HSBC Loan - Told I can't cancel insurance?

jonesMUFCforever

So you weren't covered for the first 15 days but you would have been covered thereafter.
I don't think the insurance was sold to on the basis of one employer or another. If you are working full time and not on a short term contract then the insurance would be valid now.

ANY_CHANCE

If its a single premium insurance couldnt you complain re unfair terms and conditions? If you were not made aware at point of sale that there would be difficulties cancelling the insurance.

Post on the PPI discussion thread

Pound-Of-Flesh

You have a legal right to cancel your insurance whenever you want.

And I'm sure you have the right for them not to pull the plug on the loan you already have with them.

You are NOT asking them for a new loan, are you??? They are saying that is the only way their systems will let them stop the insurance on the loan you already have. Well, that's their problem - not yours!

When you say you 'tried' to cancel in December, was that in writing or just verbal? Your position is a bit stronger obviously if you have written evidence; but even if it was verbal, you still have a strong case. They have no legal right to refuse to cancel your insurance - which is what they did.

Write to them & tell them to cancel it immediately and refund you all the premiums they have unlawfully collected since you told them to cancel it back in December. Don't get drawn into any debate about your credit status for a 'new' loan - tell them you are not applying for a new loan, but you insist they cancel the PPI on the loan you have. Any nonsense, go straight to the Financial Ombudsman - they won't have a leg to stand on.

Kavanne

jonesMUFCforever wrote: »

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.

Eh? Surely all selling PPI requires is the ability to read a script?

jonesMUFCforever

Kavanne wrote: »

Eh? Surely all selling PPI requires is the ability to read a script?

I don't thinks so you need an FSA licence - normally this done by the banks as part of their training.

Scousebird_2

robbiet27 wrote: »

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.

No you have misinterpreted this. As the OP explained-he/she wants to cancel PPI-therefore the only way to have the PPI removed (much like most banks, not just HSBC) is to have the loan restructured. I have done this myself with HSBC. Removing the PPI, or choosing to have the PPI on the loan has no influential decision on whether or not the loan is accepted-acceptance in based on credit scoring and most inportantly affordability. A decision to agree a loan is without prejudice to accepting or declining the offer of Payment Protection Insurance-any compliant adviser in any bank will tell you this, as this is a stipulation of compliant selling under current FSA regulations.

To try and explain the logic, when you apply for the loan with PPI-the lump sum+interest+front loaded PPI premium is added together then divided by the amount of repayments to give you an overall monthly repayment figure. If you removed the PPI off the loan part way through-this means an overpayment at the end of the loan term. Interest is always paid first along with PPI so the capital you borrow will not of been touched yet-this is last to be paid on a loan. So you will owe capital + interest when the PPI is deducted...this is the new amount you need to apply for which means the loan will need to be approved again.

Now, if your credit rating has dropped-it will be more difficult for the system to approve the NEW borrowing-even though this is to repay existing, because on the credit search-it will still report from the Credit Reference Agencies that there is an outstanding debt owing-plus it is mandatory for a new credit search to be done with every credit appication to see external borrowing away from the bank that holds your existing loan.

I know this seems complicated, but unless anyone else here knows otherwise, I think all banks operate in this way when removing PPI.

The only way around this is to try and apply for a new loan (either with HSBC or elsewhere-which may work out cheaper depending on if your can secure a better APR) -you will then get a settlement figure for your HSBC loan which will consist of Capital+interest+proportion of PPI non refundable (wich will be dependent on how long your loan has been in force)-then you can pay that offer and have lower monthly repayments without the PPI.

Hope this helps shine a light on things xx