Endowment shortfall compensation

[rfisher]

So a guy at work was moaning that his endowment, which matures after 25 years in 2 years time, is going to be worth around £25k.

He has paid in around £28k so not a very good investment.

The mortgage that the endowment policy was supposed to cover was originally £65k and this was redeemed after about 5 years when he sold the house.

While this was being discussed over coffee his mate chips in saying that, if he makes a complaint, the bank that he has the policy with will pay him the difference - around £40k, plus he will get the £25k when the policy matures.

Is this correct?

No one at work knew.

He isn't good at doing claim forms but I said I'd help him for a few beers if it was going to be worth trying for a claim.

[rfisher]

Ok so he should check his annual statements.

I'll suggest that tomorrow.

Thanks.

[rfisher]

pacoryan said:

The most common compensation package is calculate what the policyholder would have paid off if they had a repayment mortgage up to the date of compensation, deduct the surrender value of the policy and compensate the difference. I have had numerous policyholders do this and find the compensation was next to nothing because they still had a considerable amount of the term to go.

Well that's £40k in his case so may be worth having a go.

I've tried this for a ppi policy I had a while back and the bank just said you left it too long mate. The financial ombudsman folded straight away.

I expect the warning letters (if he got some) offer the banks a pretty foolproof way out of paying up.