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IFAs in the clear on endowments

IFAs have been publicly exonerated from having any involvement in mortgage endowment misselling by the chief financial ombudsman.

Banks and building societies are to blame for mortgage endowment misselling with IFAs in the clear, Walter Merricks said at last week&#39s LIA Annual Conference in London.

He said the vast majority of endowment problems have resulted from consumers not getting the advice they need rather than being misadvised by an IFA.

According to FOS head of communications David Cresswell, the statistics would seem to support Merricks&#39 comments as only 15 per cent of complaints have resulted from advice given by an IFA.

At the same panel discussion, FSA consumer relations director Christine Farnish warned that there will be many more borrowers falling into the red category, indicating a shortfall on their policy, as the second round of endowment projection letters goes out.

Farnish blamed the turbulence in the markets for what she expects to be the increase in red letters but said in many cases an endowment will still prove to be a better investment than a repayment mortgage.

Merricks said: “I have no bone to pick with advisers. The problem with many of the people who have endowment mortgages is that they never got any advice in the first place.”

Farnish said: “A lot of those consumers with endowment mortgages will have red letters this time and will be pretty sore about it.”

Aifa director general Paul Smee says: “I am not surprised, all the statistics point in that direction. It is nice to hear such a public statement though.”


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