The Scandal That Won't Go Away

Despite hoping that the endowment mis-selling scandal will go away, life assurers are now having to face the same financial misery that the 6 million of us who bought these non performing white elephants have been enduring for the last few years.

Evidence of this emerged yesterday, as Nationwide has announced that it has tripled its provisions for compensating endowment mortgage customers; as complaints of mis-selling continue to escalate.

Fortunately for Nationwide, they do have a 21% increase in profits to cushion the effect.

Nationwide has raised its provision from £11M to £34M.

They admit that it is "possible that the value of some investment policies will not be sufficient to fully repay mortgages on maturity".

Quite!

Don't fear for Nationwide's future, its pre tax profits for year end April 2004 were £426M.

I dropped Milberg Weiss a note today, to confirm that they have received my original enquiry about class actions sent a few weeks ago.

I have just had a look at a wonderfully acerbic site, that takes a punch at the "Which" campaign for compensation for mis-sold endowment mortgages.

The site www.notwhich.co.uk, quite rightly, points out the risk of making fraudulent claims.

It then goes on to have a "pop" at Which, for allegedly recommending endowments in the 70's and 80's. They even have a complaint letter generator which you can send to Which.

I understand that the site is the brainchild of certain Independent Financial Advisers, who are sick of people complaining.

It is a splendidly entertaining site. However, the comment in the lurid green box at the bottom of the page; asking for regulation of "The Dammed Press", is something that I do not agree with at all.

Freedom of speech is essential, to suppress the media just because a vested interest does not like what they say would be a step towards dictatorship.

I see that the rules relating to compensation payments for mis-selling, may be adjusted by the end of this year.

The new rules will cover consumers who have lost money, because they have been mis-sold a product such as an endowment policy, or have been given poor financial advice.

The scheme will replace the voluntary arrangement currently practiced by brokers et al, and will come into force from October 2004.

Shutting The Stable Door

It seems that the government has finally woken up to implications of the endowment policy mis-selling scandal.

However, before we all crack open the champagne; in the expectation that some form of compensation will be winging its way to us, I must dampen your spirits.

The government, realising the mess that the mis-selling of endowments has caused, is making sure that the same thing will not happen again for home reversion schemes.

These schemes are whereby older people may release the equity from their homes, and live off that until they die.

Needless to say these schemes have every chance of being as massively mis-sold, as the endowment polices were in the 1980's.

Therefore the government will regulate them.

Announcing the decision, financial secretary Ruth Kelly said that buying such a policy represented a huge decision.

She added: "It can have significant implications for tax, benefits, inheritance and long-term financial planning."

No kidding!

Happy Monday!

It seems that a staggering 84% of endowment policies are unlikely to reach their target. This figure is likely to grow, as life assurance firms cut their projections.

The projections are likely to fall as the Financial Services Authority has asked all life assurance companies to use lower rates, if they hold less than 70 per cent of their with profits funds in equities and property.

It seems that only Legal & General and Prudential hold almost 70% in equities and property (69% and 65% respectively); the rest fall short.

It is estimated that every 1% reduction in the projection rate will reduce the payout on a £100K 25 year policy, with 12 years to run, by £7K.

A nice way to start the week!

Drip Drip Drip

Yesterday the Bank of England raised interest rates by 0.75%, for the third time.

This move did not come as a surprise, the markets did not take flight; and it is unlikely that the booming housing market will collapse as a result of this one rise.

However, couple this rise with the two others and the prospect of more to come; then add in the total failure of the FSA, and the insurance companies, to address the endowment mortgage mis-selling scandal.

You now have a recipe for undermining the confidence and trust in the housing market, something which underpins the entire British economy, and causing a collapse in both the housing market and the economy as a whole.

We live in dangerous times.

More Doom and Gloom

It seems that shortfalls on endowment mortgages are likely to be worse than currently projected by life assurance companies.

The problem lies with the asset mix. Most of the major insurers have switched the majority of their holdings from equities and property, into assets with a lower rate of return.

Life insurers are now forced to publish far more detailed information about their investment strategy, and charges levied on their with profits funds.

However, these disclosures (called entitled Principles and Practices of Financial Management) do not require companies to disclose in full the asset mix of their funds. As usual, something that is "too little, too late".

In addition to disclosing their asset mix, life insurance companies are now disclosing that they are introducing additional charges to back up their guarantees.

Norwich Union will charge customers in the Norwich Union Life and Pensions with profits fund an additional 0.75%, and CIS will charge an extra 0.5%.

Ever felt like you were being screwed both ways?

Taking the above into account, it is unlikely that the so called "projection letters" dropping onto your mats over the coming months are accurate.

We, the holders of these failed endowment schemes, are just meant to sit and watch these companies try to bury their heads in the sand; and avoid telling us the truth about how bad things really are.

Pathetic!

The Association of British Insurers has announced that it is revising its industry code of practice on endowment mortgages.

It will provide more, and better information, for consumers to help them take prompt and appropriate action if they are faced with a potential shortfall on their endowment mortgage.

All very well, but time is running out.

Bad news for the 1.5M people holding endowment mortgage policies with the Norwich Union.

Reports indicate that the Norwich Union will be cutting their returns by 0.75%.

This cut is ensure that the guarantees made by Norwich Union, which promise that the policy will be worth a minimum amount on maturity, will be honoured.

Norwich Union expects returns of between 4.5%-6% a year after tax.

Doubtless other life insurers will be delivering bad news as well.

I understand that some of the UK's actuaries have taken a dislike to the Treasury Select Committee's investigation into the endowment policy mis-selling scandal.

They have branded it a "circus" after a heated and aggressive hearing. What is aggressive to some, is critical analysis to others.

My message to the Select Committee is simple; "keep up the good work!".

It seems that endowment letters, currently being sent to the hapless owners of the failing endowment mortgage policies, may not reflect reality.

The ConsumersÂ’ Association is worried that the calculations that may not reflect the true financial position.

The letters that will be dropping on peoples' floors shortly, will show that the expected shortfalls have increased. However, because unrealistic returns of 6% are being used in the calculations, these figures are more than likely too optimistic.

The current asset mix held by life assurers is more heavily weighted towards bonds,whichh have a 4% yield.

Hardly good news for the hapless home owner with an endowment mortgage.

Don't despair the FSA says that it is keeping its eye on things.

Well that's alright then, isn't it?

According to today's FT, more than 75% of endowment polices will not meet their target.

See full article here.

What a bloody mess!

Marginally off topic, but related to my earlier post about Abbey, there is a rumour doing the rounds of the City that Abbey National may be subject to a takeover bid by Spain's Santander bank.

This morning Abbey's shares rose 5%.

Maybe here is a possible solution to those of us facing shortfalls on our endowment mortgage policies.

Hedge the expected loss, by buying shares in banks and insurance companies (the same organisations that mis-sold the endowment policies) that may be subject to takeover bids.

Note, I am speaking with my tongue "firmly in my cheek". This would be a high risk strategy, which would quite likely lose even more money than the shortfalls predicted on the endowment policies.

Remember, when making an money related decision, always take the advice of a suitably qualified independent financial expert and lawyer.

I understand that Abbey is trying to avoid responsibility for mis-selling endowment policies pre April 1988.

Their rationale being that before the Financial Services Act took effect in April 1988, there were no rules covering endowments.

However, there is a voluntary agreement whereby banks are supposed to take responsibility for investment products they sold before April 1988.

Abbey happily argues the point that it was under no obligation to inform borrowers about any risks, it was in their view the role of the endowment company to explain the risks.

How very helpful of them!

Needless to say, if it wins this argument, it will not have to pay compensation for endowment policies mis-sold before April 1988.

It certainly needs all the financial help it can get, as over the last two years it has lost over £1.5BN.

It may be that the Financial Ombudsman Service takes a different view.

In my view, do not "lay down and die" just because your IFA has fobbed you off with the "Abbey excuse"; take it to the Ombudsman.

I understand that the Financial Services Authority is under pressure to reduce the mid range projection rate of 6% per year, which it has been using for the last 5 years.

Leading insurers are worried that the rate is unrealistic, and have themselves reduced their projection rates to around 5.5%.

The FSA is reviewing the rates and how they are calculated, a reduction in the rate will give rise to a whole new flurry of red letters warning of shortfalls.

This of course is an entirley academic exercise, the only sure measure is the day the endowment policy ends; and the difference between the endowment fund and mortgage debt is calculated.

I understand that Allied Dunbar has upheld a misselling complaint against an IFA, despite overwhelming evidence that the risks inherent in the policy were made clear at the time of sale.

The client alleged that he understood his Maximum Investment Plan (MIP) to be a savings product, and was unaware of the possibility of any shortfall. He claimed that he was not told that the policy was linked to the stock market.

However, the personal illustration issued at the outset, warned that an annual growth rate of 5% would cause the policy to fall short of its required maturity value by £5K.

Despite this, the life office upheld the complaint and refunded the investor’s contributions.

Zurich, which owns Allied Dunbar, noted that that the complaint was upheld on a technicality.

Allied Dunbar was fined £725K by the FSA for not dealing with misselling claims quickly enough.

This decision should, in my view, have repercussions for those of us seeking compensation for endowment mis-selling.

Reuters report that complaints about endowment policies will hit 2004 profits at Countrywide Assured's life assurance unit. This unit will be demerged, and will start trading as Chesnara on the 25th of May.

The firm is expected to take a £4.8M provision to cover against complaints for endowment policy mis-selling.

Countrywide Assured note that "..the increased level of endowment complaints experienced during January and February 2004 has persisted...".

Welcome to the Wild West

I received an interesting letter today, from the complaints company handling my claim for compensation the mis-selling of my pre 1988 endowment mortgage.

It seems that in the last few days another company has been writing to some of their clients. This “interloper” claims that the complaint cases have been transferred to them.

In other words, the “interloper” is trying to poach the business of the company that is meant to be handling the endowment complaint.

My complaints company points out that it has not transferred any cases to another company, and has not agreed that this company may contact its clients.

Their letter then goes on to ask me if I have been contacted, and to forward any details that I may have, I have not.

I rang to ask them how it was that this “interloper” had managed to get hold of their clients’ details. I was told that they do not yet know, they are conducting an investigation to find out.

This rather sad, and disturbing, tale shows how unpleasant and poorly regulated the whole endowment industry has become. In my view it is more akin to the Wild West, rather than a well regulated financial system in the 21st century.

Not only are 6 million endowment policy holders facing an expected £40BN shortfall on their mis-sold policies, they are now subject to dirty tricks by unscrupulous sharks seeking to bleed them dry of even more of their hard pressed funds.

In my view, the FSA and insurance companies need to get their act together and sort this disgraceful situation out once and for all.

Citizens' Advice are warning that the UK faces a debt crisis, which threatens to ruin the lives of many.

Their research shows personal debt problems threaten to overwhelm large numbers of people; this was the message at a debt conference organised by the Conservatives.

Citizens Advice has seen a 44% increase in debt problems in the past six years, and its 2,800 offices deal with over one million new debt enquiries a year.

The expected £40BN shortfall on mis-sold endowment polices will hardly help this situation.

Citywire report that house prices are continuing to rise. The gap between north and south is narrowing.

The Halifax notes that house price inflation in London has fallen from 19% in the first quarter of 2003 to 9% for the same period this year, and from 26% to 7% in the South East on the same basis.

House prices continue to rise most rapidly in northern England and Wales. The biggest price increases over the last year have been in the north (36%), Wales(36%), the North West (30%) and Yorkshire and the Humber (28%).

Rightmove, the property website, expects house price inflation to hit 20% this year.

Rightmove note that the price of an average home was £184,582 in early April, £13,674 more than in January; and 50% more than at the start of 2002. Prices rose 2.8% in March, taking annual price inflation to 14.4% from 11.9% in February.

They are hopeful that there will not be a crash, some good news for endowment policy holders then!

Reuters report today that the Council of Mortgage Lenders have stated that bankruptcies pose a growing threat to the housing boom.

Bankruptices are at their highest level for 11 years.

It is likely that interest rates will rise this year, causing people who have borrowed heavily increased hardship wrt paying their debts.

This in turn will threaten the housing market, which is already under threat from the estimated £40BN shortfall on endowment mortages.

I received a message on The Forum today from Ian, who was asking for advice about writing a letter of complaint.

Here is my response, which is pertinent to all seeking to complain:

"...Thanks for your message, I am sorry to hear of your potential loss.

You are not alone, there are 6 million of us facing a £40BN shortfall.

If you need a good quality proforma complaint letter then go to the part of the Consumers' Association website, which is helping consumers draft complaint letters, it can be found at endowment action.

I would note that the time for making complaints is running out, and that those of you who have not yet done so ought to do so very soon.

Remember that when making any financial decision, take the advice of a suitably qualifed independent financial adviser and lawyer..."

Reuters report today that mortgage equity withdrawal has hit a new record of £16BN in Q4 2003, the total for 2003 being £53BN.

This being approximately 8% of household disposable income.

The withdrawn equity is being used to finance consumer spending. It is expected to top £60BN in 2004.

I would caution against this practice; borrowing long to spend short is very unwise, and is unlikely to be sustainable.

As and when the endowment mis-selling "chickens come home to roost", there is going to be a shortfall of at least £40BN which someone is going to have to finance.

Those that have overloaded their finances with extra long term debt, in order to satisfy short term whims, may find the future very bleak indeed.

I sent the following email to Milberg Weiss (the American legal firm), dipping a toe in the water to see if they can help wrt a class action.

"....I wish to ask about the possibility of taking a class action, in respect of mis-sold endowment policies in the UK during the eigthies and nineties.

During this period these products were created by life assurance companies, to be used as repayment vehicles for 25 year mortgages.

80% of mortgages in the UK used these policies at this time.

They were "hard sold" offering not just full repayment fo the mortgage, but also a tax free profit at the end of the term.

The reality is different, they are underperforming; it is expected that 6 million people will be hit by a shortfall, which is expected to total £40 billion over the next 10 years.

The life assurance companies are doing everything possible to avoid liability. They state that they were investments, and as such there was always a risk that they would fall.

The reality was that they were sold as products, like TV's or cars. There was little or no mention of risks, and the inference was that there would be no loss.

When you buy a TV or car that is not "fit for purpose" you are entitled to compensation. The same should apply here.

I have been trying to claim compensation since Sept 2002, and have kept an on line diary of my efforts "The Endowment Diary" on my website.

Are you able to help, or do you know any firm that can help?

Thanks.

Kind regards.."

Reuters report that John Cunliffe (MD of Macroeconomic Policy and International Finance in the Treasury) told a Treasury Committee this week that house prices face only a small risk of a crash.

Additionally, the ongoing rise in house prices is expected to slow as a result of the rise in interest rates.

This may be some comfort to those of us facing shortfalls on our endomwent policies.

Reuters report today that Aviva, the UK's largest insurer, has increased its provisions for potential mis-selling claims on endowment mortgages from £50M to £80M.

In its annual report, published today, Aviva said it did not believe there would be any material effect on its shareholders from costs arising from the investment linked mortgages.

Approximately 6 million people in the UK face a £40BN shortfall on these underperforming policies.

Companies have paid out more than £670M to compensate policyholders.

The FSA has fined five companies, including Royal & Sun Alliance and Lloyds TSB, over £5M for misadvising clients.

Sales of endowment mortgages peaked in 1988, when they made up 83% of the market, but have since fallen to about 5%.

I received a call from the complaints company handling my claim for the mis-selling of my second endowment policy.

In short, they cannot handle a claim that has already been rejected by the Financial Ombudsman Service.

In view of this, I would therefore question the rationale of anyone using these claims companies.

Presenting a claim to the companies that sold these polices, and then to the Ombudsman is free. However, if you use a claims company they will charge 20-30% of your compensation if they succeed.

To my view, the only reason to use these claims companies is if you have exhausted all other “zero cost” avenues of complaint. However, they do not seem to wish to pursue cases that have already been rejected.

Therefore, in my opinion, they add no value.

That being said, I did discuss the general situation regarding compensation with them. It seems that, in their view, the companies that sold these under performing products are becoming increasingly rigid in their interpretation of what constitutes a justifiable claim.

The claim company was of the opinion that the endowment providers are doing everything possible to avoid paying compensation. My own experiences, and the letters that I have received from fellow policy holders, seem to endorse this view.

I do not regard this as the end of the line in respect of my claim for the mis-selling of my second endowment. I have some other avenues that I intend to explore.

One being, and this no doubt sounds “barking mad”, is to consider the possibility of pursuing a class action via the USA.

No I have not gone mad; the European creditors of Parmalat (the Italian diary company that is Europe’s Enron - please see my article in “In Your Face” entitled “Parmalat Europe’s Enron”) are pursuing a class action against Parmalat Italy, using Milberg Weiss an American legal firm.

My view is that if the creditors of Parmalat can do this; then the 6 million policyholders, who face a £40BN shortfall, ought to be able to do it as well.

My research into the viability of pursuing this may take some time, I am of course happy to hear from anyone who has already taken this route.

I should also mention, for the benefit of the companies that sold these underperforming endowment policies (who I know visit this site on an occasional basis), that "The Endowment Diary" has been brought to the attention of the members of the Treasury Select Committee; who reported last week on the endowment mis-selling scandal.

Their full report can be viewed here.

I see that the Channel 4 News website features a link to "The Endowment Diary".

This issue affects 6 million people; I don't think that the companies that sold us these underperforming "products" are going to be able to sweep the matter under the carpet, by paying small amounts of compensation to just a few people.

My thanks to Jane Perrone of The Guardian's Weblog for mentioning "The Endowment Diary".

She notes that it is "undoubtedly useful to fellow victims of mortgage mis-selling".

I have sent my details to yet another complaint handling company, maybe they will be a little better than the other two companies in obtaining compensation for the mis-selling of my second endowment policy.

Nothing ventured, nothing gained!

Following on from the Treasury Select Committee report into endowment mortgages (the full report can be viewed here), the Association of British Insurers (ABI) issued a press release in which it stated that it would be taking a number of steps:

• The ABI Code on Mortgage Endowments will be revised in consultation with the FSA and other stakeholders and re-issued as soon as possible. Recommendations from the Select Committee will be considered as part of this process.



• The industry is now in the process of sending out a third round of re-projection letters. The ABI will continue to consult on ways of improving all communications with policyholders. The industry is committed to providing the right information to enable customers to take prompt and appropriate action.



• The industry is also committed to handling complaints fairly and promptly. The ABI will work to make improvements in complaints handling wherever these are needed, in consultation with the FSA and the Financial Ombudsman. We will consider the Committee’s suggestions as part of that process.



• The ABI will shortly produce guidance for member companies to use when communicating with customers following a complaint and any award of compensation.



• The industry recognises the need for accurate data and, with the FSA, has already provided a great deal of statistical material to the Select Committee. The ABI will work with the FSA to improve the data further. In particular, we will examine what actions customers have taken as a result of receiving re-projection letters and will update research on the numbers of endowment policies that are still being used to pay off a mortgage.

I welcome steps to improve the situation. However, this problem affects some 6 million people; I don't see that the above steps, other than improving communication, address the fundamental issue.

Namely, endowment polices were not sold as investments but as products; such as cars or TV's.

When a new car or TV breaks down (ie it is not "fit for purpose") you return it to the manufacturer and get it fixed, or a replacement that works.

Endowment policies have been shown to be "not fit for purpose" (they will not pay off the mortage), the 6 million people facing a shortfall need to have a product that works; ie something that will pay off their mortgage.

The insurance industry needs to come up with a solution; otherwise we will see both the collapse of the housing market, and the destruction of the insurance industry, as these policies and their associated shortfalls crystalise.

Regarding my claim for compensation for the mis-selling of my second endowment policy, the claims company handling that wrote back to me.

They noted that I had already made a complaint, and as such they were happy to help me raise the matter with the Financial Ombudsman Service.

Well this route has already been taken, so I don't see there is much point in pursuing this with them.

I will take a look around for another complaints handling company, who are able to help in situations where complaints have been rejected.

I see the BBC are featuring "The Endowment Diary" on their website, see BBC.

Not surprisingly I have noticed a considerable number of "hits" from the companies that run these underperforming policies, nice to see they are taking notice.

I received an email today; not untypical of the many I have received over the past 18 months, since I started writing "The Endowment Diary".

It seems that the firms that sold and provided these endowment policies wish to wash their hands of the whole affair. This despite the fact that these policies have been proven to be not "fit for purpose" in paying off the mortgage debt they were allegedly designed to cover.

Here is an edited extract of the note I received, and my reply:

"...Hi , just reading your diary. I am in the same position as you, but my shortfall is £23600 ish it was sold by an ifa to me.

The ifa no longer exists, **** tell me it's not their problem I have to take legal action against the ifa.

The fsa won't look at anything sold before August 1988. Like the nursery rhyme " round and round in circles ".

I am continuing my fight for compensation....."


My reply:

"...Sorry to hear of your shortfall, but there are a lot of us about in a similar position!

Seems that despite the Treasury Select Committee et al, the firms that sold us these products will not admit to their "sharp practice".

Please feel free to revisit the site to see how I am getting along; by all means pass on the details to your friends and colleagues...."

I see that the Treasury Select Committee report into the endowment policies mis-selling scandal has come out today.

The report has accused the financial services industry of a myriad of failings including:

• Failings in policy sales



• Failings in asset management



• Failings in informing people

Apparently, a staggering 80% of policies now face shortfalls. The grand total of these shortfalls is expected to come to £40BN. That, in my view, could have a pretty serious effect on the British economy.

The Association of British Insurers (ABI), by all accounts, has said that they are “disappointed” that the changes made in the industry have not been recognised.

Not withstanding that “robust” response from the ABI; more alarmingly, the report notes that the problem will worsen over the coming years as the endowment policies mature.

In my view, this is a time bomb under the already overheated housing market.

Some rather depressing statistics from the FSA concerning the endowment mortgage mis-selling scandal.

• Over the last three years around 11 million letters have been sent out by endowment providers to an estimated six million households. The third mailing from the product providers updating people on whether their endowment is on track to repay their mortgage is now underway



• More than £690m in compensation has been paid/set aside by 24 firms for approximately 434,000 consumers



• By the end of June 2003, product providers had received nearly 295,000 complaints



• 60% of complaints have been upheld



• Compensation of £307.5m has been paid

I understand, from Reuters, that Abbey National says it will not pay bonuses on most with-profits insurance policies for a second year.

It blames declines in the stock market.

Abbey said on Monday that 850,000 customers of its Abbey National Life, Scottish Mutual and Scottish Provident units would get no pay-out.

So much for the phrase "with-profit"!

My claim for compensation in respect of my first endowment policy, sold before April 1988, is being handled by another claims company.

They wrote to me today, noting the following:

"...we believe that you may have received inappropriate advice in being recommended your endowment policy....

..We propose to forward the relevant, specific areas of complaint to your endowment provider for consideration in accordance with the regulatory guidelines as laid down by the Financial Services Authority (FSA)..."

So the game is afoot!

I have lodged my details with another claims company, in respect of my second endowment policy.

I received a letter from the claims handlers, who are pursuing my claim for compensation in respect of the mis-selling of my second endowment mortgage.

The company that sold me the policy will not compensate me, and the claims handlers state that they have approached all possible sources to "facilitate" my case.

They state that they are unable to act on my behalf wrt the second policy.

I shall look around and see if there are any other claims organisations who feel they could achieve more.

I read an interesting article in Saturday's Times about endowments, and those purchased before April 1988.

I was pleased to see that they agree with my analogy, which compares the purchase of an endowment to the purchase of a malfunctioning TV.

I have been banging on about that particular point since the inception of this web diary back in Sept 2002 (well over a year ago), both on the diary and to the FSA et al; yet the relevant authorities refuse to take this point on board (how surprising!).

Maybe now it has been made in national newspaper, others will take this point up and push it hard.

A few statistics, provided by the FSA to the Treasury Select Committee investigating the Endowment Mortgage mis-selling scandal of the eighties, to depress you:

• There are estimated to be 5.3 million people holding endowment polices, who face a shortfall



• The average shortfall is expected to be £5500



• The total value of the shortfall is expected to be £30BN

I fear that these are very optimistic estimates, to say the least; and suspect that the average shortfall will be in the region of between £10K-£20K.

On the this basis, we are likely to see a total shortfall of around £100BN.

I understand from reports that Legal & General will review the sale of with-profits saving products.

By all accounts Standard Life is also thinking along the same lines.

L&G CEO David Prosser told the Treasury Select Committee:

"...We have some doubts about whether there will be sufficient capital being created for the future to maintain these with-profits products.....We would certainly review whether to keep offering with-profits products..."

These products are mainly invested in equities.

Their reputation and usefulness have been diminshed expensive guarantees and falling bonus rates.

Sandy Crombie, CEO of Standard Life told the Committee:

"...The trend is against with-profits.."

The party is over!

Someone will now have to clear up the mess left behind by these underperforming products; which were used to provide the capital to repay mortgages taken out in the eighties.

The directors of some of Britain's largest life assurance companies were given quite a grilling yesterday by the Treasury Select Committee.

These life assurance companies, are those well respected institutions who sold us our underperforming endowment policies in the 1980's.

The Times printed a few stats relating to the pay rises of the top four bosses, and the performance of a 25 year endowment policy taken out by a male aged 29 contributing £50 per month.

Richard Harvey (Aviva) paid £1M 2002, pay rise since 1999 45%- endowment payout 2002 £88K, 1999 £110K (fall 25%)

David Prosser (L&G) paid £1.3M 2002, pay rise since 1999 50%- endowment payout 2002 £74K, 1999 £101K (fall 27%)

Sandy Crombie (Standard Life) paid £0.7M 2002, pay rise since 1999 70%- endowment payout 2002 £90K, 1999 £107K (fall 17%)

Jonathan Bloomer (Prudential) paid £1M 2002, pay rise since 1999 52%- endowment payout 2002 £78K, 1999 £106K (fall 26%)

Nice work guys!

Thanks to The Times for providing the figures.

I see that Jonathan Bloomer (CEO of Prudential) has been up in front of the Treasury Select Committee, which is investigating the endowment mortgage mis-selling scandal.

He told them the following, "I very much regret any mis-selling that we have done".

That's alright then!

Other heads of the companies that sold these endowment policies will be grilled by the Committee today.

The FSA estimates that around 3.5 million people are facing a shortfall on their endowment policies.

By anyone's reckoning, that is a lot of angry people.

I received a letter from the company that is handling my claims for endowment mis-selling, in respect of my endowment policy taken out in 1987.

They state that they beleive that I "have a good case for receiving endowment mortgage compensation".

If this is true, then it will be a watershed for people who are facing shortfalls on policies taken out pre April 1988.

The endowment companies have been hiding behind the legislation that only came into effect at that date; stating that pre April 1988, the rules for mis-selling do not apply.

The letter included a form for me to complete (I am an expert at these!), which enables me to provide them with more details about the policy.

First the good news; the FTSE is on the rise, and has hit an 18 month high.

Now the bad news; the companies that manage endowment schemes have reduced the proportion of their assets held in equities, favouring less risky (and less profitable) bonds and gilts instead.

This means that now that the bonus announcement season is upon us once again, don't get your hopes up; there will be a plethora of bonus cuts again this year.

I received an email from the company handling my claim for the mis-selling of my second endowment mortgage.

It seems that there are areas that they can pursue in taking my claim forward.

The process is likely to take 3-6 months; not for the fainthearted!

Extract below:

"...We have assessed your case and have highlighted a number of possible areas
of complaint that we believe we can move forward on your behalf to your
endowment provider. If we have not heard to the contrary in the next 48
hours we will issue these complaints on your behalf.

To enable us to properly manage your expectations with regard to the
timescales involved in the complaints process, we are currently finding that
it takes 3-6 months for a decision to be made on a complaint. As soon as we
have some pertinent detail to report regarding your case, we will of course
contact you to advise of this. In any event, we will contact you 8 weeks
after the complaint has been issued to report progress to date..."