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Don&#39t fear endowment probe, Cousins tells IFAs

IFAs have nothing to fear from an inquiry into endowment mortgages, says

Labour MP Jim Cousins.

Instead, he says, an investigation could boost IFAs&#39business.

Cousins says that any investigation is likely to exonerate most IFAs but

tied salesforces linked to lenders are likely to come in for most

criticism.

Cousins, a member of the Treasury select committee, says an inquiry is

necessary to combat what he sees as widespread misselling.

Rather than fading away, Cousins fears the problem may escalate as

providers are tempted to sell top-up endowments to cover the shortfalls in

original policies.

The debate surrounding endowments grabbed the spotlight again last week

after BBC flagship programme Panorama alleged that misselling was more

widespread than originally reported.

The Government is resisting calls for an inquiry, saying shortfalls in

endowmentsdo not result from misselling but from uncontrollable economic

factors such as plummeting interest rates.

Treasury economic secretary Melanie Johnson reiterated that position again

last week, saying that it was not necessarily misselling which has been the

cause of endowment shortfalls.

The FSA has attempted to set the record straight on endowments by

releasing a report that claims that, on average, policyholders have

“enjoyed returns which mean they have fared at least as well as they would

have done with a repayment mortgage”.

It also says that an inq-uiry into endowment sellingis unnecessary.

Cousins suspects the Government does not want to rock the boat for fear of

provoking further opposition to the Financial Services and Markets Bill.

He says: “If the story is told properly, IFAs are the only ones who will

come out smelling of roses. From what I have seen, it has been mostly

building societies with tied agents involved in misselling.”

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