Mis sold mortgage?

Campermad
Campermad Posts: 2 Newbie
in Mortgages & endowments
When taking out our mortgage, my husband was and is still self employed.
We were told we could not have a mortgage if we did not take out a critical illness policy.
Is this mis selling?
I would be grateful for any help.

Comments

  • ACG
    ACG Posts: 23,727 Forumite
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    Probably, but you would need some evidence otherwise it would just be your word against the brokers.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Doesn't make the mortgage mis-sold.

    Who sold you the policy?
  • ACG
    ACG Posts: 23,727 Forumite
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    I was just coming back to edit my post and noticed thrugelmirs posts.

    He is correct in that the mortgage is not miss sold, but the critical illness policy. It will be difficult to prove this but at best all that will happen is you get the premiums back.

    The broker should have sent you a letter explaining why they sold you the critical illness policy, read this letter and come back to us with what it says.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • averageish
    averageish Posts: 53 Forumite
    edited 2 October 2014 at 1:25AM
    Can someone explain how this is mis-selling?

    I can quite forsee how a self employed person, who's income is lost due to incapacity and in the absence of any other proven insurance from an employer for example, may not be able to repay their debt.

    Insurance would cover their repayments, therefore surely it is not an unfair demand?

    Why can a bank not set this as part of the lending criteria?

    The OP does not specify that the critical illness cover had to come from the bank considering the mortgage, merely that such insurance was in place?

    Even if that is not the case, a lender has the right to demand terms. This is not the same as mis-sold PPI, or even close.
  • koexelek
    koexelek Posts: 7,847 Forumite
    Campermad wrote: »
    When taking out our mortgage, my husband was and is still self employed.
    We were told we could not have a mortgage if we did not take out a critical illness policy.
    Is this mis selling?
    I would be grateful for any help.

    If you were forced to take it against your will, why didn't you cancel it once you had your mortgage up and running ?
    It is not linked to the mortgage at all and is the best way at getting back at brokers who use blackmail sales techniques , as they then lose all the commission they made on it
    I am a Mortgage adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • ACG
    ACG Posts: 23,727 Forumite
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    averageish wrote: »
    Can someone explain how this is mis-selling?
    Because no lender has ever made it a part of their criteria that the applicant HAS to have critical illness - so the advisor has lied, thats why it has been miss sold (assuming the opening poster is correct).
    I can quite forsee how a self employed person, who's income is lost due to incapacity and in the absence of any other proven insurance from an employer for example, may not be able to repay their debt.

    Insurance would cover their repayments, therefore surely it is not an unfair demand?
    Good point, but the OP has not said they are self employed and the policy in question is not for income replacement. But even if they were and it was - it would still be miss sold as it is not a requirement of the mortgage - so would still be a lie.
    Why can a bank not set this as part of the lending criteria?
    They can I believe, but they dont.
    The OP does not specify that the critical illness cover had to come from the bank considering the mortgage, merely that such insurance was in place?

    Even if that is not the case, a lender has the right to demand terms. This is not the same as mis-sold PPI, or even close.
    Nobody has mentioned PPI, there is more types of miss sales than PPI. If the customer has been lied to in order to take out a policy they do not want (even if there is a genuine need) then it has been miss sold.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • dunstonh
    dunstonh Posts: 116,359 Forumite
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    A lot of brokers require you to purchase insurance via them to allow them to provide you with fee free mortgage advice. That business model is allowed. However, the insurance sold must be suitable for your needs.

    So, whilst it was not a condition of borrowing, it could have been a condition with the broker.

    You have two issues here. If the broker did insist on insurance as a means to give fee free mortgage advice then you have no complaint (unless the insurance is unsuitable). If the broker did not insist on it but you have the impression they did then what evidence do you have to support your allegation (in most cases, you would not have any). Where no evidence exists to support your allegation, the complaint would then just look to see whether it was suitable for you or not.

    In most cases, taking out of a CI policy with a mortgage would be considered good advice.
    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.
  • Campermad
    Campermad Posts: 2 Newbie
    Thanks for all comments, having looked at my policy details, it does not state anywhere that the critical illness policy was a condition of us getting a mortgage, but we were told by our broker that we had to have the policy.
    So you are right, it is our word against his.
  • R_P_W
    R_P_W Posts: 1,505 Forumite
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    Campermad wrote: »
    Thanks for all comments, having looked at my policy details, it does not state anywhere that the critical illness policy was a condition of us getting a mortgage, but we were told by our broker that we had to have the policy.
    So you are right, it is our word against his.

    Sounds like potential mis selling of the policy? I mean you wanted a mortgage didn't you? That's why you applied for one? And you got one.
  • kingstreet
    kingstreet Posts: 38,763 Forumite
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    Does the broker's initial disclosure document or terms of business mention the need to purchase (and then maintain premiums on) an insurance product?

    As dunston said, this may be "in lieu" of charging you a fee. Any commission earned by the broker would be clawed back if you cancel within a certain period, upto four years.

    It will not mention this anywhere on the policy documentation as it is not something involving the insurer.

    If you have a mind, ask the broker how you would be expected to continue to pay your mortgage if you contracted an illness which prevented you working, but wan't one of the illnesses on which a critical illness claim could be based.

    Basically, you are making the point that permanent health insurance would have been a more appropriate product for your needs...
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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