Zurich Life Assuarance Policy Cancelled. Stuck with HUGE bill.

electribem

Hello all,

I hope someone can give me some practical advice here. I had a Life assurance policy with Zurich which I took out in 2007, this has now lapsed due to financial difficulty. The bank cancelled all my direct debts from my account. I now have a letter from the kings group saying that I have to pay a £5,200 mortgage arrangement fee in 10 days due to the fact that I have cancelled the policy with Zurich (which I never did). Obviously I am very shocked and worried. The kings group kindly sent me a signed photo copy stating that if polices are cancelled or lapse within 48 months then the full mortgage arrangement fee will remain payable by me. Obviously I had no idea this was what I was letting myself in for. And the bad luck is I am only 2 months shy of the 48 month period. I feel I've been stitched up big time. There is no way I can produce 5 grand in ten days. Is there any way I can get the kings group to overturn this? If not what are my rights and best course of action if I have to repay this huge sum of money? Any one else been in a similar situation? Any help or good advice would be much appreciated. Thanks

Quentin

These conditions are normal.

When you say they sent you a signed photo copy, do you mean it's a copy of the original agreement you signed up to?

If so they will be entitled to pursue you for the money.

If you agree that you do owe them this money, then contact them and explain your circumstances and see if they will do a deal (reduce their charge/accept instalments etc).

But if you don't agree you owe them this money then get some advice from your solicitor/cab etc.

electribem

Yes it would appear that the photo copied document is that of an original.

I phoned Zurich yesterday afternoon to try and get the policy re-instated, pay back missed payments, but they had already wiped it from their computer system.

dunstonh

There are two issues here. One is good. one is bad.

The FSA allow fee based advisers to use the commission to offset the fee. You sign a fee agreement to that affect. Its a good way to get advice as you know that the commission is not influencing the advice. You pay the same irrespective of the product bought. If you create a clawback in commission (by cancellation) then you are liable for the difference between the fee agreed and the commission received after clawback). A clawback will be pro-rata usually. ie. clawback period of 4 years will clawback 50% after 2 years. All that is acceptable and good.

Where it is bad is where there is no fee agreement and where the commission is in excess of the fee agreed. i.e. if their fee structure was £150 an hour and you agreed the fee at say £1500 then they should only have taken commission to the value of £1500. If they took more then they committed fraud. If they are now asking you for more than that fee then they are committing fraud. If they are not taking into account the commission they have received net of clawback, then they are committing fraud.

A lot of dodgy firms will try and claim money they are not entitled to. they huff and puff and threaten and even go as far as sending you a copy of the small claims court letter they "intend" to file. However, rarely will they go through with it as the courts will not uphold their claim without a fee agreement that states the fee and the agreed terms.

kingstreet

It appears that Kings Group is an appointed representative of Openwork, which is the "network" name adopted by Zurich. So you were sold a Zurich policy by a Zurich rep, basically.

I'd suggest you consider writing to Openwork's compliance department requesting they consider the question of Kings Group's fee agreement and ask them how, after forty five months premiums have been paid, they consider they are treating customers fairly by attempting to charge the full fee when the policy was only cancelled because of financial hardship and the commission clawed back would be a fraction of the amount claimed.

Write to;-

Compliance Department
Openwork Limited
TriCentre 3
New Bridge Square
Swindon
SN1 1HN

dunstonh

Zurich policies are pretty much pro rata on a 48 month clawback period. So, 45 out of 48 payments would be a clawback of around 6% of the initial commission. So, there is no way on this planet they can justify asking for the full fee again when they have received around 94% of it already.

Past threads and experience indicate that they are tying it on and a formal complaint is required. Don't be afraid to get a local IFA involved. They can set up a new policy through that IFA cheaper than a Zurich sales rep and a good IFA would tell you what to right in a complaint and areas they cannot enforce.

ACG

I believe they will be taking you to court for lost earnings, therefore if your 2 months shy of 4 years. Divide the amount they are asking by 48 and offer the months your shy on OR you could say you will take out a new contract with them. Im sure they would take their letter back then.

magpiecottage

If you can fax from your PC then send one to Openwork on 01793 487 482 complaining. If you do it over the weekend, it will be deemed to have arrived on Monday.

Otherwise, bang out a letter and get it into the post first class tomorrow morning getting proof of posting (free from the Post Office). That will be deemed to have arrived on Tuesday.

They will then have eight weeks to get a response to you (18 or 19 April) to get a response to you.

If, in the meantime, you get more threats of litigation pm me. Once the complaint goes in, though, it is most unlikely they will because if Openwork learned of it they would probably have to suspend the firm meaning it had to cease trading.

electribem

Thanks for you reply magpiecottage

Is there any advise you could briefly give (or point me in the right direction) so I can draw up a letter of complaint to Openwork the correct way? i.e. how to start, middle and end it?

kingstreet

Here's a first draft for everyone to knock around a bit;-

Compliance Department
Openwork Limited
TriCentre 3
New Bridge Square
Swindon
SN1 1HN

Dear Sirs,

Policy No. XXXXXXX Name XXXXXX DoB XXXXXXX

I write with reference to the above and further to your appointed representative, Kings Group's letter (copy attached for your information) demanding payment of fee in lieu of commission clawback. A copy of the fee agreement is also attached.

After XX months of paying the premiums, financial hardship has forced me to cease payments just before the end of the 4 year qualifying period.

Kings Group is attempting to enforce the agreement for the full amount, when I believe it should be able to recover from me only a proportion of this, based on the commission actually clawed back.

I do not believe their loss is anything like the amount claimed and cannot comprehend how this corresponds with the requirement to treat customers fairly. Surely the purpose of the fee agreement is to protect the firm against early cancellation, not to entitle it to the bulk of the commission, plus the fee on top?

Advice also suggests that if your representative attempts a legal solution, they would be unlikely to recover any more than the proportion mentioned (ie xx/48ths).

I would therefore request you investigate your representative's conduct and ask them to suspend any further contact with me until such times as your enquiries are complete.

I look forward to a speedy conclusion to the matter.

YF

Add telephone number and email address to foot of letter.

Good luck with this.

magpiecottage

Good letter kingstreet but for now I would not admit to ANY liability.

The reason is that although clawback clauses are lawful (I draft them for firms) they have to be very carefully done. If this has not been then they may not be entitled to even two months' worth.

If the OP can force Openwork to FOS then I would not fancy Openwork's chances. In theory at least, the OP could find himself forced to pay two months' worth to the AR then Openwork forced to reimburse the lot - which its contract with the AR may mean the AR had to reimburse Openwork for that and the FOS fee.