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No Room For Complacency On Endowment Complaint Handling, Says FSA

by Philip Morton, Investors

12 December 2006

A report published on Monday by the Financial Services Authority (FSA), shows that consumers are getting better outcomes in the way their mortgage endowment complaints are handled, but that there is no room for complacency.

Since July 2005, the FSA has been examining how 52 firms, covering 90% of the mortgage endowment market, handle complaints. The report revealed that the regulator had concerns with regard to 22 firms, 14 of which have taken or are taking remedial action to improve the quality of their complaints handling.

As a result of this work:

  • More than 100,000 complaints previously rejected have been or are being reviewed. Around 75% of those reviewed so far have been decided in the consumers' favour and over GBP120 million in compensation has been paid in these cases;
  • Consumers are getting decisions made more quickly. The number of complaints taking more than eight weeks to resolve has fallen from 33,000 in September 2005 to 7,000 in September 2006;
  • The quality of firms' decisions is improving and so the Financial Ombudsman Service is having to uphold fewer complaints in consumers' favour.

The FSA is also urging firms to plan ahead. This includes proactively helping consumers who cannot avoid shortfalls set up sensible repayment plans when their policies mature.

Vernon Everitt, FSA Retail Themes Director, announced that:

"It is encouraging that firms have improved the speed and quality of how they handle complaints. News of a potential shortfall is a major worry for consumers and firms owe it to them to deal with their complaints quickly and fairly. We are keeping a close eye on this to make sure that firms continue to do just that. Firms must also look ahead and not focus solely on the here and now. They need to pay particular attention to helping people deal with shortfalls when policies mature."

Since 2000, the FSA has fined 10 firms more than GBP14 million for mishandling mortgage endowment complaints. To date, firms have looked at more than 1.8 million consumer complaints and paid over GBP2.7 billion in compensation.

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