Consumers campaigners and regulators are split over the Financial Services Authority move not to launch a full-scale “endowments misselling” enquiry.
According to the FSA around 3m households will be forced to pay £40-50 per month as endowments have not produced enough to repay mortgages in full.
Around 60 per cent of the 10m endowment policies in force (held by 5m households) will suffer repayment shortfalls. For a £50,000 mortgage the regulator estimates those hit by shortfalls an extra £500 a year.
A Consumers' Association spokesperson says: “Our research shows systematic misselling of endowments. We don't think the industry should get away with these disgraceful practices scot-free.”
But FSA chairman Howard Davies says: “Endowment holders have on average done quite well in recent years, better than original projections.”