HSBC Loan - Told I can't cancel insurance?

MarkNewby

Hi all,

I tried to cancel my loan insurance in December, but HSBC told me that because my credit score was low, I couldn't have a new loan and that in order to cancel loan insurance they would have to issue a new loan.

I'm now wondering if this is true- because surely as my credit score is low it'd make sense to reduce my debt (although perhaps not business sense for them).

Anyone had similar issues? I'm basically giving myself a bit of a midyear financial makeover here so if I can claim this after all then I might complain that I was given incorrect advice in the past and that this has cost me money in effect as i've had the insurance for longer than i'd originally intended.

robbiet27

Is your credit score low / bad?

It appears they have granted you the loan ONLY if you took out insurance as a way they could reclaim the money if you failed to keep up payments / became unemployed. Surely this is illegal / fraud against insurance?

Yet again if you did not meet their lending criteria (with a low/bad credit score) they should not have offered you the loan and therefore you may have a case that they mis-sold you their product, i.e. loan and insurance.

Maybe worth putting this to them if your circumstances (financially/creditworthiness) have not changed since you took the loan.

chambta

Seems very unfair to me. What if due to a change in circumstances you are no longer eligible for the insurance? How can they insist you keep in?

jonesMUFCforever

HSBC no longer sell PPI in branch - is it worth going to a branch to rejig the loan?

chambta

How do they sell PPI then?

jonesMUFCforever

I don't think that they do.
They costed how much it would be to train all their lending staff to become competent under FSA rules to sell this insurance and decided not to bother.

chambta

Interesting. Though I work for a bank that does sell it my honest belief is that any insurance cover should be sold separately.

duff67

MarkNewby wrote: »

Hi all,

I tried to cancel my loan insurance in December, but HSBC told me that because my credit score was low, I couldn't have a new loan and that in order to cancel loan insurance they would have to issue a new loan.

I'm now wondering if this is true- because surely as my credit score is low it'd make sense to reduce my debt (although perhaps not business sense for them).

Loan Insurance is just that - INSURANCE. You as the customer can opt in / opt out and cover or take the risk.

Loans should never be sold ONLY if Insurance is taken (against all principles of duty of care).

If you've chosen to cancel then that is you're right.

I can understand the Bank may struggle if their computer system denys another loan BUT there's no such word as can't. If their system can't is that your fault ??

Suggest you re-approach and take on up the line, firmly but politely. Eventually you will reach a person who CAN

Hope that helps, good luck

Snaggles

Hiya - if you asked in December, it might be worth asking again now. I work in a bank, and our position on this has changed quite radically over the last few months, and we are now ensuring we don't put any unnecessary obstacles in the way of people cancelling insurances.

edindie

Is the OP not saying that they have a loan, and their credit history has changed since then? I thought some banks made you get a new loan when cancelling your insurance, maybe the OP doesn’t pass the credit checks when they did before?

MarkNewby

My credit score has gone down quite a bit since I took out the loan, however this is partly because I lost the job that the insurance was set up to cover around 75 days after I took out the loan [and the policy said I couldn't claim until after 90 days] and therefore had to fund myself an interim wage by extending my credit card limit etc, which I later struggled with.

Interesting to think though - as the insurance doesn't even apply to me any more [wrong employer] - I should be able to cancel it shouldn't I.

@Snaggles: Interesting - i'll have to check it out.

Thanks for the info guys, will let you know how I get on.