Message to mortgage holders
DON'T panic.That was the advice today as Suffolk homeowners digested a new report, warning that millions of endowment plans could be too small to pay off their mortgages.
By Paul Geater
That was the advice today as Suffolk homeowners digested a new report, warning that millions of endowment plans could be too small to pay off their mortgages.
MPs accused the financial services industry of a catalogue of failings over the way it sold and managed endowment mortgages.
A report by the Treasury Select Committee said there were failings in the way the products were sold, in how assets were managed and in how people were kept informed about their investments.
The committee estimated that consumers will collectively face a shortfall of nearly £40 billion between the maturity value of their policies and the mortgages they have to pay off.
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Around 80 per cent of the 8.5 million endowment policies still in force are unlikely to pay off the mortgages for which they were taken out, with average shortfalls of £5,500.
Endowment mortgages were very popular in the late 1980s and early 1990s as the stock market boomed, but are now very rare with most borrowers preferring a basic repayment mortgage.
Independent financial advisors are reluctant to give general advice because they could be liable if it proves inaccurate.
But many believe that if the stock market continues its current strong recovery the situation might not be as bad as it currently seems when the policies are due to mature in a few years' time.
People who feel they were mis-sold an endowment mortgage should, in the first instance, contact the organisation which sold it to them.
If they are dissatisfied with their response they should then contact the government's Financial Services Authority which has devoted a page of its website to information about endowment policies.
For information about endowment mortgages - and what you should do if you want to complain see the Financial Services Authority website at www.fsa.gov.uk
Have you been mis-sold an endowment? Are you struggling to make up a shortfall? Contact the Evening Star newsdesk at 30 Lower Brook Street, Ipswich, IP4 1AN, e-mail firstname.lastname@example.org or phone 01473-324788.