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.

To successfully pursue a compensation claim, you need to satisfy one of the following criteria:

• Your advisor didn’t properly explain that an endowment policy is in effect a stockmarket investment, and carries the risk that it may not perform as well as expected, and may not in fact cover your mortgage repayment at the end of the term.
• Your advisor didn’t fully explore whether you were happy with the risks involved.
• You bought your house from the council under ‘Right to Buy’ legislation, and had no previous experience of regular savings plans
• You are due to retire before the endowment matures, and the policy seller didn’t explore whether you could carry on making repayments after that.
• Endowment mortgages include life insurance cover as standard. If the policy was sold to a single person with no dependents, then the life element was probably unneccessary and this could give grounds for a valid complaint.

On top of this, mis-selling is not enough - you have to have suffered actual financial loss because of it, usually in the form of a projected shortfall when the policy matures.

Finally, most companies impose a ‘time bar’, meaning that if you don’t complain within 3 years of receiving your first notification of a possible shortfall, you’ll lose the right to compensation - whether or not your policy was mis-sold in the first place. Check whether your policy issuer has put time bars in place, and if so act quickly to avoid losing out.

Most experts advise against using an endowment claims management company to pursue your compensation claim, as they will take a large percentage of any compensation you receive in commission, without adding any real benefits over conducting the claim yourself.

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