The FSA and the ABI have toughened up their rules on endowment complaint handling, triggering industry fears that a fresh wave of complaints is set to follow.
The regulator is requiring firms which impose time limits on endowment complaints received to make clear to policyholders that they have three years from their first red letter to complain.
Firms must also issue a warning at least six months in advance of the date from when the customer would be time-barred from making a complaint.
The ABI has reinforced its mortgage endowment code after consultation with the FSA, the FOS, trade bodies and consumer groups.
It will now require standard reprojection letters to provide details of how to contact an IFA, to feature a new warning box with extra information about how and when to complain and to draw customers' attention more clearly to the need to act to deal with any shortfall.
The ABI is also making companies stress the importance of consumers using redress money to pay off outstanding debt.
Syndaxi Financial Planning director Robert Reid says: “The psyche of the British public is such that as soon as a deadline is announced, they are spurred into action. I would be surprised if this did not produce an increase in claims.”
Norwich Union head of compliance operations Iain Glen says: “We are expecting and staffing up for an increase in complaints. A lot of customers still have not taken action and the industry has to encourage them to do so.”
Dennehy Weller managing director Brian Dennehy says: “This is bound to increase endowment complaints but it is difficult to tell to what ext-ent – the problem has been around for a long time and surely we have got to the point where most of those who have grounds to complain have done so.”
