Friends Provident received 21,788 mortgage endowment complaints
between March 2000 ... and February 2003, when its defective procedures
were replaced. Approximately 5,500 customers whose complaints were rejected
were exposed to the risk that their complaints were in fact genuine
and deserving of redress, but were rejected because the procedures were
inherently not fair and were biased against customers.
The firm's failures persisted from October 2001 until February 2003.
These failures demand a significant financial penalty as they arose
from a systemic weakness in the firm's procedures and exposed a large
number of customers to potential loss. ...
Specific failings in the firm's procedures and its handling of mortgage
endowment complaints included:
- a readiness to dismiss consumers' evidence when it was not supported
by documentary proof
- an assumption that a pre-existing endowment, or other investment
held at the time of sale, was sufficient evidence that the customer
had an understanding of the risk associated with the product
- an assumption that if a consumer failed to exercise their cancellation
rights, having received all the post sale disclosure information,
this indicated that they were satisfied with the advice and the product
at the time of sale.
... These failings have, however, been mitigated significantly by
the co-operation demonstrated by Friends Provident and the remedial
action taken as a result of the FSA's action, including:
- committing to the adoption of a new approach to mortgage endowment
complaints, which provided more favorable treatment to customers
- setting up a separate group to review past mortgage endowment
complaints in order to ensure customers were treated fairly
- seeking external support and guidance in bringing about the required
changes by engaging an independent firm of accountants to review existing
procedures, design new written procedures, design and deliver a training
programme and complete quality assurance work on the new mortgage
endowment complaints-handling system
These procedures should ensure that mortgage endowment complainants
will be offered redress where appropriate and that past mistakes are
not repeated.
However, Friends Provident is one of the companies causing most dissatisfaction
on our endowments
discussion board.
