Legal & General U-turn over endowment claims

Click to follow
The Independent Online

Legal & General is to tell more than 600,000 policyholders with endowment-linked mortgages that they have just six more months to claim compensation if they believe they were mis-sold the products.

The move represents a major U-turn by L&G, which has until now been one of the few large endowment policy providers to rule out "time-barring" customers.

L&G began writing to customers this week, informing them of the time bar alongside the latest projections of how their endowments are expected to perform. About 630,000 L&G endowment policyholders will get the letters over the next 12 months or so.

The move means that policyholders who believe they were never warned their endowments might not produce enough money to repay their mortgages face a deadline within which they must claim compensation.

Tim Moore, of the complaints handling firm Endowment Claims, said L&G's decision would mean that some customers who had been wrongly sold endowment policies supposed to repay their mortgages would now miss out on redress, even if their policies end up tens of thousands of pounds short of their original targets.

"Industry regulations state that clients who become time barred are no longer able to claim compensation for a mis-sold policy, even if the insurer is clearly in the wrong," Mr Moore said. "This latest decision will mean that tens of thousands of Legal & General customers will lose out unless they act immediately."

A spokesman for L&G said the company had given policyholders plenty of time to make a complaint. "We've always said this policy was under review and we've come to the stage where we feel it is time to draw a line under this issue," he said.

L&G's U-turn leaves just two major mortgage-linked endowment policy providers that have not set deadlines within which customers must complain. Prudential and Nationwide Building Society are maintaining open-ended commitments to consider complaints.

Mortgage borrowers with policies issued by other insurers are already running out of time to claim compensation. About 1.6 million borrowers were told last year by Standard Life and Scottish Widows that they would have until the end of May to complain.

While customers who are time-barred still have a legal right to pursue an action through the courts, they are no longer able to appeal to the independent Financial Ombudsman Service, which considers complaints about mis-selling free of charge.

The Financial Services Authority, the chief City watchdog, has given endowment providers permission to impose deadlines on complaints, as long as they give customers adequate notice.

Comments