Tens of thousands of Pearl mortgage endowment victims could be pressured into accepting reduced compensation for mis-selling claims, experts have warned. The attack on Pearl, the insurer bought by entrepreneur Hugh Osmond in 2004, came last week as the Financial Services Authority published a report claiming that consumers generally were getting a fairer deal when it came to the handling of endowment complaints.

The Pearl wrangle centres on a promise made in 2001 when it said policyholders' mortgages would be met in full at the maturity of an endowment if policies grew by an agreed amount between 2001 and the maturity date.

This promise has a value for policyholders, but only if their policies are held until maturity.

However, Pearl is now insisting that where policyholders complain successfully about mis-selling, they must waive their right to the promise if they accept a compensation payout. Claim payouts are not being raised to reflect any value in the promise.

Brunel Franklin, an endowment claims handler, says this makes it impossible for claimants to know the best option. It has about 600 live complaint cases against Pearl and has threatened legal action against the company over its stance.

Ian Allison of Brunel Franklin in Altrincham, Cheshire, says: "The FSA has made a big fuss about improvements in endowment claims handling, but it might want to focus its attentions on Pearl.

"Pearl is railroading endowment victims-into options -- the benefits of which are unclear."

Teresa Fritz, principal researcher at consumer lobby group Which?, agrees: "The FSA's report was spin. It's wrong to force policyholders to make complex decisions when they were mis-sold a product in the first place."

Thomas and Linda Rodgers from Clackmannan, near Stirling, are facing a dilemma. The couple, who have two teenage sons, won 5,500 compensation from Pearl after an eight-month mis-selling battle with the insurer.

But Thomas, 51, a television engineer, and Linda, 44, a home help, have been told by Pearl that if they accept the money they must forfeit the "Pearl promise," which could be worth thousands of pounds.

"We want the compensation," says Thomas. "But we were hoping the "'Pearl promise'" would be a fallback. We don't want to surrender the policy because of the life insurance."

The couple face an 8,000 shortfall on their 40,000 mortgage endowment, taken out in 1993.

Pearl says: "If we allow policyholders who elect to keep the policy and receive compensation to benefit from the promise, they would effectively be paid more than is fair to protect them from a shortfall. Pearl has an obligation to deal with claims in a way that is fair, both to the claimants and to all other policyholders."