View more on these topics

CA raps FSA over statutory failure to help endowment holders

The Consumers&#39 Association has lodged a complaint with the Treasury, accusing the FSA of failing in its statutory objectives of promoting public understanding and securing consumer protection during its handling of the endowment crisis.

The CA is also calling on the Treasury to intervene and establish an independent review.

The complaint follows the launch of the CA&#39s &#39endowment action&#39 campaign eight weeks ago, designed to help the five million consumers who could have been mis-sold. Since its launch, 280,000 people have flooded to the campaign website for information on endowments mis-selling and 18,500 people have used the &#39letter generator&#39 to draft their complaint.

The CA also released findings last month revealing that a staggering 87% of endowment mortgage holders, who have received reprojection letters, are unaware that the FSA has a factsheet designed to help people make a complaint and only half of consumers who have actually made a complaint are aware of the factsheet&#39s existence.

The CA&#39s complaint addresses three areas:

• Giving mis-leading advice – In December 1999 an FSA press release told the public that, on average, mortgage endowment holders had fared at least as well as they would have done with a repayment mortgage. This communication was repeated throughout 2000. This statement was misleading as it was based on what the CA believed to be manipulated calculations, which did not correctly reflect the up-front charges on endowment mortgages.

• Taking inadequate action/failing to act – In its progress report, the FSA acknowledges that firms had mis-sold mortgage endowments to consumers and that millions faced shortfalls. Despite this, says the CA, the FSA has failed to take effective action to raise consumer awareness, inform surrendered policyholders and deal with the problems that arose from those reprojection letters which encourage policyholders to increase premiums. The CA believes that 1.9m consumers may have surrendered their mortgage endowment prior to spring 2000, when reprojection letters were first sent out. Though these people are just as likely to have been mis-sold they have never been contacted or sent a fact sheet because the FSA&#39s communication focused on shortfalls not mis-selling.

• Acting with avoidable delay -The FSA, to date, has failed to put out any clear communication alerting the five million consumers who may have been mis-sold to the imminent deadline for complaining to the Financial Ombudsman about mis-selling. The CA is calling on the FSA board to decide in favour of extending the deadline for complaining to the Ombudsman by a year. It has also asked the Government to force the FSA to take tougher action to help the millions of consumers who could have been mis-sold an endowment mortgage.

CA director Sheila McKechnie says: “The fact that over a quarter of one million consumers have flooded to our website in just eight weeks proves to us that the FSA has fundamentally failed in its duty to inform and help consumers who have been mis-sold or who have a shortfall. Last week the Treasury Select Committee described Howard Davies and his team as &#39asleep on the job.&#39 In the case of endowments it appears to be one of &#39asleep off the job&#39.

“The FSA&#39s track record on mortgage endowments represents a series of failures, mistakes and omissions. With only a few weeks left for many consumers to complain, the FSA can no longer afford to bury its head in the sand. In taking our complaint to the Treasury today, we hope to catalyse the Government and the FSA into action to ensure that every person in the UK who is entitled to redress gets it.”


Healthy addition to the Skipton Group

Skipton Building Society has acquired an 85% shareholding in The Private Health Partnership Ltd – an independent healthcare intermediary – bringing the total number of subsidiaries within the Skipton Group to 16. PHP was founded as a partnership in 1988 and operates from its headquarters in Otley, West Yorkshire. Its team of 12 staff, including […]

AIFA chairman says industry needs to get back onto the front foot

In his final speech as chairman of the Association of Independent Financial Advisers at the Association&#39s annual dinner yesterday, Lord Hunt said that the predominant themes during his three years as chairman were regulation and reviews. In a personal plea to guest speaker FSA chairman Sir Howard Davies, Lord Hunt says: “I urge the FSA […]

Council tax discounts on second homes to be slashed

Council tax discounts on second homes will be slashed in some areas under changes announced by the Office of the Deputy Prime Minister. The changes could raise an estimated extra £65 million nationally for councils to invest directly in local services, including the provision of affordable housing. The government proposes to give councils in England […]

Consumers overcome current account inertia

Automated processes for switching standing orders and direct debits are making it easier for people to switch current accounts, says Intelligent Finance. Consumers are now more likely to switch accounts between banks, making the option of an offset or current account mortgage more accessible. Research conducted by ICM for Intelligent Finance shows that one and […]

Guide cover resized

Guide: Johnson Fleming’s managed auto-enrolment service for SMEs

Johnson Fleming has launched its new managed auto-enrolment service, designed to support SME businesses of up to 250 employees. The managed auto-enrolment service is not just about providing businesses with a software system for them to manage themselves, but more about outsourcing the administration of the project and scheme to Johnson Fleming’s auto-enrolment staff.


News and expert analysis straight to your inbox

Sign up