The Endowment Mortgage Crisis
It is not with any exaggeration that the mis-selling of mortgage endowment policies is being described by many as the worst financial scandal in Britain of the last 30 years.
However, quite disgustingly the life assurance industry has done its best to wipe it hands of the matter; by trying to apportion blame on those who took out these useless underperforming products.
It is estimated that around 2.2 million people are facing shortfalls averaging £7,000.
The average payout on a £50 monthly 25-year policy has halved from £98,000 in 1992 to just £48,000 today.
Companies guilty of mis-selling have already paid out 2.3BN in compensation to over 1.5 million people.
The House of Commons Treasury Select Committee conducted an investigation into mortgage endowment mis-selling and issued a damning indictment of the industry.
The Chairman, John McFall, said:
"The effects of mortgage endowment mis-selling will be felt for at least another 10 years as these policies fall due for repayment.
It is absolutely vital that homebuyers who were mis-sold lodge a claim for compensation before the time bars come down.
Otherwise they will have even greater difficulty coping with payment shortfalls.
The lesson for the financial services industry is to be always simple and straightforward in its future dealings with the public.
I hope that going forward they have learned from this cathartic experience."
The lesson has clearly not been learned, as the life assurance industry is refusing to do the one thing that would restore people's faith in it, and eliminate the crisis that is causing misery to millions, namely underwrite these useless products.