(1888PressRelease)
August 11, 2007 - COURT CHALLENGE TO 'TIME BARRING' OF ENDOWMENT COMPLAINTS
By Matt Williams, PA
Millions of endowment mis-selling victims could be given a second chance of compensation as a result of a High Court challenge to the "time barring" of complaints, it was claimed today.
A request for a judicial review has been lodged against the practice of preventing customers from claiming against mis-sold policies if they miss a deadline to register their complaint.
The legal process has been launched by claims firms BrunelFranklin.com and CPH Financial Service and is aimed at establishing if the entire basis of setting a time frame in which a grievance must be registered is fair and legal.
An estimated 8.5 million endowment policies were sold in the 1980s and 1990s to homebuyers hoping to use the financial product as a way of paying off the mortgage.
But with endowments there is no guarantee that the investment will produce a lump sum large enough to pay of the entire home loan at the end of the pre-arranged period, usually 25-years.
As such many policyholders have found that their policy is running at a shortfall.
This means they are unlikely to be able to pay off their mortgage in full at the end of the policy.
Recent figures suggest that around 80% of endowments are running at an expected shortfall, with some insurers putting the proportion of customers at risk as high as nine in ten.
It is claimed that many people were not made aware of the risks involved with the products when they took them out and as such "mis-sold" policies.
At present, endowment providers can "time bar" a complaint if the consumer makes the claim more than three years after they first receive a letter warning them of a "high risk" of shortfall on their policy.
Firms must also send out a "red letter" six months before the deadline, informing the consumer of the impending date.
But campaigners say that stopping people from claiming if they miss the deadline is unfair.
It is claimed that the number of people affected by time barring could be more than 2 million.
Ian Allison, corporate relations director at BrunelFranklin.com, said: "This is a very exciting day for us all. We have been aggressively lobbying against time bars for three years and we are now reaching a point where there is a serious chance of a positive outcome for all those people who have been time barred."
He added: "We have always believed the time bar process and the communications with consumers was wrong and fundamentally flawed.
"Many customers never received shortfall letters. For those that did, the letters never mentioned the issue of a mis-sale. The use of these letters therefore to legally start the time bar clock ticking is a disgrace. This was never fair and we believe a judicial review will find in favour of the consumer."
###
