Business Loan Repayment Insurance

benita_2

Hi. Ethical practice or not? We recently purchased a business using own capital and business loan from bank. Is it normal practice to pay the insurance premium in full, up front for the term of the policy? The bank paid the insurance company in full then added this amount to our business loan which increased the amount borrowed by over £13.000. We are now faced with paying over £10,363,08 in interest alone just for insurance cover. This will bring the grand total for the policy to over £23.000 for 15 year cover. That is, if we don't see interest rates rise further. What are your comments please?

:mad:

jasonking

The FSA are currently investingating this type of insurance, especially when it is paid in this way. I suggest you complain to your bank to see what they say. Find out exactly what is covered, is the cover a condition of the loan (they might try to make out it is when in reality it isnt so look carefully at the loan agreement.) challenge the bank about what is covered and do you need it. You may well be able to get equivalent/better cover elsewhere, on a monthly premium etc.

Good luck and let us know how you get on

defender_of_the_weak

Gross mis-sale, we have taken a small number of these complaints on and although some have ended up with the financial Ombudsman, due to the disgraceful way some of the banks have tried to worm out of their responsibility, the complaints have won and clients received back their original premium plus interest. I am sure the money would be better served in your business than paying commission to whoever arranged the policy.

Businesses by their very nature change over time and with the best will in the world people change or the busines changes. You are buying something which in 5 years time you may not need. If the business takes off, which I hope it does, you might pay the loan back in 5 years. You will then have paid for a policy to protect nothing.


From the point of view of my business, knowing that there are still big financial institutions treating people so badly, means I will be in business for a number of years to come putting right the messes they continue to create.