Around 700,000 endowment mortgage policyholders have been ‘time-barred' from making a mis-selling complaint to the Financial Ombudsman Service, alleges a Treasury report.
Details of the report were revealed by the Treasury Select Committee this morning, when the chief financial ombudsman Walter Merrick gave evidence to the committee on consumer confidence in the long-term savings industry.
As part of their side questioning to long-term savings evidence, Normal Lamb MP and TSC chairman John McFall MP questioned whether 12% of 8.5m endowment policyholders or 700,000 consumers should be allowed to receive compensation for a potential mis-selling claim because the three-year ‘time bar’ rule does not allow a certain number of consumers to now make complaints.
Rather than agree with the allegation, FOS chief ombudsman Merricks instead argued he was uncertain whether those 700,000 consumers would in fact make a complaint, because many people may have been fully aware of the decisions they made and would not therefore have grounds for complaint.
Since that statement was made, the Treasury Select Committee has published details of two reports presented by the Treasury and the Financial Services Authority on Monday 7th June, the first of which alleges:
“The government is aware that consumers may not have been aware of the limitation and understands that out of a population of 8.5m policyholders, an estimated 700,000 could already be time-barred if they wished to make a complaint.” (paragraph 41)
While the Treasury argues this number of people may have been time-barred, there is no official source to the figure at this stage and it is not clear exactly whether it is intended to include clients who may have purchased endowment mortgages 25 years ago – in 1979 – when there was no regulation of financial advice.
IFAonline will add comments and additional data from the ABI, IFAs and government officials as it arrives.
IFAonline’s editorial - published tomorrow – will also predict what the Treasury Select Committee will say in its final report on consumer confidence in the long-term savings industry.
Question to IFAs: Should there be a time limit as to when consumers can file complaints to the Financial Ombudsman Service? What should it be? Do you believe all 700,000 would file complaints? How many do you think would be entitled to compensation?
If you have thoughts or comments you would like to add, post them on the IFAonline discussion board or email the editor.
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First mentioned in Cridland Report