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Pressure rising for endowment review

The FSA&#39s own consumer panel has sent a shot across the bows of the regulator, releasing research showing half of thepeople receiving endowment reprojection letters believe they were missold policies.

IFAs could face fines and compensation payments even under the limited investigation announced by FSA director of investment business Michael Folger this week.

The financial services consumer panel released the preliminary findings to coincide with the FSA&#39s plans for tackling the endowment problem, increasing the pressure for a full review.

In the worst-case scenario, the panel&#39s research suggests 3.3 million endowments could have been sold with a promise their endowment would pay off their mortgage on maturity.

The panel commissionedIFF Research to conduct interviews with 607 policyholders who had received the letters.

The FSA will name and shame companies it finds guilty of misselling endowments if they have caused financial hardship.

The FSA has also confirmed the scale of the problem, first revealed in Money Marketing, suggesting 60 per cent of the 11 million letters to be sent warn of a shortfall. Around 40 per cent of the five million letters already sent out predict a shortfall.

Consumer panel chair Barbara Saunders says: “Our research says half of all policyholders believe they have cause for complaint.

“We want the FSA to monitor the quality of the complaint procedure carefully. We are concerned firms may not have the records to show whether the sales were compliant.”

Aifa director-general Paul Smee says: “I am always sceptical of people who claim to have total recall of a conversation they had several years ago with an IFA. The key is to marry up non-compliance with financial loss. The FSA&#39s own research indicates people are not missing out.”

The FSA announced it would not be carrying out a full-scale review as it would be “expensive and time-consuming” and its research indicates that it is unnecessary.

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