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.