skip tocontent

ombudsman news

issue 34

January 2004

mortgage endowment forum

On 1 December 2003, the Financial Ombudsman Service and the Financial Services Authority (FSA) hosted a mortgage endowment forum to discuss current issues and concerns with representatives of consumer and industry bodies.

time limits

Reports that some firms are refusing to investigate complaints about mortgage endowment policies that were sold more than 15 years ago formed a major part of our discussions. The FSA confirmed that the "15-year rule" relates to the taking of court action. It does not prevent the ombudsman from considering complaints about events that took place over 15 years ago. The position remains unchanged after the FSA's recent review of the time limit for bringing a case to the ombudsman. As we noted in response to a query in issue 33 of ombudsman news (November 2003), consumers generally have six years in which to bring a complaint to us - from the date of the event they are complaining about. If the complaint goes back further than that, we may still be able to help if the consumer only became aware of the problem within the last three years.

The FSA stressed that the complaint-handling rules do not permit any firm to refuse to investigate complaints. It would be contacting those firms that had been citing the "15-year rule" as a reason to reject complaints.

firms' communication with consumers

There were several areas where the forum concluded there was room for firms to improve their communication with consumers. The FSA and the Financial Ombudsman Service will be having further discussions on this with the relevant industry bodies.

calculating compensation

The way in which some firms are calculating compensation in mortgage endowment cases will be discussed further with the industry bodies and individual firms. We will be encouraging consumers who contact the Financial Ombudsman Service to ensure they find out, and are satisfied with, the way in which the firm calculated compensation. In future editions of ombudsman news we will be including examples to illustrate compensation calculations in some common, but fairly complicated, situations.

documentary evidence

Some firms had expressed concern that, in a number of instances, full records of a sale may no longer exist. The ombudsman service said it recognised that both sides could have limited documentary evidence. We therefore look at whether, on the basis of information that could reasonably have been established at the time, mortgage endowment policies were suitable for investors at the time they were sold. We do not base our view on what consumers now think of that sale, their current circumstances or what they could afford now.


There had been some concern about issues surrounding the confidentiality of firms' settlements, following incidents where consumers had contacted the Consumers' Association. Firms were reminded that although, when they settle cases, they can make it a condition that consumers do not seek publicity, they must not do this in such a way that consumers believe the matter to be so confidential that they cannot seek advice about the adequacy of the offer.

Walter Merricks, chief ombudsman

ombudsman news issue 34 [PDF format]

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.