Welcome to: Compensation Lottery

When the odds are against you, Don't leave your claim to chance

Under new guidance the Financial Ombudsman Service (FOS) will allow certain endowment claims to have the deadlines waived providing the consumer can verify unusual circumstances that prevented their timely complaint.

In most normal cases, there are strict time-limit rules for complaining about mortgage endowments. In June 2004 the industry regulator, the FSA, told financial firms they must give customers a clear "final date" for making a complaint. Once this final date has passed, you will be too late to complain - either to the firm or to the ombudsman service - because the complaint claim period will have expired.

The general deadline for most claims is three years from its first 'red letter' that conveyed a high risk of shortfall to the consumers, but this only applies to consumers who received information that the FOS would not accept an endowment claim after the final deadline. Since the 2004 rules are not applicable to those consumers who were already out of time, even without receiving a deadline notice, there are a large number still barred and not able to file an endowment claim.

The industry regulator, the FSA, has instructed firms how to calculate compensation where redress is appropriate. The technical rules that firms must follow when handling mortgage endowment complaints are set out in the FSA Handbook.

Compensation is usually worked out by comparing the complainants current financial position (taking the endowment policy into account) with what the claimants financial status would now if the a repayment mortgage had been taken out initially. In order for a reward to be considered, the comparison must show that the complainant is worse off financially now, as a direct result of following the poor advice to get a mortgage endowment. Additionally, calculating any compensation involves comparing the mortgage interest and premiums paid on the endowment mortgage, and the current "surrender value" of the mortgage endowment policy. This is compared with the mortgage interest and capital repayments paid on an equivalent repayment mortgage, and how much capital would have been paid off the mortgage.

The FOS usually calculates compensation in exactly the same way that the FSA has told firms to do this. However, each case it also assessed based on its own merits.

Numerous complaints are still being received by the FOS and they state each case where unusual circumstances are verified, it is considered for eligibility to file an endowment claim. One such case was a consumer whose family had been through serious illness including his newborn baby having to spend six months in a special baby care unit and his own surgery for throat cancer had left him unable to make the claim on time. He won the appeal to the ombudsman and the FOS is now considering his case. Another successful case was a woman whose flat number was 1/1 but her 'red letter' had been incorrectly addressed to number 11 and she won her appeal to the ombudsman as they felt the letter may not have been delivered to her and have waived her deadline.