Beware The Compensation Offer
It seems that holders of mis-sold endowment polices have yet another issue to worry about.
Having successfully got through the complaints procedure, and been offered compensation by a "reputable" life assurance company, one would have thought that the policy holder could rest easy.
Unfortunately this does not seem to be the case.
It is reported that some well known life assurance companies are doing everything they can to minimise their compensation payments. They are reportedly making "mistakes" in the awards that they offer successful claimants.
One trick that has been used, is to calculate the compensation up to the date that they sent the first warning letter. Allowing for the lengthy time it takes for the complaint to be made and compensation to be agreed, coupled with compound interest rates, this can make a significant difference to the award amount.
However, the FSA take a different view on this; their rules state that the compensation must be calculated up to the point when the policy holder actually took action to deal with the problem.
In my view, the actions of those life assurance companies who seek to "bend" the FSA rules in this manner are reprehensible to say the least. They are undermining what little credibility the life assurance industry has left, and are leaving people with the impression that life assurance firms are little better than sleazy and underhand con artists.
The lesson here is, as with any financial decision, always take independent financial advice from a properly qualified and reputable adviser before making any financial decision (eg accepting a compensation payment).
Do not assume that the life assurance company have got their sums right!