Endowment Mortgage Services at Greg Vaughan


Endowment mortgage policies…

Over 9 million endowment policies were sold by banks and insurance companies, with the promise that they would repay a mortgage loan. The risks were rarely mentioned and, quite simply, most people did not understand how they worked or what the alternatives were. Mis-selling was common and large losses is the result.

If you were sold an endowment mortgage, please contact me or read more below…

The endowment mortgage time-bomb…

Due to a combination of over-optimistic estimated maturity values at the point of sale, high charges and poor investment performance, over 85% of endowment funds will not produce a large enough lump sum to clear the mortgage debt.

The average shortfall is between £3,000 and £5,000 and is getting bigger each year as low interest rates and subdued stock markets are reducing investment returns and thus lowering the likely final payout. Independent financial analysts estimate that shortfalls could grow in the years to come and reach between 30% and 50% of the amount required to repay the loan. In other words, if your loan is £100,000 your endowment may fall short by between £30,000 and £50,000.

Endowment no longer in force…

You may still have lost out by having one at all, even if you have since surrendered the policy or made other changes to your mortgage.

I particularly want to hear from people that have already replaced their endowment mortgage, as most don’t know they may be due compensation. If you have surrendered the policy already – or perhaps have kept it running just as a savings vehicle – you can still challenge the advice you received.  If you would have been better off without the endowment, you are entitled to claim your losses back. You do not still need an endowment mortgage to be running to be eligible for compensation.

Claiming compensation – the problem

The financial services industry regulator, the Financial Conduct Authority (FCA), won’t let you take your endowment company to task about poor investment performance. The FCA says firms are not to blame when investment returns are constrained by wider economic factors (such as falling stock markets and low interest rates) that are beyond their control.

Furthermore, as endowment policies have always relied upon investment performance, your endowment company will tell you that the policy inevitably carried a degree of risk. The company will not, therefore,  compensate you for poor performance.


The solution…

The first step to claiming compensation is to find out whether you were a victim of mis-selling. The term mis-selling is a common one within the financial services industry and it basically means that the sales process did not follow all the selling rules laid down by the industry regulator.

If you can demonstrate to the firm that the sales process didn’t follow the rules, then the company that sold your endowment mortgage will not be able to argue that it did everything necessary to make sure such an arrangement was suitable for you. And if it cannot do that then your policy will automatically be deemed to have been mis-sold, and this is the key to winning compensation. Only in the event of a mis-sale is the firm duty bound under Financial Conduct Authority rules to check if you have suffered a financial loss, and to pay you compensation if so. In the vast majority of cases such “loss assessments” confirm that compensation is due.

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