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Knee-jerk surrenders bring calls for cooling-off period

IFAs are calling for the FSA to impose a cooling-off period on endowment surrenders to protect policyholders from needlessly cashing in their plans.

Advisers fear many of their clients have been panicked into surrendering policies after receiving letters saying they could be facing shortfalls on their mortgage endowments.

They have slammed the FSA for whipping up an “unnecessary panic” about endowments and believe the regul-ator must now step in to limit the damage.

The FSA should lay down a compulsory time between policyholders requesting to surrender their policies and the request being accepted, say IFAs.

A cooling-off period would give policyholders breathing space to consider if they have made a wise decision and prevent a knee-jerk reaction of cashing in a policy which could have paid off their mortgage.

IFAs say insurance companies should also be made responsible for ensuring policy-holders do not surrender policies unnecessarily.

The Onions Group principal Penny O&#39Nions says: “I think insurance companies should be required to send out letters giving the names and numbers of three IFAs in their local area to policyholders wanting to surrender their policies.

“Companies as well as the regulator should take a more active role in making it blat-antly clear that surrendering a policy may result in a loss of money and loss of life cover.”

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