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Societies urged to prepare for new endowment claims

Lenders should brace themselves for a fresh wave of endowment mortgage complaints, according to the principal Ombudsman (banking and loans) David Thomas.

Thomas told delegates at the Building Societies Association annual conference that a significant number of holders of end-owment mortgages have not yet lodged complaints but will have a shortfall upon maturity.

He put this down to people burying their heads in the sand, planning to trade down to a smaller property or having spare money elsewhere. Thomas said a fresh wave of complaints will be a problem for the industry and he urged the industry to think about it.

He also accepted there was a problem with consumers who have been compensated for shortfalls in their endowment mortgages but who have not used the money to make up the shortfall. This opened the door to the possibility of further claims.

This issue has been raised in the past by former BSA chairman and Skipton Building Society chief executive John Goodfellow, who believes endowment compensation should be put straight back into the mortgage shortfall.

But Thomas went on to say that the problem was the FSA&#39s rather than the Ombudsman&#39s because the FOS is not able to advise consumers what to do with their money.

He said: “Events lead us to believe that there is another problem coming with endowment mortgages because there is a significant number of people who have not yet complained about their endowment mortgage for various reasons but who will have a shortfall.”

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