Mis-sold insurance/mortgage?

mfsxldab

Hello, I'd love some help on where to start with this.

About 5 years ago my (then) 60 yr old father and wife took out a remortgage of about £120,000 to buy a holiday home. It's a 20 year mortgage which is now crippling them financially.

My dad received a notice from the building society the other day informing him that the insurance he had taken out on the mortgage doesn't cover him past the age of 65 (which he turns in August). He was shocked as he assumed it covered him for the length of the mortgage. It wasn't made clear to him at the time and he's pretty angry because he says he would had never taken out the mortgage without the safety net of protection.

In the first instance he feels he was mis-sold the PPI because he had no idea it would expire after only 5 years. Secondly he feels duped because he'd never have agreed to the remortgage if he knew the PPI would not cover him past 65.

What should he do? He doesn't really know what options he has. I've told him about this site and the PPI advice, but is there anything he can about the whole mortgage? How can a lender reasonably assume affordablility for a couple that close to retirement? The repayments are up towards £1k a month!

Thanks in anticipation.

ACG

PPI or not PPI how was he intending to pay for it post retirement?

If anything its a good job the PPI has stopped as it frees up some money to pay towards the mortgage that would hav eotherwise gone on insurance?

The PPI paperwork will also state that it stops at a certain age.

It sounds like everything wasnt explained to him properly, but at the same time if you making a large purchase or entering into a contract it makes sense to read the paperwork- people have to take responsibility for their own actions at some point.

Was it an advised or non advised sale?

betmunch

how did he think he was going to pay the mortgage after stopping work? Theres no insurance that will pay out if you choose to retire. If its PPI as you say then his retirement income isnt ever going to stop even if he becomes ill or has an accident. I'm sorry to say I really dont think there is likely to be a claim here. If it was an advised sale, slim chance of something back, if non-advised forget it. Either way, simply sell the property and pay back the mortgage and the problem of the monthly payments goes away

dunstonh

My dad received a notice from the building society the other day informing him that the insurance he had taken out on the mortgage doesn't cover him past the age of 65 (which he turns in August). He was shocked as he assumed it covered him for the length of the mortgage. It wasn't made clear to him at the time and he's pretty angry because he says he would had never taken out the mortgage without the safety net of protection.

Did he not ever read the documentation?

In the first instance he feels he was mis-sold the PPI because he had no idea it would expire after only 5 years.

Can he prove he didnt know?

Secondly he feels duped because he'd never have agreed to the remortgage if he knew the PPI would not cover him past 65.

That's pushing the boundaries of believability. Sorry but it is. Insurance is to cover events that may happen in a minority of cases. On the assumption that he would never have used it (even if it had gone the whole term) how did he intend to repay the mortgage?

How can a lender reasonably assume affordablility for a couple that close to retirement?

Pretty easily. It wasnt a residential mortgage for primary residence. It was a commercial arrangement. One assumes he presented his views on what income it would generate and the lender accepted that.

holly_hobby

Firstly it is important to note, that your Father does not hold a PPI policy in connection with the mge, as PPI are sold in connection with personal finance, what your Father purchased was an ASU/MPP policy - so please don't go down the highly publicised "reclaim your PPI" route - as this isn't the policy he holds .

His ASU/MPP policy is designed to pay the mge for a period upto 12 mths, if the insured is unable to work due to sickness, accident or redundancy - therefore the provision of cover will naturally cease at the clients NRA. (or the NRA of the contract, which for a male of your Dads age when it was effected, was 65 yrs. After which point, he is in reciept of retirement income (occupational and/or state - which isobviously not affected by sickness, accident or unemploment). The affordability/servicing of his residential mortgage (which is residential not commercial, despite the fact it was use dto pch a holiday home) post your Dads retirement, would have also formed part of the advised sales process.

If this was an advised sale, then the terms if the ASU contract, should have been explained, futher to which the cessation age of the cover would have been published within the POS literature such as KFIs, illustrations, and should have been noted within the Fact Find by the adviser. Although it must be stressed that it is reasonable to expect the client to also read through the terms of the policy, to ensure that theyare both suitable and appropriate to their requirments.

Hope this helps

Holly

mfsxldab

Thanks very much everyone for your replies.

In my dad's defence, personal matters clouded his judgement, the whole debacle was instigated by my mum who'd recently recovered from a several years of deep depression. He went along with her manic optimism because he was happy to have his wife back. As the reality took hold the whole thing sent her back into depression. So... happy days really. It's a matter of deep regret for the both of them.

Holly, thank you for giving me such clear and helpful information. I've got a few more questions if that's alright. What's the Fact Find? Is it a document he should have? They'll have all the original stuff they were given because my mum never throws anything away. Also, is he able to take the Society to task over their selling of this product to him? Should he just make a formal complaint? I guess if it was in the literature then it's his fault for not twigging. It's just that with him being so close to retirement age he kind of expected them to point out any exceptions. He's pretty angry that he missed it and that it wasn't made clear. He was naive I agree, but to be fair he's only got a mortgage out once in his life, and that was 40 years ago.

Thank you.

kingstreet

Was the mortgage/insurance sold via an intermediary or direct by a lender?

An advised sale is normally the route an intermediary takes. This involves gathering data using a factfind; analysing the data and matching it to the products available. A key facts illustration is produced and a suitability letter provided which justifies how the recommended product best suits the borrower's needs.

A lender will typically listen to a borrower's request, then provide a quotation for the product in its range which will best suit the borrower's needs. The borrower accepts or rejects the offered product, but does not receive advice, or recommendation, so there would be no audit trail which could be followed.

What documentation does he have? Initial disclosure documents? Key facts illustrations? Suitability or recommendation letters? Copy of factfind or application?

I do have to ask one question though. If he borrowed £120k five years ago, over 20 years, what as he expecting to happen when he retired?

dunstonh

What's the Fact Find? Is it a document he should have?

On advised cases, a mortgage adviser would complete a factfind. There is no need to supply it to the individual. A mortgage application virtually duplicates a factfind apart from a handful of areas. On non-advised cases, there would be no factfind.

Also, is he able to take the Society to task over their selling of this product to him?

He is entitled to complain that it was mis-sold but nothing suggests it has been. People do forget. Indeed, just today I had a stern phone call with someone after they told me that I didnt tell them something. I did several times and I also put it in writing as well as it being on the illustration. It was only when I reminded him of the conversation that he then remembered it. In general, people normally forget around two thirds of what is said in a meeting. This is why the documentation exists. In a complaint, verbal allegations of what may or may not have been said carry little weight. Documentation is King. That doesnt allow documentation to cover up wrong doing but if no evidence points to wrong doing then you would expect a rejection.

There is also nothing wrong with the product and the need for the period of 5 or so years.

In some of the posts above you have been asked questions. It would help if you could answer them. Also, can you confirm:
1 - whether this was a residential mortgage for primary residence or an investment property mortgage/commercial mortgage (normal for second properties).
2 - was this an advised or non-advised mortgage application

These are key questions as non-advised means he wasnt given advice so cannot complain about the advice (as there was none). Also, consumer protection for investment properties is far less than for residential mortgages.

holly_hobby

Hi,

Kings & Duns. have explained what a fact find is, and what is an advised sale, and what is not an advised sale.

OP to answer Duns. question - can you confirm this was a remortgage on Dads own private home ? Or was it a mortgage actually secured on the holiday home itself ?

OP - the sale of an ASU policy would only be inappropriate if your father had sufficient occupational accident and sickness benefits (that he had disclosed to the adviser) that would continue for 12 mths (until NRA if a lesser time frame) under claim, and he had a gted redundancy payment that would be in excess of the benefit under the plan before his 65th bday (ie NRA).

You can not assume it was mis-sold, and indeed it will only have been so, if he had sufficient benefits held elsewhere (that were disclosed as part of the sales process), or the benefits and terms of the policy are proven as being mis-represented - but NOT on the basis that your Father simply assumed it would continue till he was 80, that he didn't read the documents, or can't remember what he was told at the time.

Hope this helps

Holly

Thrugelmir

mfsxldab wrote: »

About 5 years ago my (then) 60 yr old father and wife took out a remortgage of about £120,000 to buy a holiday home. It's a 20 year mortgage which is now crippling them financially.

Is this the real issue? A business venture that's not performed as was expected.

Is there a problem with selling the property to discharge the mortgage debt. I assume at the moment that your parents are subsidising the mortgage and property running costs. As there's insufficent income to cover the cash outgoing.

neverdespairgirl

mfsxldab wrote: »

It's just that with him being so close to retirement age he kind of expected them to point out any exceptions. He's pretty angry that he missed it and that it wasn't made clear. He was naive I agree, but to be fair he's only got a mortgage out once in his life, and that was 40 years ago.

Thank you.

To be fair the other way, though, most 60 year olds are quite capable of looking after themselves. My Dad is 62, and he'd be well unchuffed if he was treated like a semi-senile muppet because of his age!