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

Mis-selling but no financial loss

In November 1989, following the advice of an estate agent who was the appointed representative of a life company, two first time buyers took out an endowment mortgage of £70,000 over 25 years on their new house.

Early in 2000 they were told that annual growth of 6% would be likely to produce a shortfall of £9,500. They complained to the firm, saying that if they had known their policy was not guaranteed to repay the loan they would have opted for a capital repayment mortgage instead.

The firm said they had been made aware of the risks at the time, and there was no evidence that the maturity value had been guaranteed. And there was documentation showing that the maturity value would depend on investment performance over the period.

Complaint upheld. The ombudsman said the policy was inappropriate for the couple as their attitude to risk was cautious.

Amount of compensation

Their mortgage outgoings over the period were £3,750 more than they would have been with a repayment mortgage. But the policy's surrender value was £5,980 more than the amount they would have repaid off the capital of a repayment mortgage.

So they had suffered no financial loss and were able to cash in the policy and put it to reducing the mortgage.

Therefore no compensation was due.