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JAMES CONEY: Many find that dreams are turned to dust,,,

Many who lived through the Eighties remember it as holding the promise of untold wealth for those who had previously been unable to share in the country’s prosperity.

At the heart of this was a soaring stock market and a boom in house prices. But where there is money there is greed.

And this also became a time when platoons of unscrupulous salesmen for financial services companies were unleashed to sell untold dud policies to millions — most devastatingly, endowments.

Culture of excess: At the heart of the Eighties' boom was a soaring stock market

The cost of these chronically failing investments is only now becoming apparent. The toxic nature of these policies has turned to dust the dreams of millions of borrowers still repaying interest-only mortgages. For nearly a quarter of a century, hundreds of thousands of borrowers have faithfully paid into endowments after being convinced that one day they would repay the capital value of their home.

They were flogged by starry-eyed salesmen who believed their own hype that these policies would always grow by 10 per cent a year — or more. Few ever mentioned that should they fail to deliver, you would have to pick up the tab for the capital value of your home at the end as well.

  More... Up to 360,000 families may be forced to sell homes this year as endowment policies fail to deliver

And as markets tumbled, so did the value of policyholders’ endowments and their ability to pay off the value of your home. At times over the past two decades these policies paid out as much as £120,000 — the promise of this alone was enough to give thousands a false sense of security.

Many now face a terrifying shortfall —sometimes tens of thousands of pounds — which must now be covered. Goodness knows how many families, already hard-pressed and under a financial cosh, will be able to do this.

Although compensation has been awarded over the years, the stain of the scandal will be very hard to get rid of. The impact of lenders’ and  insurers’ behaviour remains all too painful on a day-to-day basis for hundreds of thousands of families.

Companies pointed the finger at the historic fall in inflation and interest rates for the low returns.

Insurers have trotted out the excuse that, back in the late Eighties when stock markets were motoring at great speed, projections of annual growth of 10 per cent were not the nonsense they appear today — and were, in fact, entirely sensible.

Yet these endowment policies also carried excessive charges that were concealed from customers.

Many policies were sold using what was known as ‘standard charge projections’ — set by what was once the industry’s regulator.

It was supposed to give an idea of how much hefty charges would eat into an endowment over the years.

Yet, in reality, these under-estimated the actual impact on the endowment, with much of the fees sluicing through the industry being funnelled into commission payments for sales staff.

And while these greedy salesmen are enjoying the rewards of their labour, thousands of families are waking up to the nightmare that they may never own their own home.

Flight mare

Since I’ve had my own family I’ve generally refused to fly by so-called budget airlines.

I rarely pay more than a few pounds extra and their rules seem designed to catch out those who travel with anything other than a change of socks and pants.

One of modern life’s most desperate scenes is of people trying to wrestle over-packed hand-luggage in to those metal cages at the airport check-in. Or of families pleading with air hostesses to allow their seven-year-old daughter to sit near them, or at least within eyesight.

These budget airlines now offer a dazzling array of charges that can catch out anyone.

There’s another reason I won’t fly Ryanair, unless it’s the only or last option. It’s because I’ve seen the total disregard they show the complaints of Money Mail readers.

I’m much happier paying a few extra pounds to avoid the headaches. What may look like a cheap deal at home could easily leave you paying more at the airport.

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