Car insurance cancellation fees Robbery!

Hi everyone,

Sold my car, tried to cancel the policy today. They said they were going to charge me a hefty £35 cancellation fee and then charge me an extra £21 on top to make up for the policy ending early:laugh: :laugh: . My policy costs £8.50 per month! My question is:

Is this fair trading?
Can they legally do this to me?
It wouild be cheaper for me to run the remainder of the policy on a car I don't own - is this OK?

They say, rather arrogantly, that its written in the fine print of my policy and that I cannot do anything about it!

Also would just stopping the DD from me bank account be OK?

Any help would be appreciated!

Thanks, Pete.
«13456711

Comments

  • Quentin
    Quentin Posts: 40,405 Forumite
    You agreed to the ts + cs when taking out the policy - or they will have given you time to check them and cancel if you weren't happy. So it is down to you not bothering to check.

    If you stop your dd then they will just pursue you for the money by billing you, then their normal debt collection procedures if you don't pay. So the benefit of stopping the dd is you will have more time to pay - though check that they aren't allowed to pass on extra charges for payments by other means than dd.

    You say it's robbery. You should report robbery to the police.
  • tonydee
    tonydee Posts: 722
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    I would ask for a breakdown in the administrative costs and then ask them to justify why it costs so much. Mumble the words fair trading and ombudsman and they may reduce it.
  • dunstonh
    dunstonh Posts: 116,033
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    They said they were going to charge me a hefty £35 cancellation fee

    £35 is not hefty. Anything upto £50 is considered reasonable.
    Is this fair trading?

    yes.
    Can they legally do this to me?

    yes.
    It wouild be cheaper for me to run the remainder of the policy on a car I don't own - is this OK?

    yes.
    Also would just stopping the DD from me bank account be OK?

    If you don't mind defaulting on a credit agreement and having the consequences of that showing on your credit file.

    This subject is a bit of an FAQ and we get new threads on this about twice a week. You may wish to read back on old threads for a bit of background. However, in summary, the fee is fair as you are cancelling an annual contract mid term. The provider has priced their product on 1 year of cover but you are asking them to amend those terms. That involves an admin fee now to pay for the time and cost of making the amendment and a cancellation charge to reflect their lower profit.

    The FOS has had complaints about these fees in the past and anything upto £50 is considered acceptable. The refund charge has to be justified within reason. That doesn't mean they have to give pro rata refunds (i.e. 6months means half your premium back). They can add up two months typically. Anymore than that and it would likely be considered unfair. Although it can depend on where you are in the policy year when you are cancelling.
    I would ask for a breakdown in the administrative costs and then ask them to justify why it costs so much. Mumble the words fair trading and ombudsman and they may reduce it.

    Why should they have to break it down? There is no requirement for them to do so and they are unlikely to do so. Mumbling the words fair trading and ombudsman are not likely to scare them as the FOS has ruled on cases like this before and published its outcome in the monthly briefings. So any firms charging within those tolerances know the FOS is going to rule in their favour (hence the under £50 being mentioned).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • tonydee
    tonydee Posts: 722
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    dunstonh wrote: »

    Why should they have to break it down? There is no requirement for them to do so and they are unlikely to do so. Mumbling the words fair trading and ombudsman are not likely to scare them as the FOS has ruled on cases like this before and published its outcome in the monthly briefings. So any firms charging within those tolerances know the FOS is going to rule in their favour (hence the under £50 being mentioned).

    Well theres no harm in asking is there.

    Challenge it and be polite, afterall this is a moneysaving website :rolleyes:
  • lisyloo
    lisyloo Posts: 29,582
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    Well theres no harm in asking is there.

    I think you are right Tony.
    If you write a letter in your spare time it costs you nothing except a stamp and an envelope.
    On the other hand they have to pay someone to deal with your complaint.

    There is a chance that they may waive or reduce the fee as a "gesture of goodwill" (which means they will never admit to being wrong).

    However they might also say no on the grounds of precedent.

    But I'm with Tony on this one - there's no harm in trying.

    I also agree with dunstonh in that you don't have a leg to stand on.

    Cancelling a DD for a contract you agreed to is a bad plan IMO.
    If you get a bad credit record then this will haunt you for 6 years plus, so really not worth it.
  • tonydee wrote: »
    I would ask for a breakdown in the administrative costs and then ask them to justify why it costs so much. Mumble the words fair trading and ombudsman and they may reduce it.


    Under the FSA guidelines Insurers are obliged to give you cancellation fees for motor insurance when you take the pol, as said you get 14 days if you dont agree with the terms and conditions to cancel (provided no claims are made) outside of that the cancellation fee will stand
  • tonydee
    tonydee Posts: 722
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    Steve1981 wrote: »
    Under the FSA guidelines Insurers are obliged to give you cancellation fees for motor insurance when you take the pol, as said you get 14 days if you dont agree with the terms and conditions to cancel (provided no claims are made) outside of that the cancellation fee will stand

    I did say they may reduce it.

    By challenging it, Mr Nice Insurance Man may say, ok we'll waiver it this time.

    For the record I also think the FSA are wrong to think that anything over £10 is fair when it comes to a simple admin change. It'll probably take the operative about 5 minutes to complete.
  • tonydee wrote: »
    I did say they may reduce it.

    By challenging it, Mr Nice Insurance Man may say, ok we'll waiver it this time.

    For the record I also think the FSA are wrong to think that anything over £10 is fair when it comes to a simple admin change. It'll probably take the operative about 5 minutes to complete.


    it will take nearer 2 minutes mate, most companies now charge one month as the cancellation fee, so those with higher premiums are being hit harder

    it might be worth checking if you can suspend the policy, you keep paying for the policy and when you get a new car you can do a change of car, this way you keep building your bonus (this is only really worth looking at if you dont have maximum ncd)
  • lisyloo
    lisyloo Posts: 29,582
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    Hi Tony,

    You are not just paying for 5 minutes of someones time you are paying for your share of the following:

    staff time
    their pension
    their tax & NI
    time off e.g. sick, holidays
    their training
    their manager
    their desk & chair
    hardware
    software
    rent
    electricity
    employers NI
    employers liability insurance
    paper, stamps, ink & printers
    costs of storage of paper, stamps, ink & printers
    costs or ordering paper, stamps, ink & printers
    share of costs of daily royal mail collection
    their share of payroll costs
    their share of office cleaning costs
    their share of kitchen equipment costs
    their share of health & safety costs e.g. provision of fire extinguishers
    their share of training for fire marshals and first aiders
    their share of hygiene provsision e.g. paper towels, loo roll, sanitary disposal
    admin costs for processing your payment
    fees e.g. visa for your payment
    time off for company meetings
    time off for fire drills
    share of business rates
    etc.

    If you don't agree with the charges imposed by one company then don't use them, find another one.
    You can find all the info for free on the net or if you want to save yourself some time try https://www.matthewsguide.co.uk

    Companies are run to make profits and the insurance companies or other customers do not want to subsidise the costs of your admin changes.
    Please don't think I'm being nasty. I'm just telling you the facts of how things are.
    If you don't like a product then don't buy it. It's simple.
    Obviously you have to weigh that up against cheap permiums.
    Personally if I was getting a really great premium then I woulnd't mind paying a bit more for admin, but if you don't like it then go elsewhere.
  • Something I forgot - you cant continue to run insurance on a vehicle you no longer own - you have no insurable interest
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