The Endowment Diary

The Endowment Diary


The Endowment Mis-selling Debacle - one of the UK's worst financial scandals

Monday, June 02, 2003

Extract of letter sent to company A today:


Dear ...,

Thank you for your letter dated 15 May 2003 (ref ..), in which you reject my claim for compensation for the mis-selling of the endowment mortgage.

I have noted the contents of your letter, and have the following observations:

 You state that I omitted to complete the section in the fact find in 1991, which dealt with my investment attitude. This formed part of your own procedures at the time, the fact that it was not completed, yet A proceeded with the endowment indicates that A breached their own procedures; ie the policy was mis-sold.

 You state that I have a low attitude to risk, yet you state that there was a risk (as is evidenced by the projected shortfall) that the policy would not pay off the mortgage. This contradiction indicates that the policy was unsuitable to my risk attitude, and should not have been sold to me.

 You state that the fees and charges were not explained to me at the time, as it was not a legal requirement. Legal requirement or not, these fees have a negative impact on the performance of the policy. An ethical company, following best practice, would have openly disclosed them.

 You state that I was already in the process of arranging an interest only loan through Barclays, and that the sale of the endowment was therefore justified. That should not have precluded your representative from discussing other options for repaying the mortgage; he did not.

 You state that you can find no evidence to support my complaint that a guarantee was given. I refer you to the financial quote provided by A at the time which stated:

“..A regular investment is made into an endowment life assurance policy, which is designed to repay your mortgage at the end of the mortgage term….

A's range of build up mortgage plans is designed not only to repay your mortgage at the end of the mortgage term but also to provide you with an additional cash sum….

By taking out an A build up mortgage plan you can be assured that you are making the right decision for 3 important reasons…

1 Investing into an endowment assurance policy offers you the prospect of a substantial surplus cash sum after the mortgage has been repaid..”.

The above, to my view, constitutes a guarantee.

 I draw your attention to the case (summarised in The Times 26 October 2002) where David Barker cited a 1965 Court of Appeal judgement by Lord Denning which ruled that a verbal statement which induced someone to take out a contract could be considered to be a warranty. Mr Barker won his case.

 I first raised my complaint with A on 11 October 2002. Since then I have exchanged a number of letters enquiring as to the progress. I was promised a final response by January 2003, one of several deadlines that was missed. In a letter from Mr... (30 April 2003) I was assured that the reasons for the delays would be answered by A. Your letter does not address these issues.

 My letter of 11 October 2002 requested a copy of my endowment file. This request has been ignored.

 Finally, why would I have opted for an endowment if it were not going to pay off the mortgage? What would have been the point of finding myself at the end of the term with a shortfall?

Based on the above I disagree with your conclusion, and reiterate my contention that I was mis-sold the endowment policy.

Additionally, I am of the opinion that my complaint about the mis-selling and the delays in responding to my original complaint and subsequent letters have not been handled satisfactorily.

To this end, I therefore give you the opportunity to address the points I have raised above; and reconsider you assessment of my claim.

Dependent on your response, I will raise a formal complaint with the Ombudsman and FSA.

As with all other correspondence relating to this matter, this will be posted on my public blog “The Endowment Diary” on

Thank you in advance.


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