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.