Endowment claims FAQs
1. How do I make a complaint about my mortgage endowment policy to FSCS?
If you believe that your mortgage endowment policy was unsuitable for you when it was sold to you, please look at our factsheet. This explains the types of mortgage endowment claims we may be able to consider. After you have read our factsheet, if you think we may be able to help you, please complete our online Initial Questionnaire.
2. What is the difference between a "product provider" and a "firm"?
It is likely that your endowment policy is provided by a large financial organisation. We refer to this organisation as the "product provider".
In many cases an endowment policy will have initially been sold to you on the advice of an independent financial adviser (IFA). We refer to this adviser as "the firm".
If you believe you were wrongly advised to buy your policy, it is the advising firm against whom you may have a claim.
3. What happens to my complaint after I have completed the online Initial Questionnaire?
Once you have completed the online Initial Questionnaire we will review the information that you have provided. If we can investigate your complaint we will write to you to ask you to complete our detailed application form, and to provide us with as much further information as you can about your circumstances at the time you were given the advice. If we are unable to help you, we will write to you to explain why.
4. Do I have to pay anything to have my claim considered by FSCS?
No. The Financial Services Compensation Scheme (FSCS) is a non-profit, independent organisation set up under the Financial Services and Markets Act 2000 (FSMA). Our service is free to consumers. You do not need to claim through a solicitor, accountant or anyone else. If you do decide to instruct someone to act for you, we will not usually be able to pay their fees.
5. Why do I have to fill in an application form?
The application form tells us what type of claim you have; when, why and how much you invested; why you believe you have a claim; if relevant, what advice you were given at the time; and whether the product was suitable for you at the time you were advised to buy it. It also gives us the authority we need to collect information relevant to your claim.
Please provide as much information as you can, answer all the questions and provide any documentation that you have relating to your policy and the advice you received. If you are unsure about any of the questions on the application form, please contact us. We will be happy to answer any questions you may have.
6. How do you decide whether you can help me?
FSCS is the UK's statutory fund of last resort for customers of financial services firms. This means that FSCS can pay compensation to consumers if a financial services firm is unable, or likely to be unable, to pay claims against it. We describe this as being "in default".
To qualify for compensation you must be eligible under our rules which are made by the Financial Services Authority (FSA), the independent watchdog set up by government under FSMA to regulate financial services in the UK and protect the rights of consumers. The rules tell us which types of claim are eligible for compensation, and limit how much compensation we are allowed to pay.
For an investment claim to be eligible to receive compensation from us, it must meet ALL of the following criteria:
(a) the advice you received to buy the investment must have been given on or after 28 August 1988; AND
(b) the firm that advised you must have been authorised by the appropriate regulator to do so at that time; AND
(c) you must have lost money as a result of the advice you were given; AND
(d) the firm (or its principals) no longer has sufficient assets to meet claims for compensation.
FSCS is an independent body. Our service is free to consumers.
7. What happens when I return my completed application form?
Generally, there are three stages that we have to work through when considering claims for compensation:
- Check that the firm that advised you is not in a position to pay claims.
As we are a fund of last resort, we can only consider claims if they cannot be paid by anyone else. In order to be able to investigate your claim, we have to be sure that the firm that advised you is not in a position to pay claims against it. We describe this as being in default. We are only able to consider claims for compensation against firms that are in default. If the firm is no longer trading but still has assets that could meet your claim, we will probably be unable to help you. If this is the case, we will write and explain this to you.
- Assess your claim for compensation.
If the firm is declared in default by us, we then need to assess your claim for compensation. For mortgage endowment claims we must establish that your policy was mis-sold to you and that you have lost money as a result of the advice you were given. To do this, we will review all the information that you have provided to us and establish whether the advice you received was unsuitable for your circumstances at the time it was given.
For example, we will consider whether a mortgage endowment policy was suitable for someone with your investment aims or attitude to investment risk at the time you took out the policy. Sometimes we are able to collect information from other sources (such as files kept by the firm, or information from product providers) to help us.
There is no guarantee that we will uphold your claim for compensation and there are limits to the protection FSCS can provide. However, FSCS is an independent body. We will consider your claim fairly, weighing up all the available evidence. If we reject your claim, we will write to you to explain why. If we uphold your claim, we will calculate how much, if any, compensation you are due.
- Establish whether you have made a loss.
In order to calculate how much compensation you may be due, we need to calculate whether you have lost money as a result of the advice you were given. FSCS can pay compensation only for financial loss. If you have not made a loss, you will not be due any compensation.
We will calculate whether you have made a loss by comparing the situation you are in now against the situation you would have been in had you not been sold the mortgage endowment policy. For example, if your claim is based on the risk of the mortgage endowment policy being unsuitable for your circumstances, and we agree with this claim, we will compare your mortgage endowment policy with a repayment mortgage. This calculation will show us whether you are worse off or better off as a result of the unsuitable advice. If you are better off, and hence have not made a loss, we will not be able to pay you any compensation. We will write to you to let you know if this is the case.
8. How long will my claim take to process?
Because of the large number of endowment claims currently being received by us, some endowment claims are taking longer than our stated six months turnaround time (from receipt of a completed application form, or declaration of default, whichever is later) to be completed.
However, we are increasing our resources to speed up processing times and improving our processes to increase efficiency. For claims against firms already declared in default, we now aim to reach a final decision within six months for the majority of new endowment claims received from 1 October 2005. In the longer term we are investigating whether we can reduce turnaround times further.
Claims already in progress before 1 October 2005 should be completed by July 2006.
If you are facing immediate financial hardship we will try to deal with your claim as a priority. If this is the case please contact us.
9. How long will my claim take to process if you have not declared the firm in default?
If your claim is against a firm that has not so far been declared in default by us, your claim may take longer than six months to complete. We need to investigate whether or not the firm has the resources to meet claims itself and these investigations can take some time because we rely on third parties for information. We are increasing our resources in the Default Team, to try to speed up the process where we can, and we will do everything in our power to ensure that we can reach a decision on your claim as quickly as possible.
If you are facing immediate financial hardship we will try to deal with your claim as a priority. If this is the case please contact us.
10. Will compensation cover my shortfall?
FSCS is only able to pay compensation for financial loss. The compensation that FSCS can provide, assuming we uphold your claim, will not necessarily equal your projected shortfall, which is simply an estimate of potential future loss. Compensation is not intended to fund any projected shortfall.
11. What do you mean by financial loss?
To be eligible for compensation you must have lost money because of your dealings with the firm. For endowment claims the compensation we pay would try to take account of the position you would have been in had you not bought an endowment policy. If you are claiming compensation because you believe the risks of the endowment policy were not explained to you, we will compare the financial position you are in now with the position you would have been in had you taken out a repayment mortgage (the risk-free alternative).
12. Are there any limits to the compensation I can receive?
Yes. Compensation only covers financial loss, and our rules limit the compensation we can pay for an investment claim to £48,000 (100% of the first £30,000 and 90% of the next £20,000) per person, per firm. The average compensation payment for an endowment claim is currently £2,300.
13. FSCS says it cannot help me. Why not?
As a fund of last resort, we can only consider claims if they cannot be paid by anyone else. If the firm is no longer trading but still has assets that could meet your claim, we are unlikely to be able to help you. This means that you will need to take your case up with the firm you dealt with.
If you are having problems finding the firm or its owners and wish to pursue your claim, we may be able to provide contact details. Please contact us.
If the firm (or its owners) will not consider your claim, you could take legal advice or contact your local Citizens Advice Bureau for help.
The Financial Ombudsman Service (FOS) may be able to help you make your claim in some circumstances.
A guide to the different roles of FSCS, FOS and the FSA.
If your claim is against a firm that is still trading, you should contact the firm directly. If your complaint is not resolved, you can ask the Financial Ombudsman Service (FOS) for help on 0845 080 1800. FOS is the statutory dispute-resolution scheme set up under FSMA for resolving disputes between consumers and financial firms.
