Melanie Bien: Endowment victim? Make your claim now

Norwich Union (NU) ruffled a few feathers last week by imposing a 12-month time limit on claims by policyholders who believe they were mis-sold their endowment policies.

Norwich Union (NU) ruffled a few feathers last week by imposing a 12-month time limit on claims by policyholders who believe they were mis-sold their endowment policies.

Currently, under Financial Services Authority (FSA) rules, customers have three years in which to make a claim from receiving their first warning that their policy might not be on course to pay off their mortgage. Once they've received a second warning, they have just six months in which to complain.

Now, however, NU policyholders have just 12 months in which to register a claim; if they fail to meet this deadline, tough. NU says it is giving twice as much notice as the FSA demands, but its decision to introduce this time bar could leave many out of pocket.

The specialist claims-handling service Endowment Claims estimates that some 34,000 NU policyholders have complained so far. Given that NU pays compensation on about half of all claims and it has some one million endowment holders - most of whom, Endowments Claims believes, are likely to face losses - thousands are set to miss out if they don't register.

NU is not alone: several insurers, including Friends Provident and Royal & SunAlliance, have already time-barred policyholders with valid compensation claims. The Consumers' Association says that around 700,000 people have already missed out in this way.

However, several big names, including, Prudential and Legal & General, announced last week that they wouldn't follow suit. Many insurers still allow policyholders to complain after the three-year deadline, and the Pru has stated that customers will be able to make a complaint at any stage if they feel they've been mis-sold a policy. The Pru feels that imposing a deadline won't do anything to boost confidence in long-term savings, and it has a point.

But NU insists that a final deadline is fairer to all its with-profits policyholders, and it too has a point as an open-ended complaints system would mean someone who bought their policy 10 years ago could make a mis-selling claim at any time over the next 15 years. This would unbalance the fund because the insurer wouldn't know the exact extent of its liabilities.

NU also believes that an open-ended timeframe for complaints could lead to claims being made for the wrong reason - because a fund has performed badly rather than that policy being mis-sold. Again, this is a valid point: there isn't evidence of widespread mis-selling of endowments, just some exaggeration in potential returns. The stock market has performed so badly for the past few years that the number of policyholders who could face a shortfall is up significantly.

But what amazes me is that anyone who feels they have a claim for mis-selling hasn't done something about it already. It's been months since the first letters were sent out warning of potential endowment shortfalls, so what have policyholders been doing all this time? Apparently, many NU customers haven't complained because they thought they had guarantees to cover any deficit. Four years ago, NU pledged to make up any shortfalls as long as investment growth was 6 per cent or more until the policy matured. If growth were below 6 per cent, it said it would still cover some of the shortfall.

But that doesn't explain the widespread inaction. I know many people can't be bothered to do anything about their finances - but even when they could lose out on thousands of pounds?

Whether time-barring is morally right is almost beside the point: you should have acted already if you feel you were mis-sold a policy.

How do you know if you were a victim of mis-selling? If you weren't aware of the benefits of a repayment mortgage, weren't told about the risks of under-performance with an endowment, or were advised to take out a mortgage that you'll still be paying in retirement, there's a strong chance you were.

And even if your insurer isn't introducing a 12-month time bar, you'd be daft not to act sooner rather than later. If you haven't registered a claim, do so now. Write to your insurer, keeping a record of all documents and correspondence.

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