The Financial Ombudsman Service has been criticised by the chairman of the Building Societies Agency because of the way endowment compensation issues are handled. According to Mr Goodfellow, endowment compensation payouts are just handed out to complainants with no stipulations as to how the money should be spent. He is concerned that many consumers do not spend the money repaying their mortgage when it has generally been paid out because of a mortgage shortfall.
Our View
A spokesperson for the Financial Ombudsman Service said that it is up to consumers to decide where the money is spent. We have to sit on the fence for this one! Mr Goodfellow believes the money should be spent on the mortgage otherwise another complaint could come in later down the line. Our view here is simple - if the complaint regarding a shortfall is settled, it is settled and no further complaints should be allowed. On the FOS's side, the consumer has the mortgage problem and they have been paid out for it. If they choose not to repay some or the entire mortgage with the compensation, that is up to them. But, they should not be allowed to make further complaints later down the line. The problem is that many endowment holders are jumping on the compensation bandwagon. Of course, other people may not need the compensation, they could just be due it because of mis-selling.