While most policies were marketed as a means of paying off an interest-only mortgage and having a lump cash sum left over, the reality is that the majority of endowment policies have been left with a shortfall. In fact, a previous Fairinvestment.co.uk user poll found that 86 per cent of endowment holders are expecting a shortfall, meaning that they will have to stump up extra cash just to cover the mortgage.
For those who are expecting a short-fall, there is the option of making a complaint and asking for compensation. However, the policy must have been mis-sold in order to do this, meaning that the risks involved were not explained at the time the endowment policy was taken out.
When asked 'were you mis-sold your endowment?' a shocking 49% of respondents, said that they had been given a guarantee that the policy would cover the mortgage. A further 27% believed that the risks were not made clear at the time the endowment was bought. The time frame within which to claim for compensation is currently either, six years from when the policy was bought, or three years since you realised your policy was mis-sold, however, an endowment policy must have been subject to a shortfall as well as mis-sold in order to claim compensation.
Other reasons given that class as mis-selling, were that 6% of people questioned believed they had been duped because the fees and charges had not been explained adequately. A further 3% believed they had been mis-sold their policy because they had been advised to cash in one plan and take out another, and 2% had not realised it was a long-term commitment when they signed up to it.
