Sam Dunn: Can endowment firms stop the clock on claims?

If the finance industry sees time-barring as 'closure', it could be wrong
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And then there were none. Well, almost.

The decision by Prudential last week to introduce a time-bar on claims of endowment mis-selling means that all the big UK insurers have now abandoned their commitment to let policyholders lodge a complaint at any time.

Only a couple of small insurers still allow open-ended claims - and for how much longer is a moot point.

Although naturally unpopular with endowment claims handlers - disgruntled policyholders calling on their services have proved a rich source of income - time-barring has largely been deemed a success at raising consumer awareness since the Financial Services Authority (FSA) introduced tougher rules two years ago.

Anyone sent a "red" warning letter since the summer of 2004, when the FSA told insurers to be precise in their language, ought to be aware of their right to complain about an underperforming policy - and the time limits imposed on them.

It's not all rosy, though: the sloppy and inconclusive wording on a number of red letters sent out earlier this century left many policyholders confused and, subsequently, unable to complain - though the Financial Ombudsman Service (FOS) has investigated many of their concerns.

For the companies, meanwhile, time-barring offers a chance to draw a line under compensation costs and move on.

It's difficult to disagree with the change. After all, it seems strange to let someone with a 25-year investment policy realise there's a problem after 24 years and then demand action.

But if the financial services industry sees time-barring as "closure", it could be mistaken.

A county court recently ruled that a letter in 2000 from Friends Provident, an endowment provider, to one of its policyholders did not make its warning of a shortfall clear enough. The judge awarded compensation of £1,500.

Although time-barring played no part in this case, legal redress may yet prove a way out for those unfortunate policyholders who do find themselves out of time.

This is no small number.

The FOS says 10 per cent of endowment complaints relate to time-bars, and that it finds in favour of the company in nearly all these cases - largely because the consumers have been confused by or misinterpreted the letters.

But if a large group of disgruntled consumers were prepared to unite and take on an insurer for compensation in court, they could make some headway, especially if the sympathy of the judge in the case above is any indication.

The complexity of each claim will probably prove a difficulty, but if enough aggrieved consumers come forward, the momentum could yield a new channel for looking again at genuine mis-selling cases frozen out of time.

Pensions pepped up

Reports of warfare - and then a truce - between Tony Blair and Gordon Brown are too numerous to remember.

But the emergence of a peace agreement on the issue of restoring the link between the basic state pension and average earnings, probably from 2012, is worth recording.

Allowing pensioners to participate in the rise in general wealth enjoyed by those working members of the nation is, socially and financially, a generous policy. And given the level of pensioner poverty in the UK, it will provide a much-needed boost.

The cost of the change (the link between the state pension and earnings was broken by Margaret Thatcher in 1980) was the cause of the latest Brown-Blair rift and has still to be worked out. But its value cannot be understated.

Lord Turner's report on pension saving pressed the need for the reform - and here appears to be the desired agreement. If it holds, it will be one legacy that Tony Blair can be proud of.

s.dunn@independent.co.uk

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