Features

• With a conventional mortgage, the borrower makes regular payments to reduce the outstanding loan amount and pay the interest. With an endowment mortgage, the borrower's regular payments go to the interest, life insurance to pay off the mortgage in case the borrower dies and an endowment premium. The lender invests the endowment premium with the aim that the total amount at the end of the loan period will be equal to or greater than the original loan amount.
  
  

Grounds for Complaint

• In some situations, the borrower can demand compensation from the lender for mis-selling the endowment mortgage. For example, if the borrower did not understand the risks involved at the time he bought the policy or if the lender made misleading claims, the borrower may be able to file a complaint. The borrower must have lost money as a result of the endowment mortgage for a successful claim. The Ombudsman will calculate the compensation based on a comparison between the performance of the endowment mortgage and a conventional mortgage.
  
  

Complaint Process

• To make a complaint, the borrower needs to contact the firm that sold the endowment mortgage and follow its formal complaints procedure. The Financial Services Authority and the Financial Services Compensation Scheme can help the borrower locate the lender. If the borrower finds the lending firm's decision to be unsatisfactory, he can take the complaint to the Financial Ombudsman Service. If he still doesn't accept the Ombudsman's decision, he can take the case to court.
  
  

Warning

• Some companies offer the service of helping borrowers pursue their complaints for a fee. The borrower usually pays the fee in the form of a fixed percentage of the compensation the borrower gets after a successful complaint. Depending on the size of the compensation, this fee can amount to hundreds or thousands of pounds. Using the services of such companies doesn't necessarily make it more likely that the complaint will be successful.