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

Possible mis-selling but no financial loss

In 1992 a couple were advised by their IFA to take out an endowment policy to cover their mortgage. The amount payable when the mortgage matured was not guaranteed.

In June 2000 they were told that annual growth of 4% would leave a shortfall of £13,700, and even growth at 8% would only produce a surplus of £1,700.

They complained to the IFA, saying they had been told the policy would produce enough to repay the mortgage early, or repay it at the end of its term and give them a lump sum as well. They were unaware a shortfall was possible and would not willingly have taken the risk.

The IFA could not produce paperwork to show that the policy had been sold correctly, so it went straight to looking at whether the couple had suffered any loss.

The calculations showed that if the couple cashed in their policy they would get £2,800 more than the capital they would have repaid from a repayment mortgage. And they had paid £4,800 less in outgoings than they would have done on a repayment mortgage.

So the IFA decided that no redress was due. The couple complained to the ombudsman, who turned down the complaint because they had not suffered any loss - as compared with a repayment mortgage.

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.