The Consumers' Association states in Which? in October) that “justice” is being done in claiming compensation against alleged misselling of mortgage endowments maturing after age 65, backed by FSA regulations which freeze the past. But the case quoted never went to court.
The April 1983 issue of Which? recommended low-cost endowments as a “best buy”, saying: “It is unlikely there would not be enough to pay off the loan.” It was explained that the full amount of the loan repayment was not guaranteed and that extra payments would need to be paid to make up any shortfall. Endowments with a guarantee were not recommended.
CA members should not be allowed to claim against misinformation over guarantees when they were clearly warned by their own organisation as well as by forests of information supplied by insurers at the time of sale.
The effect of encouraging claims for some members reduces the quality of service for the majority, whose products cost more and deliver less because of regulatory costs which come directly or indirectly from other members' savings.
It is ageist nonsense to rule that endowments should not go beyond age 65 when fixed retirement ages are under debate and to rule that single people should not be insured when the marriage rate has fallen by 20 per cent in the last decade and cohabitation starts in the teens.
There will always be winners and losers and any attempt to regulate that makes the situation far worse. The gainers of 24 per cent house price rises should not be moaning about increases to keep their endowments on track. The pity is that insurers did not build in premium increases to correct shortfalls during a time when mortgage interest payments have fallen by half.
The CA should drop its action programme and warn its members that buying cheap does not always pay off.