The Financial Services Authority (FSA) has revealed that the UK banking and insurance industries have paid out a total of £2.2bn in compensation to victims of endowment mis-selling.

Compensation levels continue to rise, with 2005/6 seeing £945m paid out compared to £601m the previous year.

The FSA is the regulator of many areas of financial services including mortgages, insurance and investment, and the compensation figures it released are based on a poll of 90% of companies in the insurance industry.

The Guardian reports that Britain’s 9th largest bank, Bradford and Bingley, have set aside a further £90m to fund future compensation claims from customers mis-sold an endowment mortgage.

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Endowment compensation claims against companies who have since gone out of business have hit a new record high according to the latest figures from the Financial Services Compensation Scheme (FSCS).

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Prudential is to send out a batch of around 110,000 ‘red letters’ telling customers that while their endowment policies still have a high risk of maturing with a shortfall, they will only have six more months to make a complaint and pursue compensation.

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A London man has been awarded £1,500 in endowment compensation after a county court hearing, despite not having made his claim within the ‘time bar’ period after which endowment customers supposedly forfeit the right to any compensation.

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Insurer Legal and General have denied a new allegation that they continued to sell endowment policies even though they knew that they would likely result in a shortfall.

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A soldier was denied endowment compensation by Abbey because the company said his occupation showed he was a risk-taker, and so would have been willing to accept a high level of investment risk.

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Legal and General has become the latest endowment company to introduce time barring, meaning that customers must claim for compensation within the next 6 months or face losing the chance of having their shortfalls covered.
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Scottish holders of endowment policies which were mis-sold through a solicitor have been warned by the government not to raise ‘false hopes’ over compensation.

Some policy holders who bought their policy before 2001 face shortfalls of thousands of pounds, yet the maximum they can claim in compensation is around £1000 under Law Society rules.

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Legal and General have reported a 19% return on its with-profits fund, which means thay can afford to raise final bonuses for its policy holders.

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