Norwich Union, the UK’s largest insurer, is calling for the regulation of third-party mortgage endowment complaint handling companies to help ensure consistent handling of mortgage endowment complaints across the industry.
Norwich Union, the UK’s largest insurer, is calling for the regulation of third-party mortgage endowment complaint handling companies to help ensure consistent handling of mortgage endowment complaints across the industry.
Insurance companies and financial advisers have to comply with stringent regulation on handling the mortgage endowment complaints which they receive. These include strict deadlines for the process of handling complaints, the calculation of redress where it is proven that a policy was mis-sold, and also how disputes are resolved.
Norwich Union believes that there should also be regulation and strict procedures for third party endowment complaint handling companies to further protect consumers. This should include the timescales for handling customer applications, clear and transparent charging (which explains exactly what the customer is paying for and whether VAT is applicable) and the procedures for handling disputes.
Customers may not always realise the costs involved in using complaint handling companies and they may not understand that up to a quarter or more, and in some cases up to a half, of any compensation could be taken in fees or charges. With compensation designed to put people back to the position they would have been in had they had a repayment mortgage, customers could find themselves out of pocket as a result.
Customers may not be aware that, if they believe they have a valid complaint, they can lodge a complaint directly with the insurance company or financial adviser who sold them the policy. Customers who are unsure what to do should consult the FSA website (www.fsa.gov.uk) or Which? (formerly The Consumers’ Association) website (www.which.net/endowmentaction) for further advice and guidance, without charge.
Mike Urmston, chief actuary of Norwich Union, said: "We think that there needs to be a level playing field for handling endowment complaints. As it stands, the industry is heavily regulated and has to adhere to strict procedures and controls, which includes the option to refer to the Financial Ombudsman Service, at no cost to the customer. The same regulations do not apply to third-party complaint handling companies.
"Customers may also not realise that up to a quarter of their compensation, and in some cases up to a half, can be swallowed up in fees or charges if they go down the third-party claim route. Both the FSA and Which? websites, which are free, have all the information people need if they believe they have a genuine complaint.
"We are also urging customers who have a projected shortfall on their mortgage to take the appropriate action now to ensure that their loan will be repaid at the end of the term. Leaving this until it is too late could have damaging consequences for borrowers."
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Notes to editors
Norwich Union statistics on endowment complaints
- Norwich Union received 20,365 endowment complaints in the year to the end of September 2004.
- Of these complaints, 50% have been upheld and 50% have been rejected. Currently 97% of Norwich Union cases are being handled in the required eight weeks timescale.
- Around 25% of cases rejected by Norwich Union are referred to the Ombudsman. In 86% of these cases for the year to 30 September 2004, the Ombudsman agreed with Norwich Union’s adjudication. Only 14% of cases get overturned.
Norwich Union is the UK's largest insurer. It is the UK's largest provider of life, pensions and investment products and one of the leading IFA providers. IFAs provide around 75% of the company's long-term savings business in the UK.
Norwich Union has strategic alliances with building societies and other leading UK brand names including Tesco Personal Finance and The Royal Bank of Scotland Group. Norwich Union’s news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media