Prudential vows to boycott ambulance chasing agencies over endowments

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The Independent Online

Prudential, the UK's second largest insurer, launched a war against so-called ambulance chasing complaints handling companies yesterday, vowing to send all endowment mortgage compensation payments direct to their clients, even if they have appointed an agency to act on their behalf.

Prudential, the UK's second largest insurer, launched a war against so-called ambulance chasing complaints handling companies yesterday, vowing to send all endowment mortgage compensation payments direct to their clients, even if they have appointed an agency to act on their behalf.

In a statement released yesterday, Pru said more than £1.7m of the compensation which it has paid out for mortgage endowment mis-selling over the past year, has gone through complaints handling groups, most taking commission of up to 40 per cent. Of that £1.7m £438,000 was paid in commission.

Pru will now write to all clients who use complaints handling agencies, advising them to apply for compensation directly. Pru is also writing to complaints handling agencies warning it will try to put them out of business.

Mark Wood, the UK chief executive of Prudential, said: "We are concerned that customers may not know that they have the option of dealing with us directly, and that this will cost them nothing. If a customer has been mis-sold an endowment then they are entitled to compensation and we firmly believe they should receive 100 per cent of the compensation.

"It is not fair to [customers] that on average 25 per cent of the money should go to a third party when by complaining directly to us they can achieve the same outcome."

The agencies argue that they provide a valuable service, with most of their customers unlikely to have realised that they qualified for compensation if it was not for the approach they received from the agency.

Marianne Fitzjohn, a director of Endowment Justice, a complaints handling agency, said: "I wholeheartedly support their drive to send compensation cheques directly to clients. We already do that. However, it's unfair to try and interfere in their customers' desire to have representation. If you look at their own numbers, 25 per cent of complainants are choosing to be represented which would suggest those customers have some issues in believing that the system is fair.

"I'm a big supporter of the Prudential. They are the only firm going out of the way to treat customers fairly but they do make mistakes. And there is a need for our sort of service in the market."

Pru says that results of recent research reveal that some 2.4 million people are relying on an endowment to pay off their mortgage, out of 5.2 million who have an endowment policy linked to their home loan.

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