The great cover-up

 

Just as you thought the endowment mis-selling scandal might be drawing to a close, another aspect has reared its head.

We now learn that mortgage endowment policyholders were subjected to sustained mis-selling, sanctioned and inspired by the regulator for nearly seven years. But the Financial Services Authority has been trying to sweep the affair under the carpet.

The issue has been pursued by a handful of independent financial advisers and specialist magazine Money Management. And we may, at last, be close to learning which insurers are involved; Money Management has this month named and shamed those it believes are responsible.

Insurers were, from April 1988 to the end of 1994, forced to use standard charges laid down by the regulator when illustrating potential growth on their endowment policies. The problem was that most insurers actually charged far more.

This astonishing act of stupidity was forced on the insurers by the then regulator, Lautro.

But some insurers compounded this idiocy by setting premiums based on these unrealistically low charges, rather than on their own higher charges. The result was that even if the policies achieved the growth rates predicted, the higher charges would mean they would still come up short. This is, without question, mis-selling, because inappropriate charges were used when setting the premium.

Several of the insurance companies involved in the scandal have paid compensation, but some, including Standard Life, are refusing because they say they obeyed the rules that were in force at the time.

What's more, the Financial Services Authority has refused to publish the names of those involved, so policyholders and their advisers don't know whether they may be entitled to compensation.

This is a gross dereliction of duty by the FSA, which is deliberately concealing information that could help the consumers it is supposed to protect.

Yet it could now be forced to come clean, due to an organisation known as the IFA Defence Union. This band of IFAs has obtained an order under the Freedom of Information Act for the FSA to publish the insurers' names.

We hope and demand that it should comply. But wouldn't it be typical of it to take the insurers' side and attempt to cover its own shortcomings by appealing, thus preventing this vital information reaching the 200,000-plus policy-holders who may be due compensation for this regulator-sponsored mis-selling?

• It's been a bad week for the FSA, which has also cocked up over Hastings Direct. This broker, based in Bexhill, East Sussex, bungled the motor insurance premiums of 2,600 and cancelled their insurance with just a week's notice. Apparently, this was all done with the blessing of the FSA. But what seems to have bypassed the regulatory buffoons is that this is the middle of August and a lot of people take their holidays now.

It is likely that a few hundred people are driving around on their two-week trips, oblivious to the fact that they are not insured.

Who, I wonder, will foot the bill if any of these drivers has an accident or is pulled over by the Old Bill and charged with driving without insurance?

• With the dreadful weather we're having this summer, I'm surprised the whole country hasn't upped sticks and moved abroad. Though having just returned from a holiday in France, I can assure you that the weather is no better over there and the food's a lot worse. What's more, their tax system makes ours look positively generous, especially if you're trying to run a small business. And could you imagine the uproar if we had to suffer their inheritance laws, where the State dictates where your money should go after you die? If I ever buy a holiday home, it will be somewhere considerably warmer, sunnier, with a more friendly tax regime and where the culinary expertise has made some advance in the past 30 years.