aviva ASU policy - mis sold ?

makemesumdosh

in 1995 when i took out my 1st mortgage through a broker they signed me up for a accident sickness and unemployment policy costing £4 per £100 of cover which i'm still paying without ever claiming.

in the process of moving my mortgage now and when i had the interview the guy at the bank queried why i had the ASU policy as i work for the NHS and i get 6 months full pay if off sick then 6 months half pay which is topped up with benefits. also if i am made redundant i would get 2 years salary as i have in excess of 24 years service.

its got me thinking why do i have this policy and was it mis sold due to the generous sick pay i receive from work.

any advice accepted

magpiecottage

The FSA has specified that, £9 per £100 in redress calculations so £4 is very cheap in comparison.

However, whilst I understand what the bank's salesperson is saying, it overlooks the fact that in 1994, you had considerably less service than you do now. If it was your first mortgage, you would have been entitled to six months' sick pay and six months' half pay but even the more generous redundancy payments would only have been one week's per year of service up to 104 weeks so I think you would have received substantially less.

There can also only be a missale if it was not done according to the law or any voluntary codes the broker subscribed to at the time and in 1994 there were none for either mortgages or general insurance.

Furthermore, an independent broker would not be subject to the jurisdiction of the Financial Ombudsman Service in respect of a general insurance taken out so long ago and if you attempted to sue, they could rely on Section 14B of the Limitation Act 1980 to timebar your complaint.

So I am afraid you are onto a non-starter.

dunstonh

in 1995 when i took out my 1st mortgage through a broker they signed me up for a accident sickness and unemployment policy costing £4 per £100 of cover which i'm still paying without ever claiming.

Thats a good price for a 1995 policy. I recall premiums being around £7 per hundred more commonly back then for bank provided products. Whole of market is always cheaper than banks. That is why you should never buy insurances from a bank. Plus, you have an ASU. ASU terms from that period are often more favourable than MPPI terms today. The bank sales rep would not be able to ascertain that without a proper analysis and as a tied sales rep, they are not actually allowed to with other provider products. So, be on guard. The sales rep may be saying you dont need that but can use the money for their products instead.

in the process of moving my mortgage now and when i had the interview the guy at the bank queried why i had the ASU policy as i work for the NHS and i get 6 months full pay if off sick then 6 months half pay which is topped up with benefits. also if i am made redundant i would get 2 years salary as i have in excess of 24 years service.

Whilst you have lesser need for it than others, the purpose is for you to use the money to pay the mortgage and not rely on your redundancy to pay bills. Also, the redundancy payment is what you get now. It would not have been that high in 1995 as you had 15 years less service.

You have no mis-sale but you may have a lesser need that may be better off with a PHI now rather than an ASU. That doesn't make the advice bad. It is just brining your products up to date with your current circumstances and not those of 15 years ago.

makemesumdosh

Thanks for the advice, i will probably keep policy for time being.

Working for NHS means no job is safe at moment thanks to goverment cutbacks and the fact that all NHS Trusts seem to be cutting staff levels. The hospital i work at have offered all staff voluntry redundancy under the MARS scheme (half a months pay for every years service up to max years pay) so depending on how low the take up is they may be compulsery redundancies which would mean a months pay per years service up to 2 years salary. This option would mean i could claim on the policy if the worst happens.