Final Stages Reclaiming MPPI

Bridgykoi

Back in 2002 we arranged a mortgage for £21950 over 14 years, we was sold a life assurance and critical health insurance to cover this amount over 25 years on a repayment basis at £31.08 per month, this wasn't suitable due to the term.
we should have been sold a decreasing policy over a 14 year term not a 25 year one, covering £21950.

The ombudsman Adjudicators decision:

Mr ? & Miss ? do not appear to have any particular experience in financial/mortgage matters and it is therefore to suggest they were reliant on the expertise of the mortgage advisor to ensure their protection requirements were appropriately met.

A recommendation for life and critical illness cover for mortgage protection is by no means unusual and given my understanding of Mr ? and Miss ? circumstances i am minded to conclude such recommendation was reasonable,however it is clear the policy they were sold did not match their mortgage and it can therefore be said this is unsuitable.(Mis sold????)

I believe MR ? and Miss ? should have been recommended/sold a decreasing term assurance,providing life and critical illness benefit over a term of 14years and with a sum assured of £21,950.

Therefore in order to resolve this complaint i recommend (Bank) ascertain what the monthly premium for the policy described above would have been,based on the original underwriting and compare this with the premium of MR ? and Miss ? actual policy.

In the event the premium for the proposed policy is less ,then (BANK) should look to refund the difference on each premium paid up to date of settlement , with additional interest of 8% Simple.

In addition (BANK) should also look to pay a sum equal to the difference in premium from date of settlement up to might otherwise have been the final premium payment date of the policy I.E September 2016.

Should the premium for the proposed policy prove to be more expensive than what MR ? and Miss ? are paying then i would conclude they have not been financially disadvantaged up to this point by the advice they received and whilst upholding their complaint, no redress is due.


The bank have accepted the Adjudicators decision and i need to accept this decision by March 12th, the problem is the bank will only calculate what i should be given back, pending my decision to agree the adjudicators decision.

I have tried comparing both fixed and decreasing policies taking into account i was 10 years younger, and it seems a decreasing policy over 14 years is around 40 - 50% cheaper over a 25 year fixed term policy.

Could i therefore assume i'm due a return of 40-50% of what i paid in.

I have obviously got the option to refuse the adjudicators decision and would have liked to see the banks calculation before accepting this decision.


Your thoughts

Thanks

Bridgykoi

dunstonh

Could i therefore assume i'm due a return of 40-50% of what i paid in.

No.

The bank will use the pricing of their own products and not those on the open market. They will also likely use 2002 pricing and not 2012 pricing (life assurance is cheaper today than it was in 2002).

I have obviously got the option to refuse the adjudicators decision and would have liked to see the banks calculation before accepting this decision.

Effectively, you will get the difference of premiums [it would have been had 14 years been used] refunded plus interest.

There is no reason to refuse the adjudicator decision. It is logical and exactly what you would expect on a simple case like this. I am surprised the bank rejected it as it is a simple open and shut case with a nice clean resolution.

Bridgykoi

Thanks for your response.

Do you think the margin between the 2 polices back in 2002 would have been roughly what they are today.

Am i right in thinking a 14 year decreasing policy is far cheaper than 25 year fixed.

Thanks

Bridgykoi

dunstonh

Do you think the margin between the 2 polices back in 2002 would have been roughly what they are today.

More or less that makes little difference.

Am i right in thinking a 14 year decreasing policy is far cheaper than 25 year fixed.

If you were in your early 20s at the start not that much but older than that then yes

Bridgykoi

Thanks again

I was actually 27 and my partner 40.

I have now accepted the decision and hope we get a fair calculation and it is dealt with within a reasonable time frame.



Bridgykoi