Mis-sold PPI?

lxpeanut

I'm wanting to cancel the ppi on my Halfax loan and looking at the agreement as it stands my monthly payments would go down by about £40. I looked through the conditions and it mentions that once the ppi is cancelled you need to rearrainge the loan. I suspect that they would recoup the money by raising the interest rate also they may refuse to rearranige as I'm in arrears. I can't go to another company as I'm in arrears and wouldn't be granted another loan.

When I origonaly took out the loan I was told that I would not be able to borrow the amount I needed without taking out PPI with them. I've also worked out that if I needed to claim on the policy due to unemployment the 12 months they would pay would cost them less than the policy cost me. I feel I was mis sold the policy but I'm not sure if I would have a legal basis for this. Can anybody offer any advice?

Astorette

From what you are saying the bank felt that they wanted the added protection of your loan being paid in the event of sickness or unemployment as they did not feel you would have sufficient funds coming in to guarantee the monthly repayments in those circumstances.

It was made very clear that the loan was granted under the condition (terms and conditions)you had PPI so therefore if you want to cancel it then you would need to get a `new loan` agreed without Protection.

I dont feel you can argue you were mis sold as the bank made it very clear that it was part of the agreement and you agreed to it. You had the option at the time to work out what the PPI payments would be.

All you can do is to contact them and ask what your options are and whether they would consider a loan without PPI, but if you are already in arrears they may not agree as they would feel justified in wanting at least some form of protection.

defender_of_the_weak

Halifax ppi is a clunker and hardly worth the paper it is written in. Payment of claims is nigh on impossible due to the policy terms and conditions and it was sold in heaps to anyone vulnerable enough to put up with it. Why did they need it in the first place ? You may have gathered, we see plenty of these.

Selling conditional policies in connection with a loan is a con designed to generate extra revenue.

regularsaver1

they do not sell conditional polices - choice

but it is run through what existing cover you have

remember the policy did not only cover unemployment

Laurenbelle

Believe me when i say that Halifax cover pay out many many more loans than they don't pay out. I do believe that people don't read the insurance booklets correctly and don't think logically about what they have to do in order to have that paid out. For eg with most insurances if you are made unemployed you need to show proof that you are signing up at the job centre just the same as if you were off sick you need to send in your doctors sick lines. You just can't trust anyone these day and need guidlines to ensure that the people are giving you the correct information so as not to ruin it for everyone else.
Expensive maybe - but they do pay out!

Astaroth

I have to say that the OP seems to be looking for an escape route from the mess they have gotten themselves into and looking for someone else to blame for their current financial situation.

Whilst a single claim may have a max 12 clause (I dont know the halifax policies) and therefore on a long loan a single claim may be less than the total premium there is not a limit of a single claim on the policy. If you were made redundant got your 12 months payout. Went back to work for a year and then made redundant again you could claim another 12 months (assuming you dont find a job quicker).

Add to that you are getting life, sickness etc on top of unemployment.

lxpeanut

Astaroth wrote:

I have to say that the OP seems to be looking for an escape route from the mess they have gotten themselves into and looking for someone else to blame for their current financial situation.

Thank you for that realy helpfull comment. I am not looking for someone else to blame for my money problems. It is my fault I wasn't savvy enough to look at my options befor taking out the loan.

I do agree that ppi or better income protection insurance is a good idea. My question was are the bank allowed to make taking out their insurance a condition of granting the loan as they did when I applied for the loan?

defender_of_the_weak

Are the bank allowed to make taking out their insurance a condition

No

Tell them you want the additional payment removed as you believe it was inappropriate at the time of sale. Explain you want to re-arrange the loan on new terms due to your change in circumstances. Ask for all the previous £40s back as you believe you were mis-sold the policy at outset

Astaroth

I have to say I do not know the legal answer however the FSA website states:

http://www.moneymadeclear.fsa.gov.uk/news/payment_protection_insurance.html wrote:

If the firm insists on PPI cover to get the loan, you should consider whether you really want to take the loan with that lender

Which would strongly suggest to me that it is perfectly correct for a lender to insist you take out the PPI

From an ethical point of view I think it is perfectly reasonable for someone (bank or individual) to make a loan conditional on the fact that insurance is taken out in the same way that a mortgage lender insists you have buildings insurance to cover the property.

Defender of the weak - can we have a source for your answer?

defender_of_the_weak

This was covered many years ago when associated protection was sold in connection with a house sale. People went to estate agents and were basically told that if the agent could not 'approve' their borrowing capacity and show that they had the finance arranged they would not show properties to them. ie the agent had made a little additional commission on either the loan or protection sale. It was also raised in connection with the sales of some endowments in the late 80's and early 90's when some companies refused to offer a repayment as an alternative thereby meaning it was interest only or nothing.

This was tried on me in Stamford and when I politely declined the interview I miraculously went from an A list to a reserve B list despite having no property to sell finance in place and all the protection you could need.

I do not have a problem with a lender protecting their position but if they have explained the risk and the customer declines that should be for the customer to live with the consequences. Are these types of conditional sales still being made? Read the rest of this forum and todays postings

jhxmt

You don't have to take out PPI to get a loan.

The above taken from http://www.moneymadeclear.fsa.gov.uk/news/payment_protection_insurance.html .