Refused car insurance by direct debit

mattdud

I took out a car insurance policy out with Santander on 12th March 2011 online via moneysupermarket.com. I paid my deposit and filled out my direct debit details. All good so far. Received my policy documents in the post which is when I realised there were some errors including only one claim entry instead of two. I then received a phone call from Santander to tell me that my credit check had been unsuccessful and therefore I couldn't pay by Direct Debit.

When I questioned this they told me that as of the 1st March all insurance companies carry out credit checks and if you fail you have to pay in full!! I explained that I couldn't pay and the lady asked me if I wanted to cancel my insurance there and then! I said no and made an official complaint through their complaints department.

I received a letter from Santander a few days later saying that my premium needed to increase due to an undisclosed claim that they had found. I have only made two claims in the last five years. One fault and one non-fault; both of which they knew about. When I checked my other details I discovered that a lot of my personal details had been incorrect. I called customer services who promptly changed them. I even had a letter to acknowledge this.

Finally today, I received a letter informing me that as of the 31st March my policy was going to be cancelled. No explanation was given. I called them and they told me it was because I couldn't pay in full and I hadn't declared all my claim history!!!!!!

After this call I spoke to the FSA and the Financial Ombudsman and made an official complaint against both Santander and their underwriters. The FSA were not aware of any new government legislation forcing credit checks to be carried out.

My arguement, apart from the unfair cancellation of my policy, is that it now appears that only the elite few, those with perfect credit or those that are rich, can have car insurance. In 19 years of driving and having car insurance I have never had this problem before.

Can anyone tell me if this is correct and if so what can be done about it? Also, how do I deal with this situation to my advantage?

Thanks.

Matt :mad:

adamc260

Insurers don't have to offer you the right to pay monthly as it's essentially them loaning you the money and you paying it back over a period of time.

Santander are awful in every respect and I can't see how the insurance side is any worse!!

Hope it gets sorted soon for you though

raskazz

It is correct. The Consumer Credit Directive applies to consumer credit agreements and requires lenders to carry out a check of the borrower's creditworthiness and lend responsibly. Clearly in this case the check indicated that the giving of credit in this instance would not be responsible lending. As such, not only can the insurer/intermediary choose to not lend to you, they would be in breach of the directive if they did to you knowing that your lack of creditworthiness indicated that lending to you would not be responsible lending. They do state on their website:

"Can I pay by instalments?

To use our credit facility you must be resident in the UK, aged 18 years or over and hold a bank or building society which supports Direct Debit. Credit is subject to status.

We work exclusively with Premium Credit Limited a non-connected third party company. We will send your details to Premium Credit for them to assess your application for credit. If this is accepted they will set up your instalment plan and send you the relevant documentation regarding your instalments. Paying by instalments may include a transaction fee."

With regards to the discrepancies on the documentation, comparison sites often pull incorrect information to the individual insurers (despite the comparison sites protestations to the contrary), it is up to you to check that the information is then correct on the insurer's website not just the comparison site.

I'm really not sure that you can "turn the situation to your advantage" unless you exercise cancellation yourself; if you wait for the insurer/intermediary to cancel then you will have to declare on all future applications that you have had a policy cancelled.

mattdud

Thanks for the replies but the fact that they didn't tell me that they were carrying out a check is an issue. Obviously I cant have insurance by the sounds of things which is unfair. Are all insurance companies doing it? Who do people recommend I try for a quote?

dunstonh

After this call I spoke to the FSA and the Financial Ombudsman and made an official complaint against both Santander and their underwriters. The FSA were not aware of any new government legislation forcing credit checks to be carried out.

The people answering the phones at the FSA wouldnt know half the things that are going on. There is no direct legislation requiring credit checks. However, the FSA themselves state that lending should be affordable and sensible. As you are using a credit agreement to pay monthly then it is logical for a credit check to be done. So, failure to lend money responsibly could see them in breach of FSA guidelines and subject to fines from the FSA.

My arguement, apart from the unfair cancellation of my policy, is that it now appears that only the elite few, those with perfect credit or those that are rich, can have car insurance. In 19 years of driving and having car insurance I have never had this problem before.

Credit is not a right. You have to earn it. With all the loophole chasing firms out there and consumers looking to shirk their responsibilities, it is no wonder that what was once really an informal credit agreement that was full of holes has been tightened up to comply with regulation.

You have had some naff service from them but the decision to offer lending facilities is a commercial one and not one that the FOS can rule on (not that the FOS will look at your complaint at this time). The FSA will not look at your complaint as its not their remit and the staff on the phones wouldnt know the regulations (they wouldnt be answering phones if they did).

but the fact that they didn't tell me that they were carrying out a check is an issue.

They do tell you. copied and pasted:

The information you provide may be used to carry out certain credit checks through licensed credit-referencing agencies. This is used as part of the underwriting process for some of the insurance providers and a record of this search will be made although this will not adversely affect your credit profile.

FlameCloud

They did tell you though- through the T&C's which you clearly read through on their website given you agreed to them.

They are saying you cannot have credit, which is fair- it is their money after all so why do they have to lend it to you? They are not saying you cannot have insurance with them.

mattdud

The info on the credit check was not in the terms and conditions which i did read! It was in the privacy policy which was not obvious! Seems to me that I am allowed to be be treated like this then. I'd best sell the car and work nearer home as I am not worthy to have car insurance unless I pay in full!