The Consumers' Association has written to the Financial Services Authority in the wake of recent revelations about the potential shortfall on endowment mortgages. The letter calls for the city regulator to put in place a visible plan of action to help consumers who believe they are the victims of mortgage endowment mis-selling to pursue claims for redress. We want to ensure that the interests of consumers are protected and put a stop to the industry's claims that the mortgage shortfall problem is simply a reflection of the changing economic environment, when that might be only part of the story. The sales practices of commission-hungry sales staff in the 80s and 90s could also have been a major contributory factor.

The ABI's recently released figures did little to dampen consumer concerns of a widening problem with mortgage endowment policies. Of the 1.2 million letters sent out to policyholders, over 60 percent have a shortfall. The original projection exercise in 2000 showed that of the 11 million policies, over 40% were shown to have a shortfall. The recently released figures suggest that the situation may have worsened. While the existence of mortgage endowment shortfalls alone does not mean that policyholders were mis-sold mortgage endowments, the FSA needs to carry out a wider review that takes the current burden off consumers and places the onus on companies to resolve this problem.

Consumers' Association calls on the FSA to take the following action:

• The ABI should be forced to clearly alert consumers to their possible entitlement to redress and to enclose the FSA factsheet: Endowment Mortgage Complaints.
• The FSA should reconsider its approach to Mortgage endowment mis-selling, including its decision not to conduct a full-scale review.
• At the very least, the FSA should adopt a stratified approach to.
• Identify the companies who are the worst performers.
• Identify how many consumers are complaining and how much compensation they've received
• Protect those policyholders who may have been mis-sold an endowment mortgage before the compulsory scheme began before April 1988.

We would also like to see the FSA issue a public statement to ensure that policyholder funds are not improperly used by companies. This will help to enforce corporate accountability at a time when there is a real potential for companies to mis-use policyholder funds.

This article was taken from the Consumers Association Website 2nd March 2004