This is the first of the examples provided by the ombudsman, which we have listed here.

Mis-selling and financial loss

A couple had a capital repayment mortgage when they decided to move in 1992. They were wary of changing to an endowment mortgage. However, they were assured that an endowment mortgage would be cheaper for them, and that the policy was guaranteed to repay their mortgage when it matured.

These were important considerations because the husband was facing redundancy, so they agreed to the change.

In August 2000 they were sent a 're-projection' letter showing a projected shortfall on maturity. They complained about the advice they were given and the suitability of the policy.

Complaint upheld. The policy was not compatible with their attitude to risk. The literature they were sent pointed out that the maturity value was not guaranteed. But, in the circumstances of this case, this risk warning did not transform an unsuitable sale into a suitable one.

Amount of compensation

If they had taken a repayment mortgage, they would have repaid £3,440 more than the amount they would get if they cashed in the policy.

Looking at their outgoings, the endowment mortgage was £1,700 dearer over the period.

The redress payable was

• The total of these two figures; plus
   
• The £125 administration fee they needed to switch to a repayment mortgage; plus
   
• £200 for stress and inconvenience.