Citizens Advice estimates that there are more than ten million endowment policies linked to mortgages in the UK. Millions of endowment mortgages were sold during the 1980s and 1990s.
But it is believed that as many as 60% of these could have been mis-sold through inappropriate financial advice. In some cases, some financial advisers may even have sold these policies due to the high levels of commission involved compared with repayment mortgages, rather than with the best interests of their client in mind.
The scale of the problem was enormous and for some it was financially disastrous, although much has been done to address the issue - many people who were given bad advice and suffered financially as a result could be entitled to compensation.
But to be eligible, you must show that either the policy was inappropriate for your circumstances when it was sold or that at the time, you did not understand the product or the risks associated with the potential levels of return. If you have lost out as a result of the advice given, there is a good chance you could be due some compensation.
The amount of compensation would be calculated by looking at the performance of the policy you were sold compared with that of a repayment mortgage during the same period of time. But remember, your grievance will not be about the performance of your policy, but the way it was sold to you.
However, you need to act very fast if you think you were a victim of this practice and therefore need to get compensation. You only have six years from when you bought your policy or three years from the date you found out you may have been mis-sold the product to be eligible.
What to do
You need to start by contacting, in writing, the company which actually sold you the endowment to make your complaint and keep a record of all your communication. If your complaint is not upheld, the matter can be taken up with the Financial Services Ombudsman. And if the company that sold the policy is no longer trading, compensation may still be available through the Financial Services Compensation Scheme.
Remember, the whole point about compensation is to bring you back into the financial position you would have been in had you not taken an endowment mortgage, so do not be pressurised into accepting a deal unless you are totally satisfied.
|Lender||Initial Rate||Duration||Standard Rate||Overall Cost For Comparison||Max Loan To Value||Fee|
|2.59%||2 years||5.69%||5.4% APR||75%||£999|
|2.69%||2 years||4.99%||4.9% APR||75%||£495|
|2.94%||2 Years||5.69%||5.4% APR||75%||£199|
|2.99%||2 years||4.99%||4.9% APR||85%||£495|
|2.99%||3 years||4.99%||4.6% APR||70%||£499|
|3.0%||2 years||5.69%||5.5% APR||80%||£999|
|3.19%||5 Years||4.79%||4.2% APR||80%||£995|
|3.35%||To Jul 2014||4.95%||4.6% APR||75%||£999|
|3.5%||2 years||5.49%||5.1% APR||75%||£595|
|3.84%||2 years||3.94%||4% APR||90%||£499|