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Davies rubbishes endowment critics


FSA chairman Howard Davies has rubbished recent criticism of endowment mortgages and &#34absolutely&#34 ruled out banning them.


There have been calls MPs and sections of the press for endowment mortgages to be scrapped because they are high risk investments, which can underperform and fail to pay off loan capital.


But Davies, in an interview with Money Marketing, says the criticism is &#34ill-informed&#34 and &#34lacking understanding&#34.


Davies believes critics have ignored the &#34basic facts&#34 that the overwhelming majority of these policies pay out adequately and that only half of the approximate 600,000 endowments sold annually are attached to mortgages.


He also points out that the number of borrowers using these policies has plummeted in recent years.


Endowments accounted for 32 per cent in the first quarter of 1999 from a peak of 83 per cent in 1983, according to Council of Mortgage Lenders&#39 figures.


The FSA is visiting providers to look at current sales practices for endowments.


Davies says: &#34I find it very frustrating when people are quite happy to pontificate but without being at first base in terms of reading what the reality is.&#34


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