There is massive compensation available if you were mis-sold a mortgage, yet there's a deadline on complaints and it's running out. This is a brief article on what to do to find out if compensation is due and how to get it without paying a penny, or giving anyone else a cut!
What is an endowment?
First of all there isn't actually such a thing as an endowment mortgage. There's a ‘mortgage' and an ‘endowment'. About five to twenty years ago, endowments were all the rage. The promise was something like this: “get an interest only mortgage, that means you just pay interest on it, then to repay the capital of the mortgage set up an endowment plan. This should not just pay off your mortgage, but give you a lump sum on top too!”
An endowment is actually a ‘with-profits investment', a rather un-transparent investment that puts your money into a great big slush fund, with a mix of shares, bonds and property, and pays out in the form of bonuses and other payments. Working out how well it's doing is rather indecipherable to most people.
What happened?
The promise was broken for many people. Millions have now ended up with a shortfall, meaning not only do you not get a lump sum, but the end result is the investment isn't even enough to pay off the mortgage it was intended to. My view is the financial services industry is culpable for this problem. Endowments paid large commissions to advisers. They weren't transparent. Worse still, to make them look cheaper than repayment mortgages, the payment amounts were often set up at a low level, hoping for unrealistically big investment returns.
How do I know if my endowment was mis-sold?
This is the crucial bit, so it's time for some big letters.
If your endowment was mis-sold, this means not just that it did under perform, but you weren't told it may under perform or were incorrectly advised
When you signed up, you should have been told that, as performance is linked to risk, your endowment may not grow big enough to pay off your mortgage. In a nutshell, you're complaining about the way you were sold – not the performance of your policy.
A couple of minutes well spent
You need to gather up as much paperwork as you can find and then need to write to the company that sold you the policy. Frankly I'm not going to detail how you can complain, for a very simple reason.
While I don't always agree 100% with Which?, its Endowmentaction website is quite simply fantastic and an untouchable non-profit resource when it comes to endowments. It will tell you about who to complain to, how to do it and includes letters you can print off to do an instant complaint. So quite simply trip there!
What if the company I've got a complaint with no longer exists?
You may still be able to claim compensation off the Financial Services Compensation Scheme, which is a State body there to protect consumers if things go wrong. So if there's no one else to claim from, fill in the FCSC Questionnaire to see if you're entitled to anything.
But remember the clock is ticking
Time is running out to make a complaint and get compensation. You have either six years from when you bought your policy, or three years from the date you realised it might have been mis-sold – whichever is longer.
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MoneySavers do it for free |
There are lots of companies willing to fight your battle for you, and for free ... but shock, horror they also want to take a big cut of your payout. I'm not a big fan of these, you're far better doing it free with Endowmentaction's help.
Yet if you are at the end of your tether and don't think you will do it any other way, then it's better than doing nothing. However, do check you will not pay a penny if you don't get compensation and that even if you do they will simply take money from your compensation and not charge a fee or make you buy an insurance policy.
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What to do with your mortgage now |
Having an endowment complaint shouldn't impact your current mortgage strategy. The best thing to do is move to the best mortgage you possibly can and cut the cost. Rather than regurgitating it all here, I've a full free guide to remortgaging you can order (if you want a printed one) or download (if you want a PDF). See below.
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A mortgage is the biggest financial commitment you're likely to have therefore getting it right is likely to be the biggest single MoneySaving act. To make it easier I've written two full guides; the Mortgage guide for first-time buyers and buy-to-let getters and the Remortgage guide for anyone who already has a mortgage.
Mortgage Guide
 
Remortgaging Guide
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Proof this is worth doing |
I've had hundreds of emails from folks who've read my prompts on complaining. Whilst this does sound a bit like one of those dodgy TV ads, I think it's important to put a couple of real case studies here:
From: Jane (name changed at request)
Subject: Endowment Compensation
Body: Just wanted to say I've just received an offer of £19K. My husband told me not to bother following your advice as it wouldn't be worth it. He's now a fan of your website!
From: Toby
Subject: Endowment Compensation
Body: I'd been meaning to put in a complaint about my endowment for ages but never quite got round to it. I took you up on your prompt to use the Endowment Action web site which was very good and helped me to produce an excellent complaint letter. To cut a long story short I had to fill out a couple of forms (which was a bit time consuming as I had to look up a fair bit of Mortgage/Endowment information) and six weeks later I got a cheque for £4,700!! Not bad for a morning's work to fill out the forms. Thanks so much.
From: Ian D
Subject: Endowment Success
Body: Just another happy chappy who followed your mis-selling guide and got a few grand back. Many thanks. Ian
From: Ian J
Subject: Endowment Mortgage Thanks
Body: Martin...I wanted to send this email to you to thank you for the advice and common sense you placed on your site with reference to the mis-selling of endowment mortgages. I had been tempted to use one of these companies that advertise on the TV but did not fancy them taking such a large cut of my compensation if I was awarded any. Thankfully I downloaded the information that you had posted with relation to the Which? letter wizard that was highlighted by your forum, and, though it took just eight weeks from start to finish I was sent a cheque last week from the Nationwide for just over £2200, which related to one of the two endowments we have with them. I am now pursuing the London Life in exactly the same way as the Nationwide cannot assist me.
The great thing is that it was so easy and took very little time. I don't know if you are mentioning this mis-selling scandal again but I am happy for you to use my experience as an example to others. To use an oft used phrase, "If I can do it, then anyone can!" Thanks Again.
The biggest compensation so far on the back of doing this simple process, that I've been told about, is £27,000. Please report how you did in this special 'Read/Report Successes Here' discussion.
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