Recent investigations have revealed that those with endowment mortgages and other investments may have been ripped off for more than 8 million pounds over the last few years. Apparently, the funds themselves have made more than enough money, but these rewards have not been reaching the millions who took out the investments and endowment mortgages. According to insurers, the average payout on an endowment mortgage is now 3% lower, marking the tenth straight year that returns have lowered, despite the fact that the funds were performing well.
Tom McPhail at Hargreaves Lansdown, an adviser, said: “Stock markets have risen substantially since the end of the bear market in 2003, but final payouts keep on falling. It just doesn’t add up.”
John Howard, chairman of the Financial Services Consumer Panel, the watchdog, said: “The reputation of with-profits has been undermined by the lack of transparency and the complicated way these funds are set up and run. We want the FSA to act.”
Guy Vanner at AKG, a consultancy, said: “The 1990s saw some insurance companies using headline bonus rates and payouts in an attempt to come top of the best-buy tables and grow new sales. With hindsight, it was the wrong thing to do. Over the past three years they have had to reverse that policy.”
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