There is much discussion in the financial sector regarding the endowment mortgage misselling scandal that has affected up to 8.5 million policyholders in the UK.

Endowments policies were sold heavily in the UK during the 80s and 90s as a cheap yet secure method of repaying your mortgage debt. The concept was extremely attractive to customers because in purchasing such a policy you had the benefit of a rolling investment that would meet the target amount (the mortgage debt) and then provide a bonus on top which could be used as a savings plan. In addition to this you also had the benefit of life insurance covering the full target amount payable upon death.

These plans were not however as secure as they seemed. All monies paid into the plans would be invested on stock markets around the world and this meant that any return on investment would be very much subject to the performance of the global markets. When the markets suffered a fall in growth so inevitably would the endowment investment.

Unfortunately many endowment salesmen failed to follow the rules and with sophisticated selling techniques many millions of policies were sold without informing customers of the risks associated with such investments. The fact that these investments were prone to stock market uncertainty was never discussed openly with the majority of prospective customers.

Endowment providers (the large banks, building societies and insurance companies) must now send warning letters advising the customer of a possible shortfall. The warnings must be colour coded to communicate clearly the nature of the warning a RED letter is therefore the most serious warning and stipulates that there is a High risk of shortfall. The customer should be advised to take action immediately.

The Financial Services Authority in the UK (FSA http://www.fsa.gov.uk/) have devised rules that now allow customers to complain if they feel they were misled by a salesman and effectively missold an endowment policy. Dispute Resolution Rules (DISP Rules) have been laid down by the FSA in its Handbook. The rules on time barring are enforced by the Financial Services Ombudsman (FSO).

The time limits for referring a complaint to us are set out at DISP Rule 2.3.1. This states (at DISP Rule 2.3.1R(1)(c)) that:The Ombudsman cannot consider a complaint if the complainant refers it to the Financial Ombudsman Service (c) more than six years after the event complained of or (if later) more than three years from the date on which he became aware (or ought reasonably to have become aware) that he had cause for complaint, unless he has referred the complaint to the firm or VJ participant or the Ombudsman within that period and has written acknowledgement or some other record of the complaint having been received.

Under the FSA rules, endowment customers have to complain within 3 years of receiving their first "red" letter, or within 6 months of receiving a second warning "red" or "amber" letter - whichever is later.

It is estimated that nearly 1 million people out of 8.5m mortgage endowment policyholders have lost a chance to complain because of time bars imposed by this rule. But now, companies must also tell customers the final date by which they can complain. This must be set out within the wording of any RED warning letter.

The problem for may people is that the Endowment providers are seeking to rely on old warning letters that pre-date the current colour coded method. Letters that were sent in 2001 / 2002 before the widespread publicity on the rights individuals have to complain, may well damage a customers right to obtain compensation.

Do not get caught by this rule. Do not lose your right to compensation by sitting back and ignoring these important warning letters. You must act the moment you receive word that your plan might be subject to a shortfall.

If you fail to take action you will lose out twice. Not only will your policy fail to match its expectations but you will lose the opportunity to make up the shortfall by obtaining recompense from the salesman.

For more information on making endowment complaints contact The Claims Connection managed by Winston Solicitors a regulated UK law firm.