Insurer Standard Life has announced that it has been forced to abandon its promise to make up the shortfall in its customers' endowment mortgages.
The company has blamed poor investment performance for the move, which will affect an estimated 600,000 policyholders.
Many of those covered by the pledge will now receive top-up payments that are thousands of pounds less than they were expecting.
In 2000, the mutual pledged that it would guarantee its endowment
policies provided it met investment targets.
However, policies maturing from 2006 will now not be entirely covered by the pledge.
Standard Life claims to have put £393 million aside since 2000 to cover endowment policy shortfalls. The company was estimated to be facing a potential bill of as much as £4.8 billion to meet the promise it had made to policyholders.
The Standard Life announcement comes just over two months after the insurer slashed payouts on endowment and pension policies for the second time this year. The firm has also warned policyholders to brace themselves for more bonus and payout cuts over the next couple of years and revealed it was introducing a time bar on endowment complaints.
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