Pru acts on endowment payouts

INSURANCE giant Prudential has declared war on endowment compensation companies, telling customers they are a waste of time and money. The company, which has nearly 300,000 mortgage endowment customers, has said it will no longer pay pay out via compensation firms.

In the past 12 months, the Pru has paid nearly £500,000 in commission to complaint handlers, almost a third of the total compensation paid to customers who complained through third parties. These firms typically charge between 25% and 50% of the customer's total compensation.

The Prudential will also write to new complainants who have come via a third party to tell them that they can complain direct.

The company's UK and Europe chief executive Mark Wood said: 'We are concerned that some customers may not know that they have the option of dealing with us directly and that this will cost them nothing. If a customer has been mis-sold an endowment then they are entitled to compensation and we firmly believe that they should receive 100% of the compensation.'

He added that it was unfair that customers were losing a quarter of their entitlement by going though an endowment complaints firm. A spokesman said using a third party would not speed up the process and gave no guarantee that compensation would be awarded.

Relations between endowment providers and the complaints handlers have been strained, and as the third-party companies have been blamed. The Pru is generally seen by endowment complaint handlers as being one of the fairer endowment providers in dealing with compensation claims.

The company doesn't time-bar customers and has avoided tactics that have blighted other parts of the industry, such as blanket rejections and delaying compensation investigations.

Ian Allison, director with one of the UK's largest claims firms, Brunel Franklin, said customers have the a choice of whether to use third parties. He said: 'The endowment complaints process is a complicated one and some people need walking through it, especially with some of the tactics employed by providers.'

But Allison said that he was bemused by the company's stance. 'Everyone has always had a good relationship with the Prudential, they are probably the best company to deal with and the most fair.'

For all the latest news on endowments, bookmark www.thisismoney.co.uk/endowments or check out endowments and mortgage advice at www.thisismoney.co.uk/mortgageexperts