Rachel Stevenson: The ambulance chasers switch to endowments

First it was ambulances the salesmen from compensation claim companies were chasing down the street, hotfooting it after personal injury claims. Now it seems, from the page opposite, that they have endowment policyholders in their sights. For vulnerable consumers concerned about shortfalls, this is a development to be wary of.

Imagine the scene: you open your letter from your endowment provider and find your policy is not worth enough to pay off the mortgage you believed it would cover. Thousands of people have experienced this in the past year. Then, as if by magic, the phone rings, with someone offering to answer all your prayers. Court case, you hear, compensation, you are promised, and no fees?

But as the problems in the personal injury claims business has shown, there is much to risk and little to gain from succumbing to the sales pitch of little-known and untried claims companies. Pursuing the possibility of a higher sum in the courts is a potentially expensive gamble.

As unpleasant as it is to face a shortfall on your policy, it does not automatically mean you were mis-sold it, though the appalling record of the financial services industry for forcing unsuitable products down our throats should always give consumers the benefit of the doubt.

But there are other safer and cheaper ways of getting your complaint dealt with. Writing to your provider costs you only a stamp, and gets results for many customers. The Financial Ombudsman Service is free, if your provider leaves you dissatisfied.

The financial services industry should not be allowed to get away with mis-selling endowment policies, but the hard-selling ambulance chasers should not be allowed to profit further from savers' misery.

* Much embarrassment this week in the corridors of Whitehall. Sales of stakeholder pensions, the Government's BIG IDEA to offer cheap pensions for all, are not only dwindling, but falling at a more rapid pace than sales of "non-stakeholder" pensions, show figures from to the Association of British Insurers this week.

Make pensions cheap, the Government cried to the pensions industry that has ripped off millions of people for years, and people will buy them. But it seems they won't.

Pensions are not bought. They are sold. But in trying to avoid another mis-selling scandal, pensions have been so trussed up with regulatory tape there is not much in the way of buying or selling by anyone. The idea is that the product does not financially harm the customer. But make pensions foolproof, and you make them expensive, so the Government is once again left scratching its head over how to make people provide for their own retirement.

The Government has admitted its pension policy has failed. That is why it spent most of last year consulting on how to reform the industry and come up with a more straightforward concept. What came as another crushing blow was the collapse in confidence of final-salary pension schemes. Now even employers no longer keep their promises. To the humble saver, there seems little point in pensions.

Nearly a year later, it is little wonder people are relying on their property to live off in their old age. Research from Prudential shows 40 per cent of people will use their property to fund their retirement. This is not without risk and is an illiquid means of income. But who will be responsible for mis-selling then?

r.stevenson@independent.co.uk