The Financial Services Authority yesterday published its policy statement on relaxing time bars for mortgage endowment complaints.
The rule changes will reduce the risk that some endowment policyholders who may have been mis-sold policies will miss the opportunity to complain because they did not realise they had a potential claim and failed to act in time.
Some consumers, however, still face the risk of being too late to complain if they feel they were mis-sold to. There are hundreds of thousands of consumers who received reprojection letters in 2000 which indicated a likely shortfall in their policies and who subsequently received a second letter. If policyholders originally received a red letter and believe they were mis-sold to they must complain within three years of first receiving information about their situation, otherwise the Financial Ombudsman Service will not be able to review their cases.
The FSA is highlighting the need for these consumers to act now. It will be using its website and consumer helpline to get this message across and hopes that other organisations with similar objectives will support its work.
FSA managing director John Tiner says: “This move will clarify the position for those considering making a complaint and help ensure that consumers have time to complain if they believe they were mis-sold to. Some people will have received their first letter three years ago and time will be running out – they must decide now whether they wish to complain.
“We will continue to work with the industry, consumer groups and others to ensure that all consumers have accurate information on their positions and what options they face to enable them to act accordingly. For anyone facing a potential mortgage shortfall, however it has been caused, the most pressing need is to decide what steps they need to take to sort out the problem.”
The Consumers' Association has welcomed the FSA's call to consumers to complain and has called on consumers to follow the FSA's advice.
CA director Sheila McKechnie says: “The FSA has made an emergency call to all consumers who received a red reprojection letter in early 2000, which warned of the high risk that the endowment policy would not pay out the target amount at the end of the term.”
The FSA has detailed the action that needs to be taken in different circumstances:
A red reprojection letter (“there is a high risk that your endowment policy will not pay out the target amount at the end of the term”) and not an amber or a green is to be regarded as notice of the potential for loss needed for time to start running. The normal three-year period would be extended where necessary to allow complainants six months after the receipt of a further reprojection letter, regardless of its colour, or other reminder within which to complain.
More generally and not confined to just mortgage endowment complaints, a complaint will be regarded as made in time if, within the relevant period, it has been lodged with the firm (and can be shown to have been acknowledged) or with the Ombudsman.