Endowment mortgage holders start to receive pay-outs after complaints

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The Independent Online

Some 750 holders of under-performing endowment mortgages have received compensation, after an investigation of their complaints by the financial services ombudsman over the past five months. This represents half of the 1,500 cases settled so far.

Some 750 holders of under-performing endowment mortgages have received compensation, after an investigation of their complaints by the financial services ombudsman over the past five months. This represents half of the 1,500 cases settled so far.

Walter Merricks, the chief financial services ombudsman, said he expected an "upcoming surge of work" in the near future as 6.6 million people received letters from their mortgage providers saying that there was an expected shortfall in their endowment policies.

The news comes two days after the Financial Services Authority announced that it would not launch an industry-wide review into endowment mortgages because it had found that the shortfalls were broadly not due to miss-selling.

However, the ombudsman's office said yesterday that there were clear cases of people being sold inappropriate policies. Jane Whittles, principle ombudsman of the investment division, said: "There are undoubtedly some people who were miss-sold policies and are due compensation."

She said that the evidence so far showed more cases of miss-selling had occurred when customers bought their policies from an agent tied to a particular mortgage provider or group of providers, rather than from an independent financial adviser.

"In just over half of the cases [awarding compensation] that we have decided so far the policy has been sold by a tied agent, who has a limited range of polices to choose from. Independent advisers can use their judgement to find the most suitable policy for the person."

The poor record of tied agents comes after the FSA promised to name and shame companies it has found to have miss-sold endowments, after an investigation that is due to be completed by Christmas. The ombudsman has the power to force companies to refund contributions and lost interest and pay compensation up to £100,000.

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