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05/01/2005
FSA issues warning over endowment complaints
The Financial Standards Authority (FSA) has warned that some mortgage endowment providers are still not handling customer complaints properly.
In a letter addressed to the chief executives of larger mortgage endowment firms and financial advisors, the regulator stated that while many firms are taking policyholders concerns seriously, there are still some firms which are failing to meet the required standards of dealing with complaints.
The FSA's warning comes after the Financial Ombudsman Service (FOS), a financial arbitration scheme, raised concerns with the organisation over how some firms are handling complaints. Clive Briault, FSA Managing Director, Retail Markets, said: "Fair handling of complaints is one of the key indicators that firms are treating their customers fairly. We are concerned, in particular, that the FOS, is not only continuing to face a rising number of endowment complaints, but is also upholding a very high percentage of complaints from some firms, suggesting that these firms may not be handling complaints properly."
Thousands of endowment holders, who believe they were wrongly advised, are currently pursuing mis-selling claims. It is believed that as many as six in ten policyholders could have been the victims of mis-selling.
The policies were heavily promoted in the 1980s as a way of re-paying mortgage debt, although eight out of 10 policyholders are now facing shortfalls. With the average shortfall across the policies standing at £5,500, this adds up to £40 billion overall.
Under existing rules, people who believe they have been mis-sold must complain to the firm that advised them. If they are unhappy with the outcome of this initial complaint, they can then approach the ombudsman. However, in some of the worst cases, the FSA said that some firms were refusing to comply with awards made by the ombudsman until threatened with court action.
The FSA had sent a letter to CEOs in April 2002, which also stressed the importance of the fair handling of complaints. It has also fined some firms, including Friends Provident and Allied Dunbar, for not meeting the required standards for handling complaints.
The FSA have issued a statement stating that it will continue to monitor progress and outcomes to assure itself and the public that complaints are being handled fairly. The regulator also stated is currently in talks with a number of firms and will be undertaking further detailed supervisory work in order to test the complaint handling arrangements of firms in the coming months.
(KmcA/SP)
In a letter addressed to the chief executives of larger mortgage endowment firms and financial advisors, the regulator stated that while many firms are taking policyholders concerns seriously, there are still some firms which are failing to meet the required standards of dealing with complaints.
The FSA's warning comes after the Financial Ombudsman Service (FOS), a financial arbitration scheme, raised concerns with the organisation over how some firms are handling complaints. Clive Briault, FSA Managing Director, Retail Markets, said: "Fair handling of complaints is one of the key indicators that firms are treating their customers fairly. We are concerned, in particular, that the FOS, is not only continuing to face a rising number of endowment complaints, but is also upholding a very high percentage of complaints from some firms, suggesting that these firms may not be handling complaints properly."
Thousands of endowment holders, who believe they were wrongly advised, are currently pursuing mis-selling claims. It is believed that as many as six in ten policyholders could have been the victims of mis-selling.
The policies were heavily promoted in the 1980s as a way of re-paying mortgage debt, although eight out of 10 policyholders are now facing shortfalls. With the average shortfall across the policies standing at £5,500, this adds up to £40 billion overall.
Under existing rules, people who believe they have been mis-sold must complain to the firm that advised them. If they are unhappy with the outcome of this initial complaint, they can then approach the ombudsman. However, in some of the worst cases, the FSA said that some firms were refusing to comply with awards made by the ombudsman until threatened with court action.
The FSA had sent a letter to CEOs in April 2002, which also stressed the importance of the fair handling of complaints. It has also fined some firms, including Friends Provident and Allied Dunbar, for not meeting the required standards for handling complaints.
The FSA have issued a statement stating that it will continue to monitor progress and outcomes to assure itself and the public that complaints are being handled fairly. The regulator also stated is currently in talks with a number of firms and will be undertaking further detailed supervisory work in order to test the complaint handling arrangements of firms in the coming months.
(KmcA/SP)
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