Low start endowment mortgage 
Background 

Capital sum of £50,000 

25 year endowment policy 

Duration to date: 10 years 

Endowment premium per month: starting at £35 in first year, increasing by 20% simple on each policy anniversary, reaching £70 after five years and then remaining at that level. 
Established facts: 

Endowment surrender value: 
£8,200 
Capital repaid under equivalent repayment mortgage: 
£9,700 
Surrender value less capital repaid: 
(£1,500) 
Cost of converting from endowment mortgage to repayment mortgage: 
(£250) 
Total outgoings to date 

Repayment mortgage (capital + interest + DTA life cover): 
£46,800 
Endowment mortgage (endowment premium + interest): 
£45,640 
Difference in outgoings (repayment minus endowment): 
£1,160 
Of this difference in outgoings, £800 arose in the five year period when the complainant was paying a low endowment premium. 
Basis of compensation 

In this example, the complainant has suffered loss because the surrender value of the endowment is less than the capital repaid but has gained from the lower total outgoings of the endowment mortgage. As in Example 3, in calculating redress the whole of the gain should be offset against the loss unless the complainant's particular circumstances are such that it would be unreasonable to do so. However, unlike Example 3, in a low start endowment mortgage the complainant may have chosen to pay a lower than usual premium in the early years (this would need to be established on the facts of the case). Where it has been established that the complainant chose to make lower payments, even if it is unreasonable to take account of the whole of the gain from total outgoings, the gain from paying a lower premium during the low start period is normally taken into account. In such cases the redress is calculated as the capital loss plus the conversion cost minus the total amount by which repayment mortgage outgoings would have exceeded the actual low start endowment mortgage outgoings during the five year low start period. 
Redress if it is not unreasonable to take account of the whole of the gain from lower outgoings 
Loss from surrender value less capital repaid: 
(£1,500) 
Gain from total lower outgoings under endowment mortgage: 
£1,160 
Cost of converting to repayment mortgage: 
(£250) 
Net loss: 
(£590) 
Therefore total redress is: 
£590 
Redress if it is unreasonable to take account of gain from lower outgoings 
Loss from surrender value less capital repaid: 
(£1,500) 
Gain from total lower outgoings during low start period of endowment mortgage: 
£800 
Cost of converting to repayment mortgage: 
(£250) 
Net loss taken into account: 
(£950) 
Therefore total redress is: 
£950 