Mr. Paul Joyce:

To be helpful to the committee, we have copies of the report if anybody wants it. Page 77 contains a short piece on endowment mortgages. On 18 January 2006, one of Mr. Deering's predecessors explained endowments to the Joint Committee on Finance and the Public Service. He said: "if the complaint is that the product was mis-sold at a date which is more than six years before the complaint was made" then it falls outside the FSO's statutory remit. He continued by stating "if the complaint is that on the maturity of the policy the financial service provider failed ... to pay out moneys in accordance with the contractual" agreement, then "provided the complaint is made within six years of maturity of the policy", the FSO "will investigate" and make a ruling.

The essence of endowment mortgages, as the Senator will have seen from his accountancy practice, is that a lot of them were mis-sold at the point of sale. In fact, the seller will have known that there would be insufficient proceeds to meet the principle that became due at the end of the endowment mortgage. That appears to have been what rules out the complaints. That brings us back to the question. Is the conduct only at the point the endowment mortgage was drawn down or is there ongoing misconduct associated with such mortgages that should allow one to lodge a complaint? I take Mr. Deering's point that a more liberal interpretation of the matter would be challenged in the courts. It also raises an issue about the "ought to have known" issue. Are people supposed to be following their endowment mortgage and how it is going so that they know they have a complaint? Is it acknowledged when they find out there is a shortfall?