Whale music for borrowers

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The Independent Online
There's a new factsheet out this week. Not earth-shattering news in itself but this one comes from the watchdogs at the Financial Services Authority (FSA).

This is not a body known for issuing a release every time someone sneezes. And unlike commercial organisations, the FSA didn't feel the need to pay loads of cash to a PR firm to phone up and beg me to cover its factsheet in these pages.

However, this is one factsheet which ought to be plugged. It is all about endowments - and it's interesting to see what the "Official Line" is on these troubled savings schemes.

Three weeks ago this newspaper reported that Howard Davies, chairman of the FSA, had defended endowments by saying the vast majority of policies set up to pay off mortgages would indeed pay off the loan. And he also ruled out any ban on the sale of further mortgage-linked endowments.

But the bad press has rumbled on, and thousands of worried endowment owners have been calling the FSA consumer helpline (0845-606 1234).

The FSA itself seems irritated by all the fuss (no wonder; the helpline is swamped) but the tone of the factsheet is calming - a sort of whale music for the panicked millions: "Don't make any hasty decisions. Check the facts first. Never cash in your policy - or stop your payments - without taking proper advice. You could lose out if you do."

This sort of guff gives factsheets a bad name. (My favourite top tip invariably appears on anti-burglary factsheets: "Shut and lock all doors and windows before you go away.")

But press on: the rest of the advice is more meaty. It is well-written and it is clear (it's almost certainly a lot clearer than any communication you have had with financial advisers or life insurance companies).

If your policy looks like it's not going to pay off the whole loan, you should act now. The FSA outlines all the options. You can get your factsheet on 0800 917-3311 or www.fsa.gov.uk

These calming noises about endowments are all very well, but let's just remember why people were exhorted to get these policies in the first place: they were promised riches just before retirement.

Paying off the home loan was the least of the endowment's advantages; it was supposed to generate a hefty lump sum as well. No-one is talking in those terms anymore. You're lucky if the policy pays off just the capital owing.

So what exactly do the 32 per cent of home buyers who still choose to buy a new endowment mortgage think they are getting? Do let me know.

n i.berwick@independent.co.uk