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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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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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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An endowment shortfall notification is pretty bad news for anyone to receive, but poor performance of an endowment, like any investment, isn’t in itself grounds for complaint and compensation.

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Pressure is rising on the government to improve compensation levels for Scots who bought endowment policies from solicitors and who are now facing shortfalls.

The chairman of the Treasury select committee, John McFall, has written to economic secretary Ivan Lewis asking for action to close a loophole that could leave thousands of Scots facing shortfalls. (more…)

A new group has been set up in Scotland to lobby for a change in the way endowment compensation is paid when the policy was bought from a solicitor, was mis-sold, and now faces a shortfall.

Unlike in England, where all policies are bought from financial companies regulated by the FSA, Scots were able to buy policies from solicitors up until 2001 - leaving victims of mis-selling outside the normal FSA compensation process.

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An article in the Telegraph warns that a new mortgage crisis could be looming, as half of endowment compensation paid out has been ’squandered’ rather than being used to restructure the mortgage.

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A new service has been launched which may help people claim endowment compensation against a firm which has gone out of business since selling the policy.

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