Mortgage & Income Protection Miss Selling

silentotter

My husband today has been looking into his mortgage and income protection policies which he took out when the house was sold and has been paying faithfully for over 10 years.

He phoned Natwest to find out how much was left on the mortgage and double check the terms of the mortgage, they informed him that as he was only paying £80.00 per month mortgage. With immediate effect the policy that was due to pay out £400 per month would only now pay out £100.00 in case of illness & unemployment! How can they get away with this?

He also took out a Income replacement plan at the same time, When he phoned them today not only did he find out that Natwest had sold his policy to Pheonix. They would also not pay out if he was made redundant but only if unemployment resulted due to illness and injury. This was not explained fully to him at the time that the policy was taken out and he now feels as if he was mis sold this product. It was sold as an income replacement plan to pay out after 52 weeks when the mortgage payment protector ended.

Where do we go from here? any help and advice would be greatly appreciated.

di3004

silentotter wrote: »

My husband today has been looking into his mortgage and income protection policies which he took out when the house was sold and has been paying faithfully for over 10 years.

He phoned Natwest to find out how much was left on the mortgage and double check the terms of the mortgage, they informed him that as he was only paying £80.00 per month mortgage. With immediate effect the policy that was due to pay out £400 per month would only now pay out £100.00 in case of illness & unemployment! How can they get away with this?

He also took out a Income replacement plan at the same time, When he phoned them today not only did he find out that Natwest had sold his policy to Pheonix. They would also not pay out if he was made redundant but only if unemployment resulted due to illness and injury. This was not explained fully to him at the time that the policy was taken out and he now feels as if he was mis sold this product. It was sold as an income replacement plan to pay out after 52 weeks when the mortgage payment protector ended.

Where do we go from here? any help and advice would be greatly appreciated.

Hi there

I will leave this one for Dunstonh to advise you - who will be along soon I expect, good luck.

dunstonh

How can they get away with this?

Because virtually all plans have this with mortgage payment protection (but not unrelated income protection). It is also in the T&C of the plans and its recommended that you periodically update them with the mortgage payment amount to ensure its set to the right level.

There is really no other way they can do it.

not only did he find out that Natwest had sold his policy to Pheonix.

So, he hadnt read the letters from Phoenix to say they had bought the insurance company?

They would also not pay out if he was made redundant but only if unemployment resulted due to illness and injury.

What you describe is permanent health insurance. Not payment protection. This is the best form of income protection.

This was not explained fully to him at the time that the policy was taken out

PHI policies at banks are sold under a full advice process. This means a full factfind, needs analysis are completed and a recommendation letter issued to your husband. In addition, the illustration and key features documents clearly state what is covered. PHI plans have never covered unemployment. To complain it doesnt cover unemployment is a bit like complaining that your car insurance doesnt cover your house.

It was sold as an income replacement plan to pay out after 52 weeks when the mortgage payment protector ended.

Thats good advice and how it should be.

he now feels as if he was mis sold this product.

What you have described sounds perfectly fine and correct and how it should be. An MPPI or PPI for the first 12 months and a PHI policy to kick in after 12 months when the PPI ceases. Generically, the advice appears to be spot on.

Based on what you have said so far, the advice is good, the way they are set up was good and the sales would have been made under a full advice process so the audit trail should be good. I see no grounds for them upholding any complaint and to be honest, it would be a pretty easy rejection for them based on what you have said as you described how it should be done.

The exception is the MPPI sum insured not being altered. However, it is the responsibility of the policyholder to adjust it or if you employ a servicing adviser and have it reviewed then they will do that as part of the review. Natwest only offer a transactional advice service. Not a servicing one. Their published terms of business makes that clear (its the same with all the banks and its a limitation of using a bank for advice).

silentotter

Which is the best Payment Protection Plan and which supplier provides it?

magpiecottage

dunstonh wrote: »

PHI policies at banks are sold under a full advice process. This means a full factfind, needs analysis are completed and a recommendation letter issued to your husband.

That wouldn't have been a statutory requirement 10 years ago, although a Key Features document would have been provided.

dunstonh

That wouldn't have been a statutory requirement 10 years ago, although a Key Features document would have been provided.

It wasnt a requirement but back then they processed the protection applications in the same way they did investment class. i.e. full factfind, needs analysis and reasons why letter. They didnt use the shorter method.