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Overestimate of shortfalls

There may be some misunderstandings following the recent Treasury select committee hearing on endowment mortgages and your interview with John McFall.

The ABI and the five companies which gave evidence to the select committee have no quarrel with the FSA&#39s estimate of the current total projected shortfall on endowment mortgages of £30bn. That is the regulator&#39s best estimate using all the available information. It is clearly a lot smaller than Ned Cazalet&#39s previous suggestion.

It is perhaps worth mentioning that this shortfall would be spread over the next 15 years or more. In real money terms (discounted for the effects of inflation)it amounts to around £20bn.

The £50bn figure mentioned in the article was put forward by a member of the select committee and, now that everyone has seen the FSA&#39s data, is clearly an overestimate.

Nor are companies unwilling to inform policyholders about their right to complain if they feel that they were missold their policy. A detailed FSA factsheet is included with all reprojection letters.

All five of the companies involved in the hearing are more than happy to provide the committee with the information it wants and confirmed that they are on track to meet the FSA&#39s demanding deadlines for resolving complaints.

Alan Leaman

Head of media and political affairs,

ABI,London EC2


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