With the growing crisis in the stock market, the vast majority of the six million homeowners are facing a shortfall mortgage. It is therefore essential that their money is protected and that shareholders meet the cost of massive corporate wrongdoing, said the CA.
The CA pointed out that policyholders have already wrongly had to meet a significant portion of the £13 billion pensions mis-selling costs and that the FSA needed to step in to prevent another scandal with a clear statement on the endowment issue.
Fines for corporate wrongdoing represent only a fraction of the actual compensation bill. For example Prudential recent £650,000 fine for delays in processing compensation claims is dwarfed by the Prudential’s share of the compensation bill which runs to over £1billion. The fine therefore represents 0.1 per cent of the compensation bill.
Sheila McKechnie, director, Consumers' Association, said: "This industry is taking consumers for a ride. Not only have they mis-sold them unsuitable products, which are failing to meet their mortgage target, they are now expecting these poor consumers to foot the bill for industry wrongdoing. This is a fatal blow for corporate accountability.
She continued: "Unless the FSA takes action, millions of consumers with endowment shortfalls could face a larger financial crisis as companies steal from their already under-performing polices to pay for industry wrongdoing. The FSA cannot allow the industry to get away with corporate theft. It is a simple question of arithmetic, every pound used to bale out shareholders is a pound that cannot be used by policyholders to pay off their shortfalls."
