A & L made me take life cover toget savings acc

samshirley

My aunt asked me to look over all her investments because she thought she was losing money. Needless to say she was! But one thing interested me most was an account she has with Alliance and Leicester. She saw some where that they were offering a 12% interest savings account. When she called to get this account she was informed of some restrictions, sunch as you can not put more than £250.00 a month into this account and you can only keep it for 12 months. But the main one was you had to take out life insurance with Legal and General. The cover I have checked is worthless and does not cover her for even a quarter of her yearly take home. And was highly unliklyto payout anyway.

Is it Legal to make someone buy a Life cover policy to obtain a savings account?

If not can anyone advise on how to sort this out. Is it best just to write a complaint and tell them to cancel the life policy and claim her money back?

Aegis

It's fine to offer savings accounts on the back of financial planning products, so I doubt you'll get anywhere by complaining. However, you might want to see about just cancelling it if it's not necessary. Losing the 12% account would lose a maximum of about £170 of income, so it's hardly going to make much difference.

samshirley

She took the life cover to obtain the savings but that was not advertised on the internet where she found it. Does that still make it legal? they said she had to take the life cover to get the savings account.

Aegis

samshirley wrote: »

She took the life cover to obtain the savings but that was not advertised on the internet where she found it. Does that still make it legal? they said she had to take the life cover to get the savings account.

Alliance and Leicester never make any secret of the fact that their best savings accounts have catches. It might be in the small print, but it's definitely there.

G_M

I'm afraid you'll not get far in terms of reclaiming the life premiums, but you could stop paying them (I assume/hope she didn't have to pay the year up front?).

Look hard at a) what income the account will earn (I'm sure Aegis above is right) and b) what the cost is (ie the life premium (and any other!).
Then decide if it's worth maintaining or whether to simply cut and run.

samshirley

Okay i'm going to check the small print. I'll post again when i've checked. I'm also checking the FSA website for any help.

dunstonh

Actually, you may have grounds here.

Whilst A&L are not breaking any rules regarding the insistence to buy another product to get a savings product, this involves the sale of life assurance which is a regulated activity. If there is no financial need for the life assurance then it is a mis-sale. If there is a financial need for the life assurance then it is not a mis-sale. Even if she doesnt want it.

So, if it was sold under advice, it still has to be suitable. If it was bought "off the shelf" without advice then she cannot claim mis-sale.

I don't recall any coverage of A&L actually insisting on life assurance products being sold to get savings accounts. It does seem like a very strange link. It may have been any financial services product and life assurance was chosen.

samshirley

It was done under advise. They did a financial review on her, they mention nothing of the savings account saying she enquired about critical illness cover and life cover. They make her sound very stupid in the review I have read. Stating things like she did not care what the figure was that would be paid out as long as it was a lump sum and she only paid £20 a month for it. It also says the advisor told her she should take out three times her annual income. there is nothing about her savings account and she informs me this was only told to her verbally. But she took their word for it. She is not the most super intellegent but she is by no means as dim as they have made her sound. And she admites to not reading the copy of the review sent to her. What do you think does she have any rights to cancel and get her money back on the cover?

molerat

I remember that account. I got a mailing about it and thought wow! 12% but reading on it was very clearly stated that the account was only available if I purchased insurance. I am sure that there were also the large window posters in the branches, again very clear on the insurance requirement.

dunstonh

What do you think does she have any rights to cancel and get her money back on the cover?

Doesnt sound like it. Whilst what they have done is sales orientated, they are a salesforce. The things in the report seem to cover them as it shows a requirement of 3x income but based on budget, a different amount was recomended.

If a complaint was made, the factfind and suitability report would be looked at to see if there was a need and it was correctly documented and it appears it was.

Almost certainly she can cancel without any comeback. However, getting premiums back would only happen on an upheld complaint and that doesnt look likely.

samshirley

okay thanks for all your help. I'm looing into it. thanks to everyone for your advice.