Life Mis-sold life assurance

D

Davering

Registered User
Messages
5
I'm not too sure if this has been covered elsewhere but I couldn't find it and I guess each persons case is different, so here goes...

I'm assisting someone at the moment who was a longtime customer of one of the large banks. She was sold a life cover policy as part of a mortgage some years ago. At the time she was single without any dependents. The bank sold her a life policy which was for MORE than the mortgage principal (which was itself a capital repayment mortgage), plus the cover was increased annually inflation/indexation.

A number of years later the bank contacted her to review her cover, again she was single without any dependents, yet the bank persuaded her to increase her cover and include critical illness.

I am a friend of hers and got involved when she told me how much she was paying for life cover.

She is/was not financially savvy and I have no doubt she was led on a merry dance by the salesperson - but (and here is the problem), she did sign the piece of the form where it says "I understand this policy may not be the cheapest.. Etc".

I have contacted the bank and got a firm response that they did everything by the book and the client was aware of the "extras".

I'm unsure about the next step:
- I am aware she signed the disclaimer, but she genuinely believed the bank were on her side, so did not think to question them.
- is there any valid reason for indexation and cover exceeding the mortgage principal?
- should I get the ombudsman involved?

In summary, I can see where her case is weak, but in my opinion the bank absolutely took advantage of her naivety.

Any thoughts?

Dave
 
I don't see any case here, in fact I would have encouraged her to take critical illness cover day one, I think it makes more sense than life cover if you are single with no dependants but the rules say it is life cover you must have.

The fact that it is for more than the mortgage is not really nor there, she agreed to it, there must have been some reason why she felt it was worthwhile at the time. Lots of people take out extra cover so that there will be a surplus to leave to someone if they die, or some do it so that if they want a top up on the mortgage they don't have to go through the life application process again. Life cover is relatively cheap so an extra 10k for example of cover does not cost much usually.
 
Dave, you haven't stated what age your friend is. Wbbs has made some valid points, but as I mentioned many times before, this prov-ado of pretending one knows it all about everything has to stop. It is not a crime to state that one doesn't understand everything.

Saying all this, a mortgage on a PPR requires Life Assurance. I think we all have a fair idea which Bank that was involved. I do wish that people would understand that these people work on commission. The more the product costs a consumer the more (the sales person) they earn.

Depending on her age, she might be better off getting a new quote for the same life cover and binning the existing policy. This could be the nicest way of telling the Bank to FO for trying to rip her off.

Another point to consider is that she might be best taking out Term Life Cover which is normally cheaper than ordinary full life cover.
 
wbbs:

You are correct in general, but this person genuinely didn't have any of those reasons for the cover, only that the person "helping" her put the cover in place recommended it. She went in solely seeking appropriate cover for her new mortgage. But yes, she did sign confirming she understood it may not have been the cheapest policy etc.

Mercman:

She was 28 at the time so little need for the extras in place. If nothing else, then out of principle I think she will move elsewhere.

Thanks for your input.

Dave
 
Davering;
Under any of the Consumer Codes the Bank MUST act in the best interest of the customer . I highlighted MUST. Since she was single with no dependants was it reasonable to have ALL the cover?
. If policy was after Aug 2006 I feel she has a valid complaint.
I am also always concerned when people have Critical Illness cover. Be very aware of the multifarious exclusions and the difficulty of getting a claim through.
If you can post more info , I will advise.
 
Davering, I'm sorry but I don't understand how the bank entered into correspondence with you regarding friends policy?
 
Sumatra,

My friend wrote to the bank informing them that I would be the contact point for a number of queries she wished to put to them regarding the policy. Pretty simple really, but initially they did attempt to correspond with the policyholder, but a second letter from myself along the lines of "as per X's letter of February 3rd, you have been requested to correspond with me on this matter", worked and they subsequently wrote directly to me.

Dave
 
How did this finish up? Was there a refund given?

Know someone in a similar position. Bad with finance. Life Cover given by the Bank was more than double the mortgage. Considering approaching the Bank now
 
You'll never get a refund from the bank on life cover as if the person died, the policy would have paid out.

As outlined above, there is nothing wrong with life cover for more than double the mortgage. Did the person have dependents, etc for whom the policy would have benefitted?
 
When did it happen? If it was more than 6 years ago, she is outside the time limit for making a complaint to the FSO, so forget about it.

She can reduce her cover now if she wants to.

She probably should have been given a "Reasons Why" letter explaining why they were recommending this amount.

Brendan
 
You must log in or register to reply here.
Back
Top