Endowment policyholders are still being "misled" by insurance firms, alleges a service targeted at policyholders seeking compensation payments.
Slant of the message sent to the media suggests the financial services industry is “fuelling” the endowment mis-selling scandal and “has done much to actively dissuade people from claiming compensation” for their endowment shortfall by making the claims process “incredibly complex”.
Marianne Fitzjohn, director at Endowment Justice, argues insurance firms are trying to ensure they do not alert consumers to the start of the ‘time bar’ by sending correspondence to client which does not appear to be reprojection letters because it does not carry ‘red letter’ colour-coding.
"We are seeing a number of the big providers wilfully misleading policyholders. They are using other types of communication to deal with their customers, but quote the relevant legislation they must adhere to. They are not using red projection letters but using general review letters,” says Fitzjohn.
Her written statement continues:
”This scandal is much more than simply being mis-sold a financial product. This issue is seriously affecting people’s lives. People were sold these policies on the basis that they would be able to pay off their mortgage and also have lump sum at maturity. The reality is millions of people are facing shortfalls of thousands of pounds. This isn’t about greed – the bottom line is people may have to sell their houses, their homes, because of poor practice of the financial services industry,” adds Fitzjohn.Endowment Justice says it is “committed to helping consumers go some way towards righting this wrong”.
A spokeswoman for the Financial Services Authority also says colour-coding of letters is not required under FSA rules as this “is very much about the ABI code of practice, and is not an industry rule”.
A spokeswoman for the ABI says while firms are expected to ensure endowment mortgage re-projection letters adhere to the ABI’s basic template of information, it is for firms to decide how often they send these letters out and how much correspondence will be sent to policyholders in the meantime.
In response to the statement by Endowment Justice, a spokesman for Legal & General points out a shortfall on an endowment mortgage does not necessarily reveal the client was mis-sold.
Some insurance representatives and IFAs have also expressed concern about the practices of Endowment Justice, as its own website suggests “60% of endowments were missold” while 60% of ‘do-it’yourself’ compensation claims fll, without stressing those claims may have been rejected because there is no case to answer.
Moreover, although Endowment Justice offers a free initial assessment service for each potential client, each successful compensation win is then required to effectively pay a fee of 20% of their compensation to Endowment Justice, which some advisers say leaves the client in a position of having a shortfall because they have paid out some of the compensation to the firm.
A spokeswoman for the Financial Ombudsman Service says endowment compensation paid to policyholders is designed to put the policyholder back into the financial position they would have been in, had they been recommended a different product to their endowment.
“What the client is buying is outsourcing of the problem of claiming compensation and don’t want to go through it without help. They are buying a professional service and all of our customers believe that very good value. We are very proud of our excellence towards clients, particularly during a time which is very difficult for them,” says Fitzjohn.
She adds it is not the firm’s intention to mislead clients about information used on its website and will make any changes to its own information – along with details of information sources – where it is necessary to do so.
Its own ‘60% missold’ claim is based on Treasury Select Committee’s suggestion 50-60% of policyholders “believe they were missold”, says Fitzjohn.
FOS, FSA and ABI officials all say they are currently unable to state how many endowment mortgage policies were missold as complaints from consumers are still being assessed.
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