What is an Endowment?
An endowment is a financial repayment vehicle most commonly used for purchasing a house. It is a form of interest only mortgage, where your monthly payments cover the interest on the capital borrowed and funds are added to an investment savings product. At the end of the policy term, the finances in the investment pot are used to pay off the capital on the mortgage. Any extra left over after paying off the capital is for the homeowner to keep and spend as they wish.
Why are there compensation claims for endowment policies?
Not all investment products make a positive net return. This means that at the end of the mortgage term there was a shortfall on the finances needed to cover the repayment side of the mortgage. Thousands of people across the UK finished their mortgage term and then received a bill to cover the rest of their monies owed, usually thousands of pounds.
Just because an endowment policy suffered a shortfall does not mean it is automatically eligible for compensation. Successful endowment claims usually involve some sort of negligence from the broker or policy provider.
Reasons for an endowment complaint
Attitude to risk
Many consumers were not told about the risk involved with this type of investment, people were simply not aware that the endowment may lose money instead of gaining. Endowment policies tend to be more suited to consumers that have higher wealth, meaning they have the ability to pay back the capital even if the policy underperforms. On a tighter budget an endowment is less likely to be a suitable product and may not be worth the risk. Risk is clearly a big factor to take into consideration when paying for your home, and a lot of people prefer the peace of mind of knowing that when the term ends, the loan is guaranteed to be paid off.
Inexperienced investor
Many inexperienced consumers were talked into taking out risky endowment policies by financial institutions even though they did not have the knowledge or experience to fully appreciate the decision they were making about their home. Many consumers wanted a guaranteed way to pay off their loan within a specified timeframe, but were swayed by previous decades endowment returns, assuming this would carry on throughout the term of their mortgage.
Bad Advice
Unfortunately, many brokers and lenders work on a commission basis. This means that they can push products onto you that reflects what is best for their pocket and returns, as opposed to the consumers. All advisors should always discuss the full range of products on offer and explain the advantages and disadvantages to each, but this does always happen.
My endowment was years ago, I can’t find any paperwork!
We are able to locate policies you have had in the past through information requests with your lender. Having your policy numbers will help, but as long as you know who you borrowed from there is a good chance we can locate the information for you to go forward with a compensation claim.
My policy has already matured
If you have suffered financially, you can make a complaint. This does not matter if the policy is still currently active, or if it was paid back many years ago.
My endowment provider no longer exists
Any UK financial policy that was taken out after August 1988 is covered by the Financial Services Compensation Scheme (FSCS), a government body that deals with awarding financial compensation for any FCA regulated providers that have ceased trading.
Time barred endowment complaints
Endowment cases can be time barred from making complaints in certain situations. This is usually after a timeframe has passed since a ‘red letter’ has been sent out by the provider warning about a potential incoming shortfall on the policy. Not every case is like this though, our in house time bar expert has successfully won over £8.5 million for our clients on cases that were originally time barred by the lender.
We can claim on your behalf
If you believe you may have been mis-sold an endowment mortgage and could be owed financial compensation, our endowment experts here at It IS Your Money can represent you for your case. We work solely on a No Win No Fee basis, meaning that if we don’t win you anything, you aren’t charged anything. Our fee is a percentage and we do not charge any up front fees. You will never be out of pocket with our services.
Simply fill in the form below to start your endowment claim.