Mis sold MPI

suzyt3

Hi all, I tried to claim mis sold MPI on the grounds that when hubby and I took out a mortgage for £130,000 in 2002 towards buying a tenanted flat, we already had various endowment, whole life and private pension policies, were both civil servants (19 and 20 years respectively) which ensured sick pay, and substantial lump sums and pensions on early retirement or death of either. We owned our own home valued then at £345,000, had no debts and the flat we were buying had a rental of £600 per month.We were well able to repay the mortgage even if either became ill or died. Nevertheless, the bank insisted we took out a Mortgage Protection Insurance for the duration of the loan, which we felt in our case was certainly not needed or wanted. We did not want to lose the specific flat we wished to buy so reluctantly agreed to do so. Our claim was rejected because we signed the agreement knowing what the terms were. We believe the bank treated us unfairly and caused us to spend money unnecessarily on MPI which we did not need. Do you agree?

di3004

Hi and welcome

Bumping up for you maybe MagpieCottage and or Dunstonh will be able to help on this one, good luck.

magpiecottage

You do not say what you mean by "mortgage protection insurance". It could cover a number of different things.

However, a lender can insist on whatever security it wants for a loan (well okay within limits - the Financial Ombudsman Service will not allow the bank manager to take you as his personal slave!)

I can see, too, why they would want cover. If you died, for example, your estate would be tied up whilst probate or letters of administration were sorted out. The tenant might not pay during that time or payments might not be able to be passed to the bank.

If I were the lender, I would want to be in a position where if you died a life policy would clear the loan and the executors of your estate could sort it out without the complexity of me demanding my money.

The Financial Ombudsman Service would not consider whether the bank should have insisted on insurance on two grounds:

1) It is an exercise of the bank's own legitimate commercial judgement (slavery would not be!)

2) A mortgage on a property which the borrower and their immediate family do not intend to live in falls outside the jurisdiction of the Financial Services and Markets Act 2000.

dunstonh

We believe the bank treated us unfairly and caused us to spend money unnecessarily on MPI which we did not need. Do you agree?

Most of your reasons are actually reasons to have it or totally irrelevant.

The only one with legs is the the sick pay. If you have 6 months full pay, 6 months half then there is significant overlap and that is grounds for complaint. If it was just say 3 months pay then there is not significant overlap you have a need for it. That assumes that MPI is actually MPPI and not life assurance or other mortgage protection insurance. If it is life assurance then it is an even easier complaint rejection.

suzyt3

Thanks for the replies. I haven`t given up yet and have written another letter including various documents from the time when we had the loan, to substantiate my claim that we had no choice but to accept the loan even though we were not happy with the terms of the mortgage contract and did not want or need the additional life cover protection, which I have discovered is not a legal requirement when taking out a mortgage. The Bank delayed in drafting the bond and letter of agreement which was not ready until 5th September 2002. We had already paid a deposit of £15,000 and signed the Conditions of sale for the flat and completion date was September 12th We did not want to risk losing our deposit or the flat and there was no time to sort out a loan with another mortgage provider, so we really had no choice but to sign the agreement. The mortgage was over an 11 year term. We transferred to another bank after 7 months we were so annoyed paying the extra money and cancelled the policy. We repaid the loan in 3years and 6 months. We did feel very let down by the first bank. Oh and we still have the flat!

magpiecottage

suzyt3 wrote: »

I haven`t given up yet and have written another letter including various documents from the time when we had the loan, to substantiate my claim that we had no choice but to accept the loan even though we were not happy with the terms of the mortgage contract and did not want or need the additional life cover protection, which I have discovered is not a legal requirement when taking out a mortgage.

It is not, and never has been, a legal requirement but a bank is perfectly entitled to make it a contractual requirement.


The Bank delayed in drafting the bond and letter of agreement which was not ready until 5th September 2002. We had already paid a deposit of £15,000 and signed the Conditions of sale for the flat and completion date was September 12th We did not want to risk losing our deposit or the flat and there was no time to sort out a loan with another mortgage provider, so we really had no choice but to sign the agreement. The mortgage was over an 11 year term. We transferred to another bank after 7 months we were so annoyed paying the extra money and cancelled the policy. We repaid the loan in 3years and 6 months. We did feel very let down by the first bank.[/QUOTE]

So why did you not complain back then?

If the bank has any sense it will simply timebar your complaint.