Life assurers agree not to put limit on endowment complaints

The vast majority of the UK's life assurers have capitulated to demands by MPs not to reject mortgage endowment complaints from those who are technically beyond the three-year time limit to complain.

The vast majority of the UK's life assurers have capitulated to demands by MPs not to reject mortgage endowment complaints from those who are technically beyond the three-year time limit to complain.

In a survey of the major mortgage endowment providers conducted by The Independent yesterday, every major bank and life assurer said it had either agreed to accept timed-out complaints, or was reconsidering its position. Royal & SunAlliance, Friends Provident and HBOS, who all previously applied the time rule, said they were reviewing the situation, and would not time-bar complaints while they were coming to a decision.

The remainder, including Prudential, Standard Life, Legal & General, Scottish Widows and Zurich, said they would not reject any complaints based on the time-bar rule. Abbey National, which owns Scottish Mutual and Scottish Provident, said that while it would not initially reject any complaints because of time limits, it may enforce the rule in the event of its final decision being taken to appeal by the Financial Ombudsman Service.

Earlier this week, a Government report raised concerns that some 700,000 homeowners would be subject to a financial regulation, which bars them from making a complaint about endowments more than three years after they received their first red reprojection letter. Reprojection letters were colour-coded either green, amber or red - with red letters illustrating that there was a high risk that the endowment would not be sufficient to pay off the policyholder's mortgage on maturity.

The first round of reprojection letters were sent out in the latter half of 2000. However, it was only after new rules were introduced by the Financial Services Authority this month, that insurers have been obliged to warn policyholders how much time they have left to complain. The Government says some 700,000 people who received red letters are now already timed out by the regulations even though they were never informed of the time limit.

MPs on the Treasury's Select Committee immediately moved to put pressure on the insurers to waive the rule.

Norman Lamb, a Liberal Democrat MP on the Treasury Select Committee, said it was "excellent" news that insurers had so quickly backed down on the use of the time-bar rule.