IFAs have been suffering under the workload of dealing with complaints relating to projected shortfalls on mortgage endowments and paying compensation for a 'loss' which has not yet materialised. Whether the compensation was paid directly or via the Financial Service Compensation Scheme is irrelevant because in the vast majority of cases the shortfalls were created by the life offices who wish to remain nameless and in the case of Standard Life has refused to make any offers of redress.
The Financial Services Authority claims that all the life offices have paid redress, this is untrue because the FSA's own definition of redress is to place the complainant in the position they would have been had they not purchased the contract and this has not happened. Instead the insurers have used various methods which include 'special bonuses', 'endowment promises' and 'enhanced allocation rates', none of these have assisted IFAs in avoiding overpayment of compensation which is calculated using the surrender value as the datum . This surrender value has been depleted because the premium paid has been much smaller than that required to achieve the target value at maturity so all charges and expenses have had an adverse effect on the smaller investment value.
The FSA also claimed that disclosing the names of the companies would breach their rights under Article 6 and 8 of the Human Rights Act 1998. The Information Tribunal has now dismissed an appeal against an Information Commissioner's decision to disclose the information requested.
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