Majority of endowment policy holders ‘facing shortfall’

A total of 87 per cent endowment policy holders believe they were mis-sold their policies in the 1980s and 90s, according to a study by Fair Investment.

While many people were attracted to the type of policy because they were marketed as a way to repay interest-only mortgages with a lump sum left over, most are now facing a shortfall, the report said.

Compensation is available for those who were guaranteed a policy that would cover the mortgage but others, to whom the risks may not have been explained, may now face debt management problems.

According to the study, 49 per cent of policy holders said their mortgage was guaranteed, a figure described as “shocking” by the finance information service.

Furthermore, over a quarter (27 per cent) of respondents believed the risks were not properly explained.

Sharon Bratley, chartered financial planner at the service, said: “This is not just a case of a small purchase; this is thousands of pounds for a house that we are talking about.”

Meanwhile, Standard Life has today been outlining the positive attributes of with-profits investments, the Herald has reported.