A large number of people are affected in UK due to mis-selling of Endowment Mortgage policies when sold heavily in 80s to 90s. General convincing factor or selling propositions were projection of policies being able to provide much higher maturity values than amount required to pay off mortgage loans, besides being least expensive method of securing the debts. Despite of projected appreciation of stock prices to reflect as addition to maturity value, customers were also lured of getting hefty bonus. In addition to all these benefits life coverage was available for assured sum. Another specific advantage was security of not leaving any burden on family in case of death of policy holders. Unfortunate death otherwise could lead to cessation of property by the lenders.
Apparently benefits were immense for people to get into big lifetime investments, mostly for homes, if it all went normally with good market conditions. However, stock markets failed to give returns as conceived of. Slump in stock markets around the world had its reflection on UK markets also. Dipping down stock prices cast reflection upon values of endowment mortgage policies heavily. This caused chain reaction among lending agencies. To protect suffering from erosion of values, individual policy holders had no choice but stop paying premiums. Reaction was equal and opposite, insurers came out with notices of insufficiency of funds to cover up secured amounts, and on lenders began to issue shortfall notices for inadequacy of endowment policies to cover up principal amounts.
For protecting customers’ right to protect themselves from erosion of value of their investments as well getting shortfall notices, The Financial Services Authority (FSA) has framed a set of rules. These rules permit customers to lodge complaints in case they were mislead by insurance company by projection of illusionary figures and Endowment Mortgage policies were mis-sold. FSA has further laid out Dispute Resolution Rules (DISP Rules) in its handbook, but a time limit for such complaints has been fixed by Financial Services Ombudsman (FSO). Time limit is for complaint is covered under DISP Rule 2.3.1. , which under section 2.3.1R(1)(c) states, “The Ombudsman cannot consider a complaint if the complainant refers it to the Financial Ombudsman Service (c) more than six years after the event complained of or (if later) more than three years from the date on which he became aware (or ought reasonably to have become aware) that he had cause for complaint, unless he has referred the complaint to the firm or VJ participant or the Ombudsman within that period and has written acknowledgement or some other record of the complaint having been received.”
It is hence clear that a policy holder has to make complaint within 3 years from receiving the first red coded shortfall notice. This imposed ‘time bar’ is mandatory. Further laid down limit for making complaint is within six months from receiving a red or amber coded reminder or warning, whichever comes last. To facilitate customers, it is obligatory on the part of companies to inform last date by which their complaints will be valid for acceptance, and this must be worded on each red coded letter.
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