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Sinking endowment mortgages threaten to swamp IFAs

The endowment mortgage is onits deathbed.

The BBC&#39s Panorama has been heavily critical of endowments this week, adding its voice to the consistently hostile national newspaper coverage. The programme made much of the fact that many of the worst offenders who were tied salesmen in the 1980s have become IFAs.

It is obvious that whatever IFAs are doing correctly now, they cannot avoid being tarred with the same brush as the rest of the industry. They must yet again batten down the hatches and rely on the trust built up with clients. But finding new customers will be that much more difficult.

Money Marketing continues to support the assertion by IFAs and life offices that, in some cases, depending on circumstances, endowment mortgages are still appropriate. They can represent a financially sound way of adding life cover,allow greater flexibility in the early yearsof a mortgage and give low-risk accessto stockmarket investments.

But some, perhaps many, endowments are being sold where they are not appropriate. IFAs know not all the bad applesare in direct salesforces.

The perception is many IFAs have been involved in misselling. This weakens the defence of polarisation while the pressure on the FSA for a full scale pension-style review may become irresistible.

What will get lost among the hysterical headlines is that IFAs remain the best hope for a revival of the industry&#39s reputation.

The endowment ship is sinking fast but the real fear must be that it will take some IFAs with it.

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