By Kirstie Redford AMP UK Financial Services has promised to reassure around 80,000 customers...
By Kirstie Redford
AMP UK Financial Services has promised to reassure around 80,000 customers with mortgage endowment policies at London Life, NPI and Pearl against possible shortfalls.
In a statement called the AMP Mortgage Promise, the group has pledged to meet the target value of all mortgage endowments, providing that customers continue to pay the current level of premiums for the policy term and that the policy earns a minimum average of 6% a year until the maturity date.
Tom Fraser, managing director of AMP UK Financial Services, said: "No with-profit endowment from an AMP company in the UK linked to a mortgage has failed to pay off its associated loan so far. I can see no reason why any should fail in future unless investment returns fall further than we currently expect. We recommend that our customers should take no immediate action as a result of the current endowment review. We will be writing to our customers who have mortgage endowments to let them know about our mortgage promise and how it may affect them."
According to the group, the overwhelming majority of endowment customers are actually better off now than if they had opted for a typical repayment mortgage. However, Fraser added that the low-inflation and low-interest environment today means that they would not recommend an endowment for someone starting a new mortgage.
Around 70,000 of the 150,000 with-profit mortgage endowment policyholders at the AMP group, have already been informed that their policies will hit target value. It is the remaining customers who are to receive a copy of the new mortgage promise through the post.
