In May 2005 the FSA published its verdict on how Abbey National had handled endowment mortgage complaints.

Finance Victims comments:

How much endowment compensation?

The FSA press release suggests that between Q4 2001 and Q2 2003 some 3,500 complaints were rejected which should have been upheld.

But the FSA's final notice says Abbey accepts that it is likely that there were similar levels of failure to handle cases correctly throughout that period [1 January 2001 to 31 December 2004]. As the FSA concludes, the failings in mortgage endowment complaints handling continued over a 2 year period and in the context of a 4 year period in which it is likely that there were similar levels of failure.

Looking at this longer period suggests that some 6,075 cases which were rejected should have been accepted. If we adopt the average compensation level of £5,500 used by the FSA, we have a total for compensation not paid over during that period of up to £33m.

Again extrapolating from figures in the Final Notice, probably a further 2,600 cases were rejected in circumstances where Abbey should have sought further information. If (say) half of these cases were wrongly rejected, that is a further possible £7m+ wrongly not paid out.

So we are looking at a total of possibly £40m.

How quickly did the FSA deal with this?

Once again the FSA has been very slow.

From Q4 2001 to Q2 2003 Abbey rejected some 93% of endowment mortgage cases it decided, an astonishing figure.

Endowment mortgages were one of the biggest personal finance mis-selling scandals of the decade. It would have been simple - and, you might think, prudent - for the FSA to ask each major financial firm for quarterly totals of cases received, decided and rejected.

But it seems the FSA was content to trust the firms which had done the mis-selling, when it came to handling complaints against themselves fairly. Either that, or they did monitor performance and a 93% rejection rate raised no eyebrows.

Abbey had built up a backlog of complaints. In monitoring the clearance of this "in about May 2003", the FSA noticed an emerging trend of cases where Abbey had rejected a complaint but which on referral to the FOS resulted in either a settlement or an ex gratia payment being offered to the customer. The FSA then reviewed 50 of Abbey's FOS cases, which revealed failures in Abbey's complaint handling.

In March 2004 the FSA required Abbey to appoint someone to do a review for the FSA. That person produced a report in November 2004.

Abbey's failures were not announced until May 2005. So what went on while Abbey's victims and the general public were kept in ignorance?

Probably negotiation between lawyers about the text of the announcement and the size of the penalty.

The victims and the public are the last in the queue.

The fine for mishandling over 8,600 endowment mis-selling complaints

How much has the FSA fined Abbey for mis-handling endowment mis-selling complaints?

• Abbey had told the FSA it was complying with the Tiner points in the way it dealt with complaints. It was not.
   
• The failures were not brought to the FSA's attention by Abbey, but were discovered by the FSA following enquiries or requests for information.

But once an independent sampling instigated by the FSA had uncovered the facts, Abbey demonstrated a high level of co-operation with the FSA and a willingness to remedy any consumer detriment that may have been caused. In other words, once the FSA review demonstrated that they were bang to rights, Abbey co-operated. And the FSA considered this to be one of a number of mitigating factors!

They fixed a penalty of £800,000 against a failure to pay compensation of up to £40m - or 2%.

Abbey endowment complaints - what now?

Abbey has offered to review all mortgage endowment complaints rejected since 1 January 2000 and pay redress in any case where the complaint has been unfairly rejected. The review will be overseen by an independent firm of accountants.

If Abbey rejected your endowment mortgage complaint and it didn't go on to the FOS, you should get it out and look at it very closely.

If you are not completely satisfied with their reasoning, why not tell them?

And if an old rejected complaint is belatedly accepted, Abbey should offer you

• Interest to take account of the payment being later than it should have been
   
• Payment for any consequential loss you have incurred because compensation for your mis-sold endowment mortgage was wrongly withheld.

You can have your say on our endowment mortgages discussion board.