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Surge in endowment complaints

01 July 2004 / by None
Homeowners are making their anger felt as complaints about endowment mortgages quadrupled in the space of a year.

They appear to be coming from those who have been warned their policies may not produce enough cash to pay off their home loans.

The financial ombudsman's office was receiving around 1,000 complaints a week about endowment during the twelve months to March 31st.

The chief ombudsman, Walter Merricks, commented: "Neither we nor the financial services industry - which we consult on our workload estimates - had forecast a surge on such a major scale."

Trying to cope with the workload has been "a major challenge", which has forced the office to recruit and train more than 200 extra staff.

Mr Merricks said the increase in work had been driven by a "flood" of mortgage endowment complaints, up from 13,570 last year to 51,917 this year - a 57 per cent increase.

The complaints came in response to letters warning thousands of investors their endowments were unlikely to produce the cash they need.

Many homeowners now face sizeable shortfalls on their mortgages.

About 250,000 mainly older people have lost billions after investing in risky high-income bonds that often promised unrealistically high returns or claimed investors' capital would be at less risk than if it was invested in the stock market.

The ombudsman's office said complaints were likely to increase again, as consumers responded to warnings about imminent deadlines for registering complaints.