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87% of Brits mis-sold endowment policies

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by Kay Mitchell
87% of Brits mis-sold endowment policies

Research from Fairinvestment.co.uk has established that 87% of British homeowners believe they were sold an endowment policy under false pretences.

During the 1980s and 1990s, endowment policies were a popular choice for homeowners and it is believed that over 10 million mortgage endowment policies were sold in the UK during the period.

Endowments were primarily taken out as a savings vehicle expecting to pay a mortgage off or to have a lump sum available at a specific time.

However, the majority of endowment policies have been left with a shortfall. A recent survey from Fairinvestment.co.uk revealed that 86% of endowment holders are expecting a shortfall, meaning that they will have to find extra funds to cover the mortgage.

The survey asked ‘were you mis-sold your endowment?’ and 49% of respondents said that they had been given a guarantee that the policy would cover the mortgage.

Meanwhile, a further 27% believed that the risks were not explained at the time the endowment was bought.

Endowment holders who are expecting a shortfall have the option of making a complaint and asking for compensation.

The time frame within which to claim for compensation is currently either, 6 years from when the policy was bought, or 3 years since you realised your policy was mis-sold.

However, the policy must have been mis-sold in order to do this, meaning that the risks involved were not explained at the time the endowment policy was taken out.

Sharon Bratley, chartered financial planner at Fairinvestment.co.uk, said there are many reasons that somebody may have been mis-sold an endowment policy, one being a lack of adequate explanation.

An endowment policy is not a short term commitment and this should be explained at the time the policy was bought as well as the fees and risks involved, concluded Ms Bratley.

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News posted: August 13, 2008

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