Is this mis-selling

markymark29

My son took out two loans with Halifax approx two years ago, whilst helping sort out his finances recently we discovered he had PPI on both loans. He is self employed running his own business and we asked why he had this. He says he was told by the bank that if he didn't take the insurance he probably would not get the loan (twice) 19 at the time. He has been on to the bank to try and cancel and has been told he should have done this inside 30 days, does anyone know if something can be done about this and the best way to go about it.

Also when he asked about consolidating the two loans in to one he was told he could not do it as his credit has deteriorated and would not be accepted for a new loan?????????????

Any advice would be helpful

jonesMUFCforever

Halifax I assume are telling the truth!
If his credit score now is not good enough for Halifax then he has to find another finance company willing to take him on.

Moonbeam

If your son believes he has been mis-sold a policy he can write/phone into Halifax customer services or contact his local branch (who should transfer the complaint to customer services straight away).

If he has the original paperwork that can be useful as they will be able to track who sold him the PPI(if not they should still be able to do this using the reference numbers). Being self employed does not mean that PPI isn't necessary - it can still be used to claim for life, critical illness, if the company folds and other things.....see the policy booklet for more info. He should think carefully before cancelling it as it may be an appropriate thing for him to have.

They are right that he cannot cancel the PPI part of the loan only and would need to repay both loans in full, but I'm curious to know if they did a new application for him to consolidate? It may also not be worth consolidating if interest rates have risen since he took out the original loans.

In terms of PPI being a requirement of the loan that is simply not true - I think that the ombudsman would take a negative view of that - but first port of call before involving them would be to speak directly to Halifax.

Hope this helps.

Astaroth

It is seen negatively but isnt not allowed.

PPI will protected people who are self employed though so this isnt a reason enough to say that it is miss sold

Laurenbelle

As previously stated you would still be covered if self employed, if you did want to cancel the insurance it would be a case of keying a "like for like" loan where the consultant would get a settlement figure on the loan (remember this already has interest added on) over the remainder of time left and it owuld have to be approved but remember the interest rate could change. So your settlement figure would incl the interest and a new set of interest would be added on (depending on the APR you are appoved at). Hope that helps!

Nienna_2

It depends on what the PPI covers.

If (and this is pure speculation) there was a life insurance element to the PPI and he had dependants then it could be seen as a useable benefit. If there was an element that covered chronic/terminal illness (ie cancer) and he unfortunately developed this then he could in theory claim on this against lose of earnings.

It all depends on what is in the PPI. I would get the paperwork out and see if the payout circumstances benefit someone who is self employed or if it only applies to employees. (For example a redundancy element wouldn't do much for the self employed)

As for the refinance option to clear the PPI, unfortunately sometimes the credit score changes and it becomes impossible for the lender to arrange a new loan - which is what refinancing actually is - taking another loan.

Bear in mind that sometimes the bank has no control over what that money is spent on - it is paid into the customer account and they are then responsible for settling their debts by paying off the existing loans. So once its granted the customer could go and buy a new car and not pay off the existing loans - especially if they are held with a different financial institution. (Banks will often deal with their own internal debt while the customer is in the branch to ensure this doesn't happen and also makes it easier for the customer to pay off what they owe.)

This wouldn't help the customer but it would be the customer's choice to be that foolish. They then end up ith twice the debt as they haven't paid off the existing debt with the new loan.

Sometimes a bank will not lend if there is no protection in place - ie: income protection, savings to back up the payments, a regular surplus in salary every month that won't change are some possible examples. If it was sold to him when he had told the bank there was no way to pay back the loan if his income stopped they may have calculated he could afford the protection payments and recommended it to protect them and him. It would have been his choice to sign the papers under these circumstances though. I seem to remember been offered loans in the past with the condition that I can find a way to repay if something happened to me (I personally have income protection. Well worth looking at esp when young as it can often be cheaper). It doesn't have to be the banks policy though. It may be that you can purchase an outside policy which can be cheaper.

This is my understanding but please don't take it as official advice or as fact. You need to find out exactly what the circumstances were surrounding these loans and speak to the bank who are the only ones who can give you a definitive answer for how he got these loans and the PPI.

In summary, I would get the paperwork, check it over, see if theres anything he could realistically claim against, check with the banks lending dept if theres a problem or questions, and then if you do find evidence of mis-selling, take it up with the bank first.

They will almost certainly be able to track the lender. Its usually logged on the computer system under an employee code - same as you can normally tell who sold you a coffee in a cafe by the log on the till code. Most retailers use some kind of accountability system like this - especially where contracts are involved.