TENS of thousands of people whose mis-selling complaints have been rejected by their endowment firms should challenge the decision urgently, writes David Budworth.

The Financial Services Authority (FSA), the City watchdog, warned last week that some consumers may have missed out on compensation because firms have been dismissing claims too readily.

Consumers are being urged to pursue their cases through the Financial Ombudsman Service (FOS), which can order companies to pay compensation for valid complaints even if the firm has previously rejected it.

However, you must contact the FOS within six months of receiving a final decision from your endowment firm.

The ombudsman said: “We are only able to ignore the deadline in extreme circumstances, such as when someone is in hospital.”

The FSA has written to the chief executives of all companies that sold endowments, censuring them for rejecting complaints that are subsequently upheld by the ombudsman.

Clive Briault of the FSA said: “The FOS is upholding a very high percentage of complaints from some firms, suggesting they may not be handling them properly.”

About 20% of endowment complaints end up with the FOS. The average rate for other types of complaint is between 2% and 5%. Of the endowment complaints dealt with by the ombudsman, 45% are upheld, compared with a usual rate of 30% to 40%.

The FSA and the ombudsman will not name names, but firms that help people with mis-selling claims, such as FS Complaint Handling, Endowment Justice and Endowment Investigations, say the worst offenders include Halifax, Abbey and Royal & Sun Alliance. Complaints firms usually take a fee of about 25% from your final payout.

Here we highlight some of the ways companies try to dismiss complaints — or reduce the compensation they have to pay.

Policies sold before 1988

Many consumers who were sold policies before 1988, when the Financial Services Act came into force, are told they have no hope of redress.

But if your complaint is against an insurer, bank or building society, it is still worth pursuing because firms had a duty to give fair advice prior to 1988.

However, the ombudsman is unlikely to consider your complaint if it is against a financial adviser because different rules applied.

Time wasting

An accused firm has eight weeks to respond to a complaint. But some take longer.

Some firms also refuse to investigate on the grounds that the customer’s details cannot be found. They claim they can only proceed if clients provide the information themselves. But it is up to the firm to produce the paperwork to dispute a claim.

Miscalculation

There is growing evidence that insurers routinely miscalculate how much compensation is due.

For example, some policyholders have been told that they will only receive compensation for the period when the endowment was used to repay a mortgage. Companies claim that people who keep an endowment after this date must have decided that they wanted to keep it running as a savings scheme.

But the ombudsman said that companies should not make such blanket assumptions. Some people may have been confused or even told not to cash in their policies. In these cases the fact that they have stopped using a policy to repay a mortgage should not prevent compensation being paid over its full term.