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Endowment time bars for complaints to be relaxed

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  • 16/12/2002
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The Financial Services Auth- ority (FSA) has published a consultation document which suggests relaxi...

The Financial Services Auth- ority (FSA) has published a consultation document which suggests relaxing time limits for mortgage endowment complaints.

It believes the three-year period (during which complaints are permitted) should start from the sending of a red re-projection letter, stating a high risk of the endowment not reaching its target.

A red letter alone does not start the clock and a claim can only be made if the policy was mis-sold at the outset and there was potential for financial damage as a result of that mis-sale.

The Consumers’ Association (CA) welcomed the suggestion but added that the public needed more information.

Mick McAteer, senior policy adviser to the CA, said: ‘The FSA must provide clear information to consumers on how they should go about seeking redress. The CA’s and FSA’s research found a minority of mortgage endowment holders said they were properly advised on the risks of taking out a mortgage endowment policy.’

The proposals take account of FSA research showing 99% of endowment holders are aware of concerns about endowment mortgages.

84% said their policy was either on track to pay the sum assured, or that any shortfall was no problem and 21% of endowment policies were never, or are no longer being used to repay a mortgage.

Stephen Sklaroff, deputy director general of the Association of British Insurers, said: ‘This research largely confirms our own understanding of the performance of the mortgage endowment market and will help bring a much-needed sense of perspective to this issue.’


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