The Treasury Select Committee has just released a report regarding how they believe endowments were mis-sold. According to the report, 80% of endowment policies will not meet their target amount, leaving Mr and Mrs Average with a shortfall of around £5,500. Obviously some will be far higher or lower than this amount. The MP's that make up the Treasury Select Committee also believe that 60% of endowments were mis-sold. They have now called for better financial advice for policyholders with shortfalls and extended periods in which to allow complaints.
Our View:
We are proud to say that we have never advised any client to take out an endowment mortgage. However, we know many that have and the general reason for the recommendation over and above a repayment mortgage is commission. Whilst commissions can be extortionately high, the culture of the average employed financial adviser relies on these commissions. They have sales targets to meet and this was generally why endowments were sold in the past. There has also been mis-selling (in our opinion) in more recent years when endowments fell out of favour. The commission based advisers still needed high commission paying policies and therefore opted for packaged Individual Savings Accounts from a number of providers. These policies paid 'endowment style' commissions but gave no guarantees. We believe this is the next problem to arise and anyone with an ISA, PEP or Pension mortgage should review them immediately. Discussions with Committee. has entered into discussions with MP's at Westminster concerning the above and with regard to some clients who have blatantly been mis-sold by Banks/Building Socities to see if the Committee can help. Contact us if you would like you case out forward.