Santander refusing to pay out on PPI claim

edited 30 November -1 at 1:00AM in Reclaiming Mortgage Fees, Council Tax, etc
4 replies 3.5K views
mandyt12mandyt12 Forumite
80 Posts
Hi all

My in-laws took out a loan with Alliance and Leicester around 9 years ago and also took PPI, they answered all the medical questions required and were accepted. Approximatley 20 months ago (after Santander takeover) they applied for a top up loan over the phone, but were never asked any more medical questions or if anything had changed etc. (In the 7 years after the inital loan my FIL was diagnosed as having bowel trouble, but nothing life threatening) Jump forward to December 2010 and my FIL was admitted to hospital with breathing problems, again not life threatening, but he subsequently contracted pneumonia, and sadly died aged 67. My MIL contacted Santander mid January and informed them that she would like to make a claim, she was told that they would cancel her future payments and sort the claim out as quickly as possible. Approx mid Feb, she received a letter asking for permission to access my FIL medical records, which she gave, only to get a letter a couple of weeks later saying that the claim was not being honoured as my in-laws hadn't declared he was ill. She explained about the top up loan without medical questions etc, but they weren't interested. She has now received another letter saying they will repay all her PPI payments (totalling just short of £2,500) as it was mis-sold, but that will be the end of the matter as far as they are concerned, and she still owes them over £9,000.
My MIL has been to CAB and Debt agency, but nobody can give her any advice on what to do. She is 69 years old, retired and only has her pension to live on ??
Does anyone have any advice that I can pass on to her as its making her ill.I've given all the information I have, but if more is needed I can always ask my MIL.

Thanks for taking the time to read this, I know it wasn't easy. ;)


I originally posted this on the Loans board, but was advised to put it on here, so there are two threads with the same title.....sorry


  • dunstonhdunstonh Forumite
    107.5K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    It sounds like there were two different policies involved.

    PPI does not require any medical questions to be asked. So, the first plan of 9 years ago is unlikely to be PPI. When the top up was done nearly 2 years ago, they either used a PPI for the new amount or replaced the old policy with a new one or the old one is still in place.

    PPI is underwritten at point of claim. So, if a pre-existing condition exists, that will normally result in a the claim being voided if the reason was linked to the pre-existing condition.

    Unfortunately, PPI is not life assurance. In this case, the product that was needed was life assurance. So, whilst the PPI wasnt suitable given the pre-existing condition, it still want the product that your FIL needed to take out.

    So, I am not really sure anything can be done about it to be honest. That said, if the PPI did have a death clause (some loan ones do), then it may be worth following up if the death was unrelated to the conditions that existed prior to application.

    One other possibility is looking into the old plan details. If Santander recommended cancellation of a better quality insurance for a lower quality one, then that could be a mis-sale as they shouldnt be doing that.
  • Hi Dunstonh

    Thanks for the reply, in answer to one point, yes they did have a death clause on the policy, this is what my MIL was trying to claim on. He died of something totally unrelated to the pre existing bowel condition, but they still refused to pay out.

    And I'll get her to dig ALL her paperwork out relating to the original loan, and have a good read through myself, although I'm not too sure what to look for.

  • dunstonhdunstonh Forumite
    107.5K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    It may be worth issuing a complaint to Santander then.

    PPI nearly always refuses to pay out on pre-existing conditions but not unrelated conditions. It looks like they are being too quick to refuse in this case, based on what you have said.

    If a complaint is made to Santander, they have 8 weeks to investigate. If they reject the complaint within that period, you can then go to the ombudsman. The ombudsman is an independent arbiter of complaints. Although it does have a slight consumer bias as it considers fairness and not just the letter of the law.
  • Thanks for the advice, it's greatly received and I shall tell my MIL what you have said.

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