The underlying investment of Equities, Commercial Properties and Fixed Interest were also analysed, and other aspects such as past performance, charges and financial strength, were also studied to provide the best possible basis for discussion about the better companies, which has been valuable whilst the equity markets were poor.

It may be the complaints culture that we now live in, but it still amazes me that anybody would say that we have said that an endowment policy is guaranteed to pay off a mortgage, particularly when we have stated as a matter of public record on numerous occasions in newspaper articles the problems of shortfalls and the nature of an endowment policy. We have suffered from threats as a result of trying to inform the general public. We have however had a handful of investors who believe we have guaranteed the payout, resulting either from the passage of time or a belief that there is a compensation rainbow. Fortunately we do keep copious notes and where the ombudsman has looked at the detail he has ruled in our favour every time. To look at these cases impartially as nobody is exempt from mistakes does take a considerable amount of time

I do realise that despite out earnest attempts to inform the general public about the nature of an endowment policy, that many other investors were told that their policies were guaranteed and they have very good grounds for complaint and should do so. We have aided many of these investors free of charge, but in our case this is rather like a heart surgeon publishing that fast food contributes to heart attacks, only to be sued years later for encouraging people to eat fast food.

We will continue to assist genuine investors who have a valid complaint, but as this has grown significantly in the last few months we will have to introduce a charge of 15% of the redress gained. We have always tried to put something back into the industry whether it was providing free help with repossessions and arrears in the early 90's to endowment policies nowadays. Unfortunately and it is with regret it has become too time consuming to work without remuneration, particularly when we have had to defend ourselves against a few compensation hunters.