When Compensation Falls Short For Endowments

If the firm who mis-sold you an endowment policy has gone out of business, you can still claim compensation.

If you're one of the millions of households with an endowment-linked mortgage, have you considered your position yet? Time is running out for people facing a shortfall who want to claim compensation for having been mis-sold a mortgage endowment policy.It's estimated that over a million households feel they have a case for making a complaint but haven't yet done so. And half of those who haven't complained are unaware of time-bars that may cause them to miss the chance to complain and claim compensation.However, what happens if the firm who sold you the policy has gone down the pan? It's all very well being able to make a case that you weren't properly advised of the risks of a shortfall or that the product was unsuitable for your circumstances, but if the firm doesn't exist any more or it doesn't have the assets to pay you, what can you do? If you fall into this category you may be able to get help from the Financial Services Compensation Scheme (FSCS), which offers last resort compensation to people who've lost money.The compensation only covers actual financial loss and is limited to £48,000 although it's estimated that the projected shortfall facing most homeowners with an endowment-linked mortgage averages £7,200 per household. The aim is to put you back in the financial position you would have been in had you not bought an endowment policy in the first place.The FSCS has produced an online questionnaire to help you decide if you have a claim that they may be able to help with. The majority of claims received by FSCS over the past couple of years relate to mortgage endowment claims and it's expecting to handle around 22,000 new claims in the current financial year with a further 26,000 claims expected in the next.If you don't qualify for compensation but have been told of a projected shortfall then it's time for action. The best solution is to switch some or all of your mortgage to a repayment scheme if you still have some years to run. Even if you only switch the amount of the shortfall predicted by your insurer, you'll at least have taken a step in the right direction. If you have the facility to make over-payments and can afford to do so, this will reduce the amount you'll owe at the end of the term.The Financial Services Authority has produced a leaflet outlining your options which also include saving separately for the projected amount of the shortfall, cashing in or selling your policy using the proceeds to reduce your mortgage.Find out more about Mortgages | Endowment Shortfalls - Don't Take No For An Answer