There is massive compensation available if you were mis-sold a mortgage, yet there's a deadline on complaints and it's almost run. This is a quick guide to find out if compensation is due and how to get it without paying a penny, or giving anyone else a cut!
And if you’re wondering whether it’s worth it, here’s one of the hundreds of similar e-mails we’ve been sent on it…
Dear Martin, Just wanted to say I've just received an offer of £19K. My husband told me not to bother as it wouldn't be worth it. He's now a fan of the site!
In this guide...
Does this affect me?
If you have an endowment mortgage, then it's quite possible you were one of the millions of people who were missold it.
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 ten 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.
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.
ACT Quickly, time is ticking
Time is rapidly running out to make a complaint and get compensation, so if you think you may’ve been missold, it’s urgent you act as quickly as possible. If you are planning to make any overpayments on your mortgage do check in advance if this would affect your misselling complaint.
Companies were told they would only need to deal with claims if they were made within two time limits… the LONGER of:
Either... six years from when you bought your policy.
You have six years from the date your bought your policy, yet most policies were now sold substantially more than six years ago, so this one is mostly defunct.
Or... three years from the date you realised it may’ve been mis-sold.
Again, time is ticking here as it is more than three years since the regulator told companies it had to write to customers who had shortfalls. Yet not all banks started sending letters straight away and you may not have had a shortfall initially and therefore received a letter later.
What to do if you think you’re past the time limit.
Even if you are past the limit it is worth still trying to put a claim in, as we’re often talking a vast amount of money. The nature of your complaint needs to address why you didn’t put a claim inat the time.
Even if this is just “I got the letter and didn’t really understand what it was telling me, but have had it explained and it does now”. The best thing to do in this case is give a quick call to the helpline for the Financial Ombudsman, which deals with these cases, to see how the land lies, the number is 020 7964 0500.
How to complain: it only takes a few minutes
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.
The campaign to reclaim Endowments started before MoneySavingExpert.com, and Which? has built up years of experience via its free Endowmentaction campaign. (If this link doesn't work for you seach for 'mis-sold endowments' from the Which homepage.)
It will tell you about who to complain to (usually the Financial Ombusdman), how to do it and includes letters you can print off to do an instant complaint. So quite simply at this point let me pass you over 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. More details on the FSCS website.
Don’t pay to complain
There are lots of companies willing to fight your battle for you (just try doing a search on Google and you’ll see them all). They all say its 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 and the Financial Ombudsman’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.
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.
For that please read the full guides to getting a mortgage or remortgaging, which include details of how to deal with an endowment shortfall.
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:
Just wanted to say I've just received an offer of £19K. My husband told me not to bother following your suggestion as it wouldn't be worth it. He's now a fan of your website! - Jane (name changed at request)
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. - Toby
Just another happy chappy who followed your mis-selling guide and got a few grand back. Many thanks. - Ian D
Endowment Mortgage Thanks
Martin...I wanted to send this email to you to thank you for the suggestion 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 £2,200, 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. - Ian J