Endowment claims – consumers get better deal by going direct

A report from the Financial Services Authority has highlighted insurers’ success in improving customer service standards when dealing with mortgage endowment complaints.

The industry has now paid out some £2.7 billion in redress to over 1.8 million customers.

New data from the ABI (Association of British Insurers) shows that consumers get a much better deal when they complain direct, rather than using claims management companies (CMCs). Consumers can end up unnecessarily paying thousands of pounds in fees to these companies.

Chris Kenny, the ABI’s Director of Life and Pensions, said: “Policyholders can save thousands by ignoring CMCs and complaining direct. If dissatisfied with their insurers’ decision, they should themselves refer the complaint to the free Financial Ombudsman Service.

“Our data shows that individuals who have complained through a CMC typically receive around £1,400 once CMCs have received their share. This compares to an average of £3,200 received when individuals who complain direct. 71% of complaints made direct so far in 2006 were upheld, compared to only 51% received through a CMC.

“It is absolutely clear that policyholders get a better outcome when they complain direct. Policyholders should understand there is a fair and entirely free system in place. CMCs add no value to the process – yet charge a hefty fee for doing so.”