The life insurance giant Prudential set the clock ticking yesterday for more than 100,000 customers whose endowment policies are not on track to pay off their mortgage, withdrawing its promise to not impose a time limit on complaints about mis-selling.
The Pru was the last major life insurance company to have not taken up its right to impose a so-called "time bar" on endowment mis-selling complaints, but finally caved in yesterday by following similar moves by Legal & General and Nationwide over the past few weeks.
Financial Services Authority rules allow insurers to reject endowment mis-selling complaints if they are made more than three years after customers were first sent a "red letter", warning that their policy was unlikely to pay off their mortgage. However, several companies, including the likes of the Pru and L&G, initially trumpeted the fact that they would not be imposing such limits. All have now reversed their decisions.
In a statement yesterday, the Pru said only about 15 per cent of its customers were on track for a shortfall on their endowment, and promised to give all of them six months' warning before imposing any time bar.
Nick Prettejohn, the Prudential's new UK chief executive, said: "Since 2000, we have written regularly to all of our mortgage endowment policyholders to give them details of their projected payout. Many of our customers will have seen their letters go from 'red' to 'amber' or 'green' during this period due to the outstanding performance of our life fund. In light of this, we believe that the time is right to draw a line under this issue and for customers to resolve any lingering concerns they may have."
Complaint-handling agencies reacted angrily to the news, however. Marianne Fitzjohn of Endowment Justice said the move was "grossly unfair". She said: "Once Legal & General had caved in, Nationwide followed, and the Prudential clearly thought it couldn't be left as the only one treating its customers fairly."
Mr Prettejohn claimed it would be unfair on other policyholders to not impose time bars: "We do not think that an open-ended complaints procedure for mortgage endowments is fair for our 4.5 million with-profits policyholders who will have to bear the brunt of this cost for many years to come."