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Endowment complaints

If you have been told that your endowment policy may not cover the outstanding capital at the end of your mortgage, you should get advice to see whether you can make a complaint and get compensation.

You may be entitled to compensation if the company that sold you your policy gave you bad advice and you lost out financially as a result.

Was the adviser or company wrong to sell me the endowment?

Companies selling endowment policies must follow certain rules. If you think you've been treated unfairly you can make a complaint. You may be able to do this even if you have already sold or cashed in your policy. You should consider complaining if:

  • you were advised that your endowment policy was guaranteed to earn enough to pay off your mortgage, and there is now a shortfall
  • you were sold a policy that wasn't due to mature until after your retirement and your adviser didn't consider whether you would be able to afford to keep up with payments after you retire
  • you were advised to cash in one endowment policy to take out another
  • you weren't advised that you were paying for life insurance as part of your endowment, and you didn't need it
  • your mortgage will end before your endowment policy matures
  • you weren't advised that your money would be invested in the stock market, which means it isn't guaranteed to pay off your mortgage
  • you weren't told that if you decide to cash in or sell your policy early, you will have to pay penalties, and may not get much for the policy
  • you weren't informed of any other fees and charges involved.

You may also be able to get a small amount of compensation if you have been seriously distressed or inconvenienced by the shortfall. If you think you have a valid complaint, you should take action quickly. If you don't, you could lose some or all of the compensation you're entitled to.

Making a complaint to the company or adviser

You should complain first to the company or adviser that sold you the policy. This could be the endowment company itself, a solicitor, or an intermediary broker. Anyone selling financial products needs to have a proper complaints procedure and provide information about how to use it.

The Financial Conduct Authority has guidance on how to make a complaint on their website. They may also be able to help you if the company that sold you your policy has gone out of business or disappeared. You can also find out more about missold endowment mortgages at the Money Saving Expert website.

Can I complain to the Financial Ombudsman Service?

If you aren't satisfied with the response you get, you may be able to make a further complaint to the Financial Ombudsman Service. The ombudsman provides a free independent service to help solve disputes with financial companies.

What if the endowment was missold to me by a solicitor?

If you were missold an endowment policy by a solicitor after 1 December 2001, you can complain to the Financial Ombudsman Service. However, if you took out the policy before that date, you'll need to complain to the Scottish Legal Complaints Commission instead. This is because the FCA (formerly the FSA) only started to regulate solicitors offering financial advice on 1 December 2001. Read the page on complaining about a solicitor to find out more.

How much compensation will I get?

The amount of compensation you get normally depends on how much worse off you are compared to if you had taken out a repayment mortgage (often with a separate life insurance policy) from the start. If you have lost out financially, you may be entitled to a lump sum payment, which will allow you to switch to a repayment mortgage without losing out on payments you have already made.

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The important points

  • There are a variety of ways that the advice you received to help you buy your endowment policy could mean you were treated unfairly.
  • If you do think you have a valid complaint against your adviser you need to act quickly or you might lose some or all of the compensation you're entitled to.
  • The Financial Conduct Authority is who you need to if you haven't got a satisfactory response from your adviser.

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