HSBC Life Insurance as part of the mortgage agreement (NOT endowment)

nedcase

In 2001 I took up an HSBC mortgage. I was told that I had to take up life insurance to cover the total cost of the mortgage should I or my wife die (mortgage protection insurance, not mortgage repayment insurance). At the time I had company life insurance that would have covered it, but was told that as my wife was not fully covered we would have to take out a joint life insurance policy with HSBC.

At the same time I was sold mortgage repayment protection, which covers us for 1 year of mortgage repayments, and income protection, which covers us in the case of lifetime sickness. I challenged the need for all three, but was told no, they were different and exclusive. And the life insurance was required as a condition of the mortgage.

I've always wondered whether this was misselling or not. It doesn't appear to be covered by the normal PPI issues. Anyone had a similar experience?

dunstonh

I've always wondered whether this was misselling or not.

In the past some mortgage deals were made available only if you bought the insurance. If yours wasnt one of those then you may have a case. However, proving is it a different issue.

At the time I had company life insurance that would have covered it, but was told that as my wife was not fully covered we would have to take out a joint life insurance policy with HSBC.

Death in service is generally disregarded in the case of debts. There is no guarantee DIS will pay out where intended as its in trust and many DIS benefits have been eroded over the years. Its more a use for family protection rather than liabilities.

I challenged the need for all three, but was told no, they were different and exclusive.

Which is the correct response.

If you have no financial need for the insurances then you can complain about those. Where you have a financial need, then it is much harder. If you have evidence saying that you needed to have them when you didnt then you have a strong case. However, if you dont you would be relying on a the case files not being documented well. If they dont mention that you were forced to have them and they show a financial need, then it is not likely a complaint would be upheld.

nedcase

Thanks for the reply. I have kept most of the original documentation including the record of the conversation (early days of CRM!)

The offer letter at the time includes the statement:
'The bank agrees to provide this mortgage subject to ... satisfactory insurance/assurance.'

The mortgage was HomeStart
In the schedule it has the insurances listed as Life Insurance, Income Protection and Mortgage Repayment Protector Insurance

It notes that selling costs of this are GBP550

In the comments of the meeting the FA notes:
I am advising... mortgage protection... income protection
I recommend... mortgage repayment protector

No mention of having advised on anything other than the upsides of them (and it was a pretty hard sell I remember, it was our first mortgage and we were pretty green around the ears).

Interestingly, the reason I'm posting this now is that we cancelled our mortgage two years ago, but the MP has been coming out of our savings without us noticing - it was only when they hiked the premiums and sent us a letter that we realised!

nedcase

And in another document - 'I have identified a need to protect this loan against death and critical illness. I have also identified a nee to protect your monthly payments... especially as Income Support for mortgage interest will not be paid until nine months after a valid claim'

See what I mean about the hard sell?

dunstonh

See what I mean about the hard sell?

Thats not hard sell. Thats factual information that they need to record to justify the recommendation. (although the banks do use a salesforce and are known to be pushy but that is not grounds for mis-sale unless they misrepresent the facts). It actually supports the bank as it would indicate a needs analysis has been done. If the needs analysis is correct, then it is very hard for you to prove mis-sale as you had the financial need. So, the usual excuses of "didnt need it" or "was not eligible" wont be open to you to use in a complaint.

The offer letter at the time includes the statement:
'The bank agrees to provide this mortgage subject to ... satisfactory insurance/assurance.'

That would suggest there was some insurance requirement. That was acceptable in the past and even now they can still insist on it. They just cant insist on you using them any more.