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Endowment Compensation

Endowment Compensation

Endowment Mortgage Claims

Endowment mortgages were sold to millions of people in the 1980s and 1990s but have ended up falling far short of expectations. An Endowment mortgage is a mortgage loan combined with a separate savings scheme in the form of an endowment policy. The endowment policy was invested in the stock market and was supposed to pay off the mortgage at the end of the term. The problem was that projections of growth were often unrealistic and that many people sold Endowment mortgages now face a shortfall.

In fact over 80% of the Endowment mortgages that have been sold are in danger of falling short: this means about 7 million homeowners could be in trouble. Understandably many of the people who have been sold this type of mortgage are unhappy and large amounts of compensation have been paid out as a result. To qualify for endowment compensation you will have to prove that you were misled about the nature of the endowment mortgage and the likely repayment amount and time-span.


A Treasury Select Committee Report has estimated that up to 60% of Endowment mortgages were mis-sold. For many the first time that they become aware of this is when they receive a letter from their insurers warning them their policy will not pay out the expected amount and that there will be a shortfall. This will effectively be ‘the date of knowledge’ that negligence has occurred. They now have three years to make a complaint.

The Financial Services Authority (FSA) has written an advice booklet for people who have endowment mortgages entitled; “Your endowment mortgage-time to decide” and this should help clear up any questions you might have about what to do.

If you decide to complain your first step is to complain to the company who sold you the endowment. If they cannot resolve this or turn you down you should approach the Financial Ombudsman in your county; they have dealt with more than 14,000 endowment mis-selling claims in last few years and about 40% of these have ruled in favor of the claimant. If the product was unsuitable, you did not understand the risks involved and it was inappropriate for your financial circumstances at the time then you should have grounds for a claim.