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AIFA comments on endowment website

Amanda Jarvis

October 9, 2002

The dedicated website to assist consumers who wish to make a complaint about their endowment policy. The site includes a step-by-step guide on how to make a complaint and a letter generator which will produce a standard letter of complaint listing reasons which can be selected from a checklist.

Commenting on the move, Paul Smee said: “The site has attracted the inevitable press comment in support of disgruntled consumers (their
readers). This naturally causes concern, as it undermines the complaints procedure which is there for genuinely aggrieved consumers, who know why and what they are complaining about without being prompted.

“The CA is indiscriminate in its accusations even if its main targets are the DSFs and banks (indeed in many areas, its policy is broadly supportive of independent advice). It is also holding out unreasonable prospects of redress for consumers.

“The root cause of the CA initiative and the press response to it, lies in the warning letters from providers to many consumers, that their endowments are not now forecast to pay off the mortgages secured against them. These letters, and not the press comment, create the pool of angry and worried consumers.

“IFAs are best placed to explain to their clients why shortfalls are being predicted and how the situation can be addressed. We know that many firms have been proactive in reassuring clients and providing advice on restructuring their mortgage arrangements, where appropriate. This is why IFAs are coming out better in the complaints statistics and is why the present comment is best countered on the ground and not through the media.

“AIFA has met with FSA and FOS to record our concern about the nature of the CA campaign and its effect on the complaints process. We particularly wanted assurance from the Ombudsman, that they will investigate fully the circumstances of a complaint deriving from the CA campaign and will probe thoroughly the reasons selected from the checklist.”

Approximately 30% of endowment mortgage business written since 1988 is attributed to IFAs. The latest mortgage endowment complaint figures for the period from 01/04/02 to 08/09/02 provided by the Financial Ombudsman Service are:
• Mortgage endowments accounted for 28% of all new cases in the Investment Division; and
• Of these 90% are from customers who have bought direct; 10% are from clients of IFAs.


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