The Endowment Diary

The Endowment Diary


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

Wednesday, May 04, 2005

Time Bar To Bring Chaos

Time Bar To Bring Chaos

Life assurance companies, who sold underperforming and useless endowment policies to 8 million home owners, are using a number of methods to reduce the claims being made against them for compensation.

One such method is the time bar, whereby claimants are given a deadline to complain or lose their right to do so for ever.

This neat little trick is allowed by the Financial Services Authority (FSA), which said that an insurer may disregard a case for mis-selling three years after a policyholder receives the first "red" letter warning that an endowment has a high risk of not meeting its target.

Needless to say, there is now a deluge of complaints swamping the system.

Many hundreds of thousands of red letters were sent out in early 2003, this means that the deadline is now fast approaching for these people to make a claim.

The deluge has been further exacerbated by the fact that the FSA has told the life assurance companies that they must remind people 6 months before the final deadline, as to their right to make a claim.

Needless to say the life assurance companies and the Ombudsman will be hard pressed to cope with this deluge of complaints.

It has taken me over two years to reach the final stage of my claims which, for the record, were both rejected.

Simply put, the system can't cope!

This problem is exacerbated by the fact that, according to Chief Ombudsman Walter Merricks, 45% of endowment mis-selling cases were upheld by his office after being turned down by life companies.

These companies are reportedly issuing time bars:

Norwich Union - it has 1M endowment policyholders. It began warning of a time bar last October, giving 12 months' notice.

Standard Life - it has 1.2M endowment policyholders. It will write to customers in coming weeks to remind them about its deadline, giving 12 months' notice.

Royal & SunAlliance - it has 450K policyholders. It began reminding policyholders about time-barring last May and gives policyholders six months to complain after a second red warning letter.

Allied Dunbar/Eagle Star - it has 100K policyholders. Policyholders have 12 months to complain after receiving second letter.

Friends Provident - it has 450K policyholders. They have imposed a three-year time bar after policyholders receive their first red letter.

Pearl/NPI/London Life - it has 100K policyholders. Time barring applies three years after the first red letter.

Axa - it has 160K endowment policyholders. It introduced time-barring last month and is writing to customers giving 12 months' notice.

Scottish Widows - it has 165K endowment policyholders. It introduced time-barring in February, giving customers 12 months to complain after receiving their second red letter.

Good luck!

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