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.”
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Notes
1. Enquiries to:
Alan Leaman 020 7216 7440 (Mobile: 07957 482 330)
Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)
Jonathan French 020 7216 7392 (Mobile: 07958 330 480)
Lucy Butler 020 7216 7411 (Mobile: 07712 841 184)
Kelly Ostler 020 7216 7415 (Mobile: 07968 364 302)
2. Though CMCs regularly advertise their services as ‘no-win, no-fee’, they commonly charge around 25% plus VAT of any payout – despite the free availability of the Financial Ombudsman Service (FOS). Around £55 million in redress payments has been received by CMCs in 2006, out of a total £160 million paid out in CMC-handled complaints.
3. The ABI is the trade association for Britain’s insurance industry. Its nearly 400 member companies provide over 94% of the insurance business in the UK. It represents insurance companies to the Government, and to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold up to a sixth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.
4. An ISDN line is available for broadcasts.