Frequently Asked Questions

> How much do I receive if I am entitled to compensation?

According to the FSA, the standard used for assessing compensation claims is to compare your current financial situation (taking into account your endowment mortgage) with your possible situation had you taken out a repayment mortgage instead.

If the difference shows that a repayment mortgage would have been in your favour, the amount of your compensation is then calculated by comparing the following:

• The mortgage interest and premiums you have actually paid on your endowment mortgage, and the current surrender value of your mortgage endowment policy.
• The mortgage interest and capital repayments you would have paid on an equivalent repayment mortgage, and how much capital would have been paid off the mortgage.

(Source: http://www.financial-ombudsman.org.uk/faq/mortgage.htm)

> Why were endowments traditionally sold with mortgages?

At a time when the market was considerably more stable, endowment policies generally delivered what they promised: the mortgage was paid off and a lump sum amount was left for the policyholder to spend.

> Why are endowments no longer usually sold with mortgages?

• Wrongfully sold endowments attracted a significant amount of negative media attention and had harmful repercussions for the financial market in general.
• Many providers relied on inadequately-trained employees to sell endowments based on obsolete and irrelevant figures that did not reflect the escalating risk involved with investing in the policies.
• Alternatives for paying back mortgages like ISAs and PEPs proved to be more popular investments, increasingly hurting the endowment market until it finally crashed.