Unresponsive broker - what next?

waterbaby

dunstonh wrote:

If you signed a fee agreement as it appears you have, then you are basically stuffed. However, if the commission for the mortgage covers it, then you are ok. However, that fee agreement also means that if the insurance commission is above 2% of the advance, with the mortgage commission, you should be rebated the difference.

I'm sorry to be slow but I didn't quite grasp that bit Is it that if insurance commission + mortgage commission > 2% of advance, they should pay me the difference?

If so, how do I go about finding out how much the commissions are?

dunstonh

The fee agreed was 2% of the mortgage which equals £2000. If the commission from the mortgage AND the life cover is in excess of £2000 then he should be rebating the difference back to you.

When this particular option is chosen (and it is a valid option), the commissions earned must be disclosed to ensure no fraud is taking place. You can check the mortgage KFI (quote and figures etc) for the mortgage commission and the life assurance illustration. The life assurance commission isnt required to be disclosed unless it is being used to offset a fee.

Leon_W

I think you've been had.


In return for them not making a charge you have commited to paying the life insurance premiums for 3 years. The charge I would consider extortionate anyway.

Now, some brokers may say, well, I've spent all this time researching and applying etc on your behalf so I will need payment for this time. Some brokers will indeed write this into any fee agreement. I'm not convinced and personally I don't believe its the right way, it's still pretty uncommon though.

MGM are weird. No idea why this company should be chosen over more recognised providers but I suspect higher commision (or tied).

I hope you were advised not to cancel any cover until the new policy is in force ? You don't say.

Let us know how you go as I'd be interested in how it turns out.

budgetflyer

Waterbaby said the premium was comparable with existing policy so I dont think they have "been had".It all depends on the "work " involved to get a suitable mortgage.
Waterbaby-Could you not contact the insurer direct to find out whats happening ?
If they arent going to insure you then you will need to sort out your own and just avoid any further contact with broker in case you "remind" them you owe them £2K (unless theyve been paid anyway)

Conrad

Waterbabe

MGM is poor value. Almost certainly this firm is tied to them. I bet he hasnt told you the critical ilness definitions are way inferior to those you already have with your existing policy? You as a layperson will not realise the significance of this until its time to claim.
I suspect your existing insurance is at least 2 years old so probably has better definitions (ie a claim is more likely to be paid out)

You need to see a proper old fashioned honest IFA and get alternative quotes or keep the policy you have (sounds like the new one may end up with extra exclusions as medical investigation are taking time)

The FSA will quite likely say the broker is not treating you fairly. I used to have a life commision clawback agreement in place but I found out tfrom the FSA that it was against the spirit of the rules, so I abandoned it.

In other words 2% is too high a fee. Im sure you will find this is in addition to the lenders commision.
Dont take the life policy unless you are sure its in your best interest and complain about the high fee. They will probably tell u that u have no case, in which case then complain to the Financial Services Ombudsman.

THE BACKBONE OF YOUR CASE IS: You were not made fully awar of the IMPLICATIONS of not taking thier life policy and you had been told THE NEW LIFE POLICY WOULD BE AS GOOD IN ALL RESPECTS AS THE EXISTING ONE.

Conrad

budgetflyer wrote:

Waterbaby said the premium was comparable with existing policy so I dont think they have "been had".It all depends on the "work " involved to get a suitable mortgage.
Waterbaby-Could you not contact the insurer direct to find out whats happening ?
If they arent going to insure you then you will need to sort out your own and just avoid any further contact with broker in case you "remind" them you owe them £2K (unless theyve been paid anyway)

Definitions and exclusions is the key comparible not cost. In the event of a claim this becomes very clear.

Many advisers will be sued for replacing policies with inferior models, particularly newer policies which generally have far worse definitions.

Laypeople cannot be expected to have been able to determine which policy was best, so advisers will be sued in thier thousands.

I predicted the endowment and pension clouds 20 years ago. At the time advisers chuckled that I was over reacting. Not laughing now thought are they.

waterbaby

Leon_W wrote:

MGM are weird. No idea why this company should be chosen over more recognised providers but I suspect higher commision (or tied).

What does 'tied' mean?

Leon_W wrote:

I hope you were advised not to cancel any cover until the new policy is in force ? You don't say.

No! Luckily I haven't, although I don't know if what I had before was connected to the last mortage and so is somehow void. Hopefully not.

waterbaby

budgetflyer wrote:

Waterbaby said the premium was comparable with existing policy so I dont think they have "been had".

Yes, the cost was almost identical and the conditions were about the same in number but some of them were different so, being sceptical, they are probably less common or cheaper conditions.

budgetflyer wrote:

Could you not contact the insurer direct to find out whats happening ?

Yes I'll do that.

waterbaby

Conrad wrote:

Waterbabe

MGM is poor value. Almost certainly this firm is tied to them. I bet he hasnt told you the critical ilness definitions are way inferior to those you already have with your existing policy? You as a layperson will not realise the significance of this until its time to claim..

The thing is, they never looked at what I had, they told me that MGM is how they make their money and would I like to proceed. I totally agree that I am a layperson and didn't realise the significance, but how would I counter the defence that I agreed to proceed having seen what was being offered?

Conrad wrote:

You need to see a proper old fashioned honest IFA and get alternative quotes or keep the policy you have (sounds like the new one may end up with extra exclusions as medical investigation are taking time)

I think we're ok on that as the tests found no problems and there is no need for any medical intervention/check ups etc.

Conrad wrote:

In other words 2% is too high a fee. Im sure you will find this is in addition to the lenders commision.

What sort of fees do brokers usually charge then? It would be useful to know then I can query why it is out of line, having gathered some evidence.

Conrad wrote:

THE BACKBONE OF YOUR CASE IS: You were not made fully awar of the IMPLICATIONS of not taking thier life policy and you had been told THE NEW LIFE POLICY WOULD BE AS GOOD IN ALL RESPECTS AS THE EXISTING ONE.

But I hadn't been told it was as good as the existing one, they never asked about it. Does that spoil my case?

waterbaby

Conrad wrote:

Many advisers will be sued for replacing policies with inferior models, particularly newer policies which generally have far worse definitions.

Laypeople cannot be expected to have been able to determine which policy was best, so advisers will be sued in thier thousands.

I'm well up for this!! I just really need to understand what my own argument is. Initially it was just that they are not responding to me, however the silence is very telling isn't it. It's fuelling my fire.

So it seems my major complaint is that I was sold insurance that was not suitable, or was inferior to what I had, and that this is not acceptable because they should have been acting in my best interests?