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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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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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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Prudential, the company behind the UK’s biggest with-profits fund, have announced that bonus rates are to be maintained in 2006, meaning that all policies maturing this year will see increased payouts.

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Life insurer Scottish Widows have announced improved bonus rates for 2006, bringing a measure of cheer for around 70% of its with-profits policy holders, including those with endowment mortgages.

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