Abbey Endowment Policy News

Abbey endowment claim shame
Jo Thornhill, Financial Mail
19 December 2005

MORTGAGE endowment giants are still failing to deal with customer complaints fairly - almost a year after the Financial Services Authority warned company bosses that they must do better.

A survey by third-party claims handler Endowment Justice shows that the Financial Ombudsman Service is backing the customer and overturning at least half the cases taken to the Ombudsman after they had been rejected by some of the biggest banks and insurers.

Endowment Justice says the worst offender is Abbey, which has already been disciplined this year for failings in its endowment complaints handling.

The Spanish-owned bank was fined £800,000 by the FSA in May and was forced to review 50,000 complaints it had rejected (see below).

Endowment Justice has reviewed 400 cases where the Ombudsman became involved. In the cases relating to Abbey, a staggering 99 per cent ended up with the Ombudsman backing the customer.

Halifax also performed poorly with 81 per cent of cases it rejected subsequently being supported by the FOS.

'This time last year I sent a similar survey to the FSA,' says Marianne Fitzjohn, managing director of Endowment Justice in Churcham, Gloucestershire.

'Six months later, Abbey was hit with a fine by the FSA. I conducted the research again because I am still concerned by the high rejection levels and by the delays many consumers are experiencing.

'I've seen little improvement in the past 12 months and hope the FSA will act on this information.'

FSA chief executive John Tiner wrote to all the major endowment providers last January warning them to improve their claims handling or face enforcement.

Companies were dismissing too many complaints and passing an increasing number to the Ombudsman, which were subsequently upheld. But the situationhad not improved by August and Financial Mail revealed that Tiner had written again to 80 chief executives putting them on 'red alert' over complaints handling.

The FSA said on Friday: 'Firms not maintaining acceptable standards will be required to fix any problems. Where necessary, we will use the full range of remedial sanctions

available to us to achieve this.' These include reviewing samples of rejected cases or reviewing all decisions within a given period.

Abbey said: 'We have overhauled our whole claimshandling process and are happy that our overturn rates at the Ombudsman are far lower than those previously reported.'

Halifax says: 'We have robust processes in place and have put significant resources behind complaints handling.

'We have 500 staff handling complaints and recently allocated-more than £250 million to meet claims.'

Endowment Justice findings are supported by evidence from the FOS, which says it overturns about 45% of referred cases - the same level as a year ago. But it does believe most companies are improving standards.

FOS spokesman David Cresswell says: 'We are still keeping a close eye on referral levels. But the general picture is certainly improving and we have seen a sea change within some companies.'

Overruled: The roll of dishonour

An astonishing 99 per cent of cases rejected by Abbey were later supported when Endowment Justice referred them to the Financial Ombudsman Service

1. Abbey 99%
2. Halifax 81%
3. Legal & General 78%
4. Britannia BS 75%
5. Nationwide 71%
6. Bradford & Bingley 67%
7. Lloyds TSB Life 67%
8. Norwich Union 55%
9. Barclays 50%
10. MGM Assurance 50%

Source: Endowment Justice. Figures based on cases Endowment Justice handled between February 2004 and November 2005. Ninety-five per cent of cases relate to 2005.

'We'll hit December deadline'

ABBEY is confident it will have completed its review of 50,000 endowment complaints by the end of the month, as scheduled.

The bank was ordered to conduct the review after the Financial Services Authority fined it last May over endowment complaints mishandling.

An Abbey spokesman says: 'We fully expect that 98% of cases within the review will be settled by the end of the month.

'The few that are outstanding are more complex cases, typically where third-party insurers are involved.'

But Jeff Dorricott, managing director at Libran Compensation Services, a third-party claims handler, says he will be amazed if the deadline is met.

'I've got a number of review cases in the system that are still in their early stages of investigation,' he says.

'Abbey is expecting to complete the review and calculate redress in the next two weeks when most offices will run a skeleton staff. I just don't see how it can happen. Abbey's statement is nothing more than optimism.'

Tim Moore at third-party case handler Endowment Claims says: 'Even if the deadline is met, I'm still concerned about the quality of case decisions coming out of Abbey.'

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