The FSA says it will come down hard on life companies which do not reduce backlogs of mortgage endowment complaints, threatening fines for breaching complaint handling rules.
In a letter to life office chief executives, the FSA warns that, from May 1, firms should be clearing complaints in line with its rules.
The move comes after a dressing down for leading life office chief executives by the Treasury select committee last week over endowment misselling and is timed to correspond with the end of FSA waivers aimed at helping life officers deal with the volume of complaints. Several life offices disclosed their average shortfall to the Treasury select committee last week.
FSA spokeswoman Jackie Blyth says the letter signals to firms that the FSA is serious about making sure they continue to process complaints, including four firms which were given waivers last year.
But many offices believe the warning is a publicity stunt, with the industry well aware that waivers will run out on April 30.
Zurich spokeswoman Erica Harper says the announcement was not a surprise to Zurich, whose waiver is coming to an end. She says the firm is confident it can comply with FSA rules by April.
Scottish Widows spokeswoman Paula Sutherland says an eight-week deadline has never been a problem for the firm, which sold most of its endowments through IFAs. Widows says it did not ask for the waiver and believes it has no staffing issues in its complaints handling department.
Norwich Union head of media relations James Evans says: “We are entirely comfortable with the FSA waiver coming to an end. We have been aware of this for some time and have been in contact with the FSA throughout.”
Blyth says: “A line has been drawn in the sand to ensure that firms process complaints effectively.”