On the face of it, there was nothing wrong with the idea of an Endowment Mortgage. Instead of paying off capital directly, you diverted the same monthly sum to buying equities. Over the long term - say two or three full economic cycles - the rise in the values of equities would comfortably pay off the capital sum. Several things went wrong, most of them attributable to the greed of the fund managers. First up was a hefty commission paid to the Estate Agent who arranged the Endowment, then punitive management fees every year, and finally they managed to mis-invest the money in equities and funds that performed significantly worse than the FTSE 100. As a result, they killed-off the Endowment Mortgage.
Now of course the Observer reveals they've been doing the same to our pension pots. A saver who made contributions of £70,000 between 1994 and 2009 would have seen the entire £46,000 profit in the rise of the FTSE 100 swallowed in fees and charges by the financial sector. The UK financial sector currently makes 3.2% a year out of our investments, most of it fat salaries and bonuses enjoyed by traders and fund managers.
Frankly, this makes me want to see their nostrils slit with a rusty gutting knife, with ear-cropping for a second offence.