Loan Insurance Mistake

swollendrain

Hi, bit of a legal question....

I took out a temporary BNPL loan for some home improvements with the intention of taking an advance on my mortgage to pay off the temp loan. The loan was for £8k and it had insurance of around £1100 on it.

I have now payed the temp loan off via a DD payment and payed around £8.2k. I have a letter from the bank dated 11/10/2006 stating that the loan account is now closed. I then receieved a letter shortly after, from the banks insurance dept stating that the unused Insurance premium will be refunded to my account. Understandable I thought.

However looking at my statement, on the 17/10/2006 I received a credit of the £1100 into my current account. :rolleyes: Shouldn't this have gone into the loan account before being closed?

Now apart from the obvious "Tell the bank about their error"

I was wondering if this type of thing has happened to anybody else? If so did they keep the error?

billywhizz

My guess would be that the loan has the insurance premium added to it and that premium is paid up front with that money (£8k loan £1100 insurance borrow £9100 and the £1100 pays for the insurance for the full period of the loan).

When the loan is closed the insurance is no longer needed and the refund comes to you.

mrcow

I know it's a really boring reply, but it would be worth just querying this with the bank. It does sound very odd. Surely the insurance should have been refunded to the bank directly, and not to you? Are you sure that they are not expecting you to pay it forward?

My worry is that you'll spend the money, and then they'll come after it at at a later date.

Sorry, I know it's a boring reply