A Straw in The Wind
The Financial Services authority (FSA) has decided that it is now time to "get tough" with the life assurance industry, in respect of the underperforming and useless endowment policies that some 8 million people hold in the UK.
The FSA have written to the chief executives of all companies that sell endowment policies; the letter warns them that, in the opinion of the FSA, they (the life assurance companies) are dismissing complaints from customers without proper investigation.
To date, 500,000 people have complained to insurers and banks; and have received compensation for endowment mortgage mis-selling.
The FSA notes that the Financial Ombudsman Service (FOS) is upholding a large proportion of complaints, that were originally dismissed by the companies that sold the policies; this gives rise to the conclusion that the life assurance companies are not handling the complaints properly.
The FOS now employs 1000 people to handle endowment complaints.
Clive Briault, managing director of retail markets at the FSA, says:
"firms may not be handling complaints properly...Firms should not manage their own caseloads by allowing an excessive number of complaints to flow through to the FOS...".
The FSA has also identified "inconsistencies" in the decisions of some life assurance companies, relating to certain types of complaint.
To date the FSA has fined two companies, for their failure to handle complaints about endowment mortgages properly.
-Allied Dunbar Assurance was fined £725K for serious flaws in March 2004
-Friends Provident was fined £675K for failures in its procedures.
The FSA states that it wants firms to review their policies and procedures for the handling of complaints, and confirm that they are appropriate or take any necessary action.
The FSA will continue to monitor progress and outcomes to assure itself and the public that complaints are being handled fairly, and to act in any cases where it finds weaknesses that put consumers' interests at risk.
There is reportedly a straw in the wind, albeit a rather small one, that indicates that the mood at FSA headquarters is shifting in favour of the hapless endowment policy holder. Namely, that the majority of policies were not mis-bought but mis-sold.
Which? goes one better.
Which? wants the FSA to order a wholesale re-investigation of all rejected complaints, to ensure that people have been dealt with fairly.
Louise Hanson, head of campaigns at Which?, said:
"The FSA must continue to take these bad apples to task by immediately naming and shaming them, and then implementing significant fines where rules have been broken.."
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