Five million endowment mortgage holders could be missing out on financial compensation, according to a consumer campaign.

The Consumers' Association suggested that up to 61% of people with endowment mortgages could have been given bad advice and are therefore entitled to financial compensation.

But the groups said only 4% of people with the policies have so far made a formal complaint.

The campaign is urging endowment holders to now "get even" with the companies that sold them the endowment by claiming their pay-outs.

Endowment shortfalls

Endowment mortgages involve two monthly payments - one to pay off the interest on the loan, and one into a fund intended eventually to pay off the amount borrowed.

Endowment mis-selling is nothing short of a national scandal that has shaken up the lives of millions of people

Consumers' Association

But the policy is invested in the stock market and recent market falls mean many people may not have enough of a fund to to pay off the original loan.

The Personal Finance Authority ombudsman has said that many people could be entitled to financial compensation from banks, building societies and insurance companies if they weren't warned of the risks involved with endowments.

A 'national scandal'

And the Consumers' Association is urging people to do just this.

"Endowment mis-selling is nothing short of a national scandal that has shaken up the lives of thousands of people," said the Consumers' Association.

Insurance companies are required to write and tell their policyholders if their investments are on track to repay their mortgages.

Two years ago, 15% of endowment policy holders were being sent "red letters" warning them of a likely shortfall.

That number had jumped to 34% by May 2002.

Risks mount

But simply having an endowment that will not cover the mortgage is not enough.

There have to be grounds for claiming that the policyholder was badly advised.

This could have been by the adviser not properly assessing the risks involved, for example, or telling people to 'cash-in' any previous endowment policies.

Further information:

Details of the Consumers' Association campaign can be found on its Endowment action website (see link on right).