Winterthur Life UK, part of the Credit Suisse banking group, was yesterday ordered by regulators to pay £10m in compensation to 10,000 customers for inappropriately selling them mortgage endowments.
The case, which was brought by the Financial Services Authority, was the first evidence of mis-selling of mortgage endowments, which is thought to have been widespread and will lead to many other companies having to pay compensation.
Winterthur was also fined £500,000 and must pay the £57,000 costs of the FSA's two-year investigation.
The company was penalised, the FSA said, because of a computer system used between March 1998 and December 1999 to establish what type of mortgage a customer should be given.
The FSA calculated that in about 10,000 cases, customers were offered endowment mortgages when, based on the information they provided, straight repayment mortgages should have been recommended to them.
Carol Sergeant, managing director for regulatory processes at the FSA, said: "This is delivery on our commitment to deal effectively with endowment mis-selling. We are also dealing with a number of other firms where mis-selling has been identified to ensure that consumers receive proper redress, so further announcements can be expected."
Winterthur withdrew from the endowment market in July 2000 and is in the process of contacting those customers who were affected by the mis-selling.
The company said that redress would be offered where appropriate, including to those policyholders who have surrendered their policies.
Clifton Melvin, chief executive of Winterthur, said: "We very much regret that this has happened and our first aim is to make sure that none of our policyholders are financially disadvantaged."Reuse content