Article date: 22 November 2004
Norwich Union, the UK’s largest insurer,is calling for the regulation of third-party mortgage endowmentcomplaint handling companies to help ensure consistent handling ofmortgage endowment complaints across the industry.
Insurance companies and financial advisers haveto comply with stringent regulation on handling the mortgageendowment complaints which they receive. These include strictdeadlines for the process of handling complaints, the calculationof redress where it is proven that a policy was mis-sold, and alsohow disputes are resolved.
Norwich Union believes that there should also beregulation and strict procedures for third party endowmentcomplaint handling companies to further protect consumers. Thisshould include the timescales for handling customer applications,clear and transparent charging (which explains exactly what thecustomer is paying for and whether VAT is applicable) and theprocedures for handling disputes.
Customers may not always realise the costsinvolved in using complaint handling companies and they may notunderstand that up to a quarter or more, and in some cases up to ahalf, of any compensation could be taken in fees or charges. Withcompensation designed to put people back to the position they wouldhave been in had they had a repayment mortgage, customers couldfind themselves out of pocket as a result.
Customers may not be aware that, if they believethey have a valid complaint, they can lodge a complaint directlywith the insurance company or financial adviser who sold them thepolicy. Customers who are unsure what to do should consult the FSAwebsite (www.fsa.gov.uk) orWhich? (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 forhandling endowment complaints. As it stands, the industry isheavily regulated and has to adhere to strict procedures andcontrols, which includes the option to refer to the FinancialOmbudsman Service, at no cost to the customer. The same regulationsdo not apply to third-party complaint handling companies.
"Customers may also not realise that up to aquarter of their compensation, and in some cases up to a half, canbe swallowed up in fees or charges if they go down the third-partyclaim route. Both the FSA and Which? websites, which are free, haveall the information people need if they believe they have a genuinecomplaint.
"We are also urging customers who have a projected shortfall ontheir mortgage to take the appropriate action now to ensure thattheir loan will be repaid at the end of the term. Leaving thisuntil it is too late could have damaging consequences forborrowers."
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Notes to editors
Norwich Unionstatistics on endowment complaints
- Norwich Union received 20,365 endowment complaints in the yearto the end of September 2004.
- Of these complaints, 50% have been upheld and 50% have beenrejected. Currently 97% of Norwich Union cases are being handledin the required eight weeks timescale.
- Around 25% of cases rejected by Norwich Union are referred tothe Ombudsman. In 86% of these cases for the year to 30 September2004, the Ombudsman agreed with Norwich Union’sadjudication. Only 14% of cases get overturned.
Norwich Union is the UK's largest insurer. It isthe UK's largest provider of life, pensions and investment productsand one of the leading IFA providers. IFAs provide around 75% ofthe company's long-term savings business in the UK.
Norwich Union has strategic alliances withbuilding societies and other leading UK brand names including TescoPersonal Finance and The Royal Bank of Scotland Group. NorwichUnion’s news releases and a selection of images are availablefrom Aviva's internet press centre at www.aviva.com/media