The Endowment Diary

The Endowment Diary


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

Monday, November 20, 2006

Compensation Payments Stalled

Compensation Payments Stalled

It seems that, according to endowment claims company Brunel Franklin, consumers who were mis-sold underperforming and useless endowment policies are being kept waiting weeks/months for their compensation cheques to arrive.


Seemingly the financial institutions are struggling to cope with a flood of complaints, and some are stalling payouts to successful claimants.

Ian Allison, claims director for Brunel Franklin, said:

"It is wholly unreasonable to wait two months or more for your compensation payout when the figures have already been agreed and the offer accepted by the client. At this point there is no reason why the claim can't be settled within a few days."

It is hardly surprising that the financial services industry in Britain has such a lousy reputation, and that the ordinary man in the street no longer has any trust in it.

It is also worth noting that many in the financial services industry in the City will enjoy massive six figure bonuses this year end. Maybe they would like to use some of their windfalls to help out those who will be suffering shortfalls on their endowment polices?

Yes, that will happen!

Monday, November 13, 2006

The Endowment Mortgage Crisis

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.

Tuesday, November 07, 2006

Another Scandal In The Making

Another Scandal In The Making

The FT reports that first-time buyers and others are taking out interest-only mortgages, with no identified means of capital repayment.

This leaves them dangerously exposed to financial calamity, or being forced to trade down the property ladder to pay off their mortgage.

The increase in interest-only home loans has led to fears of another endowment style mis-selling scandal.

The Financial Services Authority (FSA) has noted that interest-only mortgages are one of the top "emerging retail risks" and drew attention to "an increasing number of mortgages.. with the lender not recording that there was a linked repayment vehicle in place".

People are in danger of mortgaging their future, without any hope of paying off the debt. A very foolish thing to do.