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How endowment compensation is calculated following a complaint

How is endowment compensation calculated?

*Please note* This site is for information purposes only - we are not accepting any new cases from January 2007

Once you have proven that there were grounds for complaint and that your case is successful - how will the endowment compensation actually be calculated?

The endowment redress method

The way compensation is usually worked out is to compare the difference between the current state of the endowment mortgage / investment and the position of a repayment mortgage - had that option been taken up instead.

To show whether or not you are worse off now financially as a result of bad advice, the calculation will take into account the capital that would have been repaid on a repayment mortgage, compared with the actual surrender value on your endowment policy plus any difference in monthly outgoings.

This is rather complex and allows for some flexibility.

In summary - you compare:

  • the mortgage interest and premiums you have actually paid on your endowment mortgage,
  • and the current surrender value of your mortgage endowment policy;
  • with   the mortgage interest and capital repayments you would have paid on an equivalent repayment mortgage,
  • and how much capital would have been paid off the mortgage.

The precise calculation varies because of factors such as whether life insurance was needed or whether the endowment ran beyond any retirement date. No compensation is due if you are deemed to be not worse off based on the above criteria.

If your claim needs to be made against the Financial Ombudsman Service then a similar method of calculation is used. There are real case studies on the official FOS site - Financial Ombudsmans official site.

There are a few interesting sites below where you can find out more about endowment complaints in the UK:

  1. Financial Ombudsmans official site
  2. Consumer information from the FSA
  3. Building Societies Association

Or read our additional pages here:

 We also offer a Payment Protection Insurance (PPI) mis-selling complaints service:

We have a team of specialist Insolvency lawyers providing bankruptcy advice.

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