Money Advice Service

Do you think you were mis-sold an endowment mortgage? There is a time limit for borrowers who want to make a complaint and it is running out, so you need to act now.

How do I know if it was mis-sold?

You might feel you were mis-sold your endowment mortgage if it was not suitable for your needs and circumstances.

However, you can only complain if the advice you received was incorrect or misleading.

You don’t have grounds for complaint simply because the endowment has not performed as well as you would have hoped.

Grounds for complaint

  • It wasn’t fully explained to you that there could be a shortfall at the end of your mortgage term.
  • You were told that the endowment would definitely pay off the mortgage.
  • The fees and charges were not explained to you.
  • Your adviser didn’t complete an assessment of your financial circumstances and attitude to risk.
  • Your endowment policy and mortgage were set up to run into your retirement and your adviser didn’t ensure you would have the income to continue to make payments.
  • Your adviser recommended that you cash in an existing endowment and then sold you another.

Time limits

If you feel you have been mis-sold your policy and want to make a complaint there are strict time limits.

Any complaint received by a firm after these time limits will usually lead to your complaint being rejected as being out of time, “this is known as ‘time-barring”.

Your complaint can be rejected if:

  • You receive a letter warning of a high risk of a shortfall; then receive a subsequent letter giving you at least six months’ notice of a ‘final date’ by which you have to complain.
  • That ‘final date’ is at least three years after the date you received the first letter (and at least six years since you bought the policy).

However you might still complain after the ‘final date’ even if the firm rejects your original complaint as “being out of time”, to the Ombudsman if you think:

  • The time bar was unfair
  • The time bar was wrongly applied
  • There are exceptional circumstances

This should be done within six months of the firm sending you a ‘final response’ letter.

How to complain

Your first step should be to contact the business that sold you the endowment policy in writing.

This might be a financial advisory firm, a mortgage lender or an endowment provider.

Try to pull together as much documentation as you can find and write down your grounds for complaint.

If you can’t find the paperwork you can request it from your endowment company when you file your complaint.

If you need extra help the consumer group Which? has produced a really helpful endowment complaint letter template.

What if the company no longer exists?

If the adviser or company that sold you the endowment no longer exists you should contact the Financial Services Compensation Scheme, which might be able to pay compensation if the firm that sold you the endowment has ceased trading.

Right of appeal

After the firm has investigated your complaint it should give you a final decision within eight weeks, and this might include an offer of compensation.

If you are not happy with the response you receive, you’re entitled to make a complaint to the Financial Ombudsman Service within six months, which will look independently at your case.

The Ombudsman is free and its contact centre staff will talk you through the process on 0800 023 4567 or 0300 123 9123. Lines are open Monday to Friday 8am to 8pm, Saturday – 9am to 1pm.

What the Ombudsman’s decision means

If the Ombudsman decides in your favour it might rule that the company pays compensation to you.

This will not necessarily cover any mortgage shortfall you have.

It’s merely meant to return you to the position you would be in if you had received proper advice.

If you are happy with this decision you can accept it – in which case it is binding on both you and the company.

This means you cannot decide to claim more compensation at a later date.

If you are not happy with the decision you can take your case to court, although it could be costly.

Cashing your policy in

You might be thinking about cashing in your endowment policy, particularly if you’re awarded compensation.

However, an endowment is a long-term investment and by cashing it in early you might get a much smaller amount than if you had waited until maturity.

In addition, endowments have life insurance built into them, which you might need.

Finally, remember that if you cash in your endowment you will be left with nothing in place to repay your mortgage at the end of the term, so you must plan for this. Speak to a financial adviser if you’re not sure what to do.

Find out more about Choosing a financial adviser.

This article is provided by the Money Advice Service.