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.’
