Pat Bunton

Patrick Bunton from L & C Mortgages sheds some light.

When Alan Sheppard from Oxfordshire complained about his endowment, his supplier stated that it was sold by a financial advisor and they had no responsibility for it. The financial advisor has since ceased trading.

The scheme is going to seriously under perform - can they really claim it is nothing to do with them?

It is important to remember that underperformance is not in itself grounds for a complaint.

What is though if you were not advised by the salesman that the contract carried some risk - ie that the ultimate payout was dependant on investment performance.

The provider has acted correctly as they simply provided the product and did not advise you to take it. The firm that originally gave you advice is no longer trading so you should contact the Financial Services Compensation Scheme - www.fscs.org.uk and they will investigate your complaint instead.

Ms Alexander from Surrey has an endowment with Royal & SunAlliance which matures in 2016. Last year, it earned a bonus of nearly �5,000. She no longer needs it to cover the mortgage, should she cash it in? The surrender value is �6,736.

This is a with profits policy and a large part of any final payout is likely to be in the form of a terminal bonus upon maturity.

The bonuses once added are also guaranteed so it does give you some degree of stability in turbulent times.

If you surrender early you will be penalised and provided monthly payments are affordable the normal advice would be to keep it running as a free-standing savings policy.

In the event that you do decide to get rid of it though, check the second hand market as you may be able to sell your policy for more than the surrender value Royal & SunAlliance will give you. If you need help with this speak to a good IFA.

Margaret Walker from Lancashire took out an endowment with NatWest in March 1988. It matured in February 2003. Up until March 2001 it was on target to get �26,000 but when they finally got the cheque it was only �21,000. She complained to NatWest - they said it wasn't mis-selling. She is now complaining to the ombudsman. What else can she do ?

Nothing, you are doing the right thing and the ombudsman will adjudicate. Don't forget that the question of mis-selling relates to what you were told when you took the policy and not to performance. If you invest in stocks and shares there are no guarantees that they will go up so really your complaint hinges on whether or not an endowment was appropriate for your circumstances and whether or not "risk" was adequately covered.

Colin Bainbridge from London wants to know about companies who buy endowment policies - is it worth doing and what should he look out for ?

There are a number of companies that buy second hand endowment policies and the only real issue if you are selling one is to ring around and try and get the highest figure you possibly can. If you don't want to do the legwork then contact a good IFA who will be able to do it for you.

Alison Wallace from Aberdeenshire has an endowment with Axa and last heard from them in November. She wants to know how long should she wait before getting in touch again. Their policy was originally through Equity and Law and as she's an ex-employee will this make any difference to the delay/decision ?

We would generally suggest that you check progress annually, so if you have not received further correspondence within that timescale, contact the company and ask them to send you a revised maturity projection.

The fact that you were an employee does not affect this in any way as the calculations are based simply on performance.

Tony Wallington from West Sussex recently had a phone call from a company claiming to obtain any shortfall on an endowment that was used to secure a mortgage They claim to work on a "no cost" basis, win or loose! Should he trust them ?

In a word no, if the policy was not mis-sold then they will not win. If it was mis-sold they will help you to complain, but presumably take a cut of any award made.

All you need to do if you feel the policy was mis-sold (ie that the risk of it not paying off your mortgage was not explained) is to complain to the company that sold it to you in the first place.

If they agree they will compensate you, if they don't they will tell you why not and if you still disagree you can refer the case to the financial ombudsman for independent arbitration - all of this will cost you nothing, but a bit of time

Paul Winterflood from Dartford is worried about several endowments he has with AMP. He was sold them by Pearl Assurance, who were then taken over by AMP. He's heard that AMP are now in trouble and he wants to know if anything did happen would he be entitled to compensation and if so from whom?

Once again the issue of compensation is wrongly getting caught up with performance, or the financial security of the provider.

Compensation is only likely to be paid where the verdict is that the policy was mis-sold ie it was inappropriate for your risk profile, or that the risks of the contract were not adequately explained, or disclosed before you took it out.

Martin Stacey from Hampshire asks if there is any information on how many endowment complaints are being upheld and compensation claims awarded... he has complained and been rejected and thinks the whole thing is only a paper exercise.

Well, whilst it is disappointing to lose a claim, the fact remains that both the ombudsman service is finding in favour of many customers with endowment policies. They are truly independent and do not simply pay lip service. If anything, the industry has often grumbled that they find in favour of too many (not too few) cases.

Stephen Hafenrichter from Ealing in West London wants to know where the burden of proof lies in cases of mis-selling ? Do the customers (often with limited financial knowledge) have to prove they have been mis-sold or do the companies have to prove they're innocent ?

The burden of proof is on the firm to prove that the product sold was appropriate at the time for the customers circumstances and that "risk" was adequately covered. If they cannot do this then they are almost certainly going to lose any dispute that reaches the ombudsman. Of course, if a firm can prove this then it would not be fair for them to be found guilty - as that would be akin to someone suing a their bookie for taking a bet on a horse that subsequently lost.

Colin Sheldon, who lives in France, wants to know if endowments are worth keeping if there seems no prospects of terminal bonuses returning?

This is a million dollar question and is almost impossible to answer as the answer lies in the future investment performance of the providers, in turn this will be affected by global stock markets.

It is worth remembering that this type of policy should always have been bought and sold on the basis of being a long term investment and that one should accept that over a typical 25- year policy term markets are going to have good, bad and indifferent times.

Derek Jordan has a problem with a mortgage dating from before April 1988 - can he complain to anybody?

The regulation of the selling of financial services did not begin until 29 April 1988, so firms that gave advice before that date do not have to offer customers the option of arbitration through the Financial Ombudsman Service, although some may do this voluntarily.

A viewer wants to know the best way of cashing in an endowment so he can add it to his redundancy pay and finally settle his mortgage.

If it is a unit-linked policy just surrender it as the value of the policy is the value of each unit multiplied by the number of units you hold. If it is a "with profits policy" obtain a surrender value from the provider and then shop around the second hand market to see if you can sell it for more - simply go for whichever option gives you the most.

Barbara Deal has an insurance policy - small endowment - no payments have been collected from her since last August. She rung them three times about this but so far nothing - what should she do ?

She should write to the company because if payments are not made the policy could lapse, although it does sound as if there is more to this than meets the eye. In your letter mention the fact that you have been trying to resolve this without success and that you would therefore like the firm to treat this matter as a formal complaint - that should focus their minds.

Derek Abrahams says "You always ignore the fact that an Endowment Policy is a Life Assurance Policy. When you replace it with a Repayment Mortgage you are leaving your family without security. What if you have an accident? Where would they live ?"

You can replace the life cover that an endowment provides cheaply and simply with term assurance (the industry name for life cover). This simply pays out if you die within the term but you can also incorporate critical illness cover into it as well to ensure a payout is made should you suffer from a serious illness, or be unable to work for the long term. If you surrender an endowment it is important that you consider this as otherwise you could well end up with an unprotected mortgage.