More than 200,000 people who bought endowment mortgages in the late 1980s and early 1990s, could be owed up to £200m by insurers after revelations that they downplayed the impact of their charges on investments.

In the latest twist to the mis-selling scandal, 12 firms have been named and shamed following a freedom of information request to the Financial Services Authority (FSA) by Money Management magazine.

Between 1998 and 1995, the firms showed potential policyholders what they could expect to get from their investments using industry standard charges laid down by Lautro, the industry regulator at the time.

The firm’s actual charges were much higher – sometimes double the Lautro rate – eating into returns. However, they failed to make this clear and gave policyholders unrealistically high maturity figures, leaving many struggling to repay their mortgages.

The guilty parties include Standard Life, Pearl, Axa, Scottish Widows and Prudential-owned Scottish Amicable, Resolution-controlled Scottish Mutual and Scottish Provident.

These insurers were taking as much as 0.75 per cent a year in charges from their funds. But they were luring customers by showing future payouts using a 0.3 per cent annual charge. If the company assumed it would make 7.5 per cent profit in a year, it would show the endowment growing by 7.2 per cent when it would actually grow by just 6.75 per cent.

Standard Life has admitted that, using the lower Lautro charges, a policyholder would have been told they needed to pay £36.24 a month to repay a 25-year £25,500 home loan, assuming the fund grew at 7.5 per cent a year. But based on Standard Life’s charges, the policy would pay £22,300 – resulting in a £3,200 shortfall.

However, it is unrepentant and has refused to pay compensation. The insurance giant, where 80,000 policyholders could be affected, said: “We followed all the regulator’s requirements and industry practice when producing our illustrations.” Other companies have agreed to set aside money to refund their customers. They include Axa, Legal & General and Clerical Medical.

Endowments were sold as the underlying investment for millions of mortgages in the 1980s and 1990s. But poor returns and high charges mean that many are not on course to pay off the loans.

Those who are considering cashing in a poor-performing fund are being warned that it might be best to get out quickly as they could be hit with an exit penalty known as a market value reduction, or MVR, if they delay much longer.

Analysts warn that the recent stock-market downturn could see insurers reintroducing or hiking MVRs, which penalise investors for getting out of a fund early.

MVRs of up to 25 per cent were common during the start of this decade as stock markets dived and the returns from with-profits funds took a tumble. Over the past year many insurers have removed the exit charges as the bull market in shares had helped improve performance. But they could be about to make an unwelcome reappearance.

Guy Vanner at AKG Actuaries, an independent consultancy, said: “If there is a sustained period of stock market instability and considerable further falls, then I think reintroducing MVRs is one of a number of measures that with-profits providers might consider.”