The rules, which came into force on 1 June were announced on 25 May.
Commercial law firm Reynolds Porter Chamberlain (RPC) said the FSA’s new rules require firms to warn endowment policyholders that they have three years from their first ‘red letter’ to complain, and to issue that warning at least six months ahead of the time bar.
The FSA suggests this warning should be contained in reprojection letters. RPC said firms could only take time bar defences if these procedures are followed.
For product providers the time bar warning can be included in the reprojection letters. However, Jonathan Davies partner at RPC, said the position is different for endowment mortgages sold by an IFA.
“Where an IFA advised on the case responsibility for any complaint falls to the IFA, not the product provider. However, it is the product provider which issues the reprojection letter. Many IFAs do not even know when such reprojection letters are issued. Therefore the IFA cannot issue the warning the FSA’s new rules require.”
Davies said the issue raises the serious concern that some IFAs will not be consulted and may therefore be prevented from defending claims on time limit grounds because the necessary information will be excluded from the reprojection letters.
