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FOS wants endowment chasers to be regulated

The Financial Ombudsman Service is calling for the regulation of mortgage endowment claims management firms.

Chief ombudsman Walter Merricks told the Council of Mortgage Lenders’
annual conference in London this week that the rise in mortgage
endowment complaints has fuelled a growth in claim management firms
which do not disclose their fees clearly.

Merricks said these firms should not raise expectations falsely and
should be more open about their processes and fees.

The newly formed Claims Standards Council – a Government-endorsed
independent body – wants to see these firms offer sound, regulated
advice to their clients.

Merricks warned that IFAs and providers are rejecting swathes of
mortgage endowment complaints with little or no investigation and
referring them to the FOS. He expects the FOS to have had at least
65,000 complaints by the end of 2004, rising to about 85,000 next
year as a time-bar warning takes effect.

About 20 per cent of all mortgage endowment complaints made to firms
are referred to the FOS, far higher than any other area of complaint.
Merricks said IFAs and providers could be “dumping” cases on the
FOS because of the relatively cheap fee of 360 that the body
charges for taking on a case.

He said: “The rise in mortgage endowment complaints to the FOS is
not necessarily a drive to higher standards by firms but a minimising
of their payouts.”

Pearson Jones associate director Yvonne Goodwin says: “These
complaint-handling companies are shocking but it just goes to show
that the FOS is not putting itself out there and making itself
known.”

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