Saver was abandoned after IFA disappeared

Graham Ward thinks he has a clear case of endowment mis-selling and the facts seem to support him. But Mr Ward, a retired aircraft worker living in Chesham, Buckinghamshire, has hit a problem that seems insuperable - the firm that sold him the product has vanished.

Graham Ward thinks he has a clear case of endowment mis-selling and the facts seem to support him. But Mr Ward, a retired aircraft worker living in Chesham, Buckinghamshire, has hit a problem that seems insuperable - the firm that sold him the product has vanished.

"No written fact-find was undertaken, the date of maturity of the mortgage policy was after my normal retirement date, the financial adviser stated in writing that the endowment would be sufficient to pay off the entire mortgage, the risk of a shortfall was not explained and as a cautious investor this type of mortgage was unsuitable," says Mr Ward.

Each of these factors on its own would normally be sufficient to demonstrate an endowment mis-sale. But this is of little help to Mr Ward, who took out his Scottish Amicable policy in 1991. The sale was conducted by an IFA - and no one now seems to know where the financial adviser has gone.

Keith Bell, an adviser in Farnham, Surrey, sold Mr Ward the policy while trading through a partnership with his wife called Ariston Insurance. But Ariston ceased trading in 2002. Having checked the Financial Services Authority (FSA) website and found that Ariston had closed down, Mr Ward concluded that he should be entitled to money from the Financial Services Compensation Scheme (FSCS) - the industry-funded body that meets the debts of IFAs and many other financial services businesses that become insolvent.

The problem is that Ariston did not become insolvent - it simply ceased trading. FSCS conducted an investigation into Ariston and concluded that the firm had sufficient funds to meet Mr Ward's claim. The FSCS provided Mr Ward with the supposedly current address of Mr Bell, but when he wrote to that address, a flat in Farnham, the mail was returned as "gone away".

We spoke to Janet Derry, who bought the property from the Bells. She has received many phone calls, letters and visits from people trying to contact Keith Bell. Mr and Mrs Bell had written to Mrs Derry from hotels in Australia, France and Spain, but she now has no idea where they are. We also, unsuccessfully, asked the Bells' former solicitors if they could put us in contact with their client.

There is no evidence that Mr and Mrs Bell are doing anything other than having a long retirement holiday. But their disappearance is symptomatic of a growing problem for clients of IFAs who want to obtain mis-selling compensation. In recent months, both large and small IFAs have been liquidated, leaving creditors to seek compensation from the FSCS. And with thousands of customers claiming the mis-sale of split-capital trusts as well as endowment policies, potential liabilities are mounting for many current and former IFAs.

It might be expected that the FSCS would be sympathetic to the plight of people like Graham Ward. But the FSCS refuses to assist him in tracing Mr Bell, as does the FSA. A spokeswoman for the FSA says: "We would not be able to say where the firm is. When it stops being authorised by us, it ceases to have a relationship with us."

"Our rules mean we are the funder of last resort," says FSCS's spokeswoman, Heather Tilston. "If there are assets in the firm, a client has to go to the firm." Only firms regarded as being "in default" have consumer liabilities met by the FSCS. "Ceasing trading would not in itself make a firm in default," explains Ms Tilston. "The default question is settled when a claim is submitted against the FSCS."

The FSCS's function is fulfilled once it has determined that a firm has the assets to meet its potential liabilities. It has no powers to assist an individual locate a firm, nor can it provide details on what type of assets the IFA has, which country they are in, or how an individual might seek to obtain compensation out of the value of the assets. What is more, once the FSCS has determined that a business has sufficient assets to meet its liabilities it is not in a position subsequently to reconsider the matter.

Not surprisingly, Mr Ward feels disillusioned. "The FSCS in its leaflet never said there were so many clauses under which it would not help," he complains. "It seemed to us that if an adviser no longer traded, the FSCS would help you. I am disappointed with the regulatory system. It has let me down."

Vincent Cable, the Liberal Democrats' Treasury spokesman, endorses this view. "There is a serious regulatory failure," he says. "Organisations set up to protect consumers appear to be failing in their duties. They should be pro-active in supporting consumers. If there is a genuine regulatory deficiency this government should act quickly to deal with it."