Illegal Loan???? Advice needed please :)

Amanda4242

Thanks to whomever reads/responds to my request for advice

Rougly about 5 or 6 years ago I took out a loan with Lloyds TSB. Now before I go any further I must apologise as my memory isnt what it was! I have a heart condition and the meds I take have messed with my memory!!!

I was paying for some kind of insurance on the loan and from what i remember it was about £1000 for a £5000 loan or something pretty close to that. When I took out the loan I was UNEMPLOYED and in receipt of benefits (income support) and made this very clear on the forms. Well from what I can remember I was paying the money off of the loan for probably about a year, maybe longer. Then I found out I have a heart condition, a rare life threatening condition. So I decided with advice to make a claim on the insurance.

However, the bank said that I wouldn't beable to claim because I shouldn't have been sold the insurance in the first place as I was unemployed. I fought this, but they said they were sticking to their guns, so they gave me the insurance money back. *At this point can I say that not only did I find out I had a life threatening condition, but was going through a divorce, so the £1000 was a life line and my head wasn't quite there!!* I've been making regular payments, but have had to lower the payments due to debt taking over my life.

My question is, even though I have taken the insurance money back is there any way I can still fight this as I'm now believing that what Lloyds have done is illegal. Firstly by selling the insurance to me in the first place and secondly by not paying my loan off when I have a health condition.

Is there any way with the data protection act I can request ALL information on my loan to be sent to me. By this I mean ALL correspondence sent/received by me etc.....?????? If I have this info it will fill holes in where my memory is a bit rusty!!

Any more info needed let me know and those that can help in any way please do so! Thanks very much

jonesMUFCforever

You were sold insurance which was unsuitable so the bank seemed to have refunded the insurance premium to you. Is that correct?
If so it was up to you to put this towards the loan but I suspect that the money was spent. Is that correct?

If the insurance is cancelled then you have no claim now so not sure what bank have done which is illegal?

Amanda4242

Yes thats right. I was told I HAD to take insurance, then when I tried to claim on my condition I was then told I couldn't claim as they shouldn't have sold me the insurance in the first place (even though the paperwork clearly shows I was unemployed). When I fought it they said I still couldn't claim as I was unemployed at the time so they sent me a cheque for the insurance money.

I'm just trying to get my head around it all so when I call them to sort out my payments I have every fact to hand. Looking back I should have fought them to the end then I wouldn't be in this mess,but at the time the money they gave to me from insurance was needed as I was moving house due to divorce.

Thanks for the advice

jonesMUFCforever

If you are in financial difficulties phone them up and tell them, they can then arrange a repayment plan with you without the addition of uneccessary charges or the debt being passed on to a debt collection agency.

regularsaver1

I am thinking the loan should not have been given to you at all on income support, or do Lloyds allow this?

jonesMUFCforever

We don't know why but if it was to consolidate existing borrowing it may have made sense ie have one monthly payment to cover debt instead of perhaps incurring charges on current account.

jamesd

Refund of premiums sounds about right for how to correct their mistake with the insurance. You won't get whatever cover the insurance would have paid.

I assume that you didn't use the refunded money to buy insurance that would have covered you for the health condition and didn't then continue paying for that insurance to replace the insurance you then knew that you no longer had.

The ability to simpy cancel the premiums when you claim, leaving you uninsured when you thought you were insured, is not fair but that's the way it works. If you didn't take out alternative cover you effectively demonstrated that you suffered no loss as a result of the error because you wouldn't have taken out the insurance unless you'd been forced.

turbobob

jamesd wrote: »

Refund of premiums sounds about right for how to correct their mistake with the insurance. You won't get whatever cover the insurance would have paid.

I'm not sure I agree.

To give a slightly different example, say you took out a Critical Illness policy, and make a full and honest declaration about your medical history on the proposal form. You are accepted at ordinary rates and issued with a policy. A year later you develop one of the specified critical illnesses, and make a claim. The insurance company can't then turn around and say "we made a mistake accepting you, but here's the premiums back". Its a legal contract which both the insurer and the proposer have entered into therefore in that situation you would have a valid claim.

To the OP, were you in employment at the time you tried to make a claim under the insurance?

turbobob

Amanda4242 wrote: »

Is there any way with the data protection act I can request ALL information on my loan to be sent to me. By this I mean ALL correspondence sent/received by me etc.....?????? If I have this info it will fill holes in where my memory is a bit rusty!!

Yes, you can make what is called a "Subject Access Request" under the Data Protection Act. They can charge a fee up to £10 for providing the information and have 40 calendar days in which to provide it. You should request this in writing, making clear that you are making a Subject Access Request and want a copy of your file.

keeperbear

Amanda4242 wrote: »

My question is, even though I have taken the insurance money back is there any way I can still fight this as I'm now believing that what Lloyds have done is illegal. Firstly by selling the insurance to me in the first place and secondly by not paying my loan off when I have a health condition.

So you had a full refund on your insurance premiums, which you spent, and you still think that Lloyds should provide insurance? What exactly have they done that is illegal? I presume that you personally signed for the original loan, the original insurance and the refund of the premium. If you did, I don't see what the bank has done that is illegal.

Morty_007

Hmm, I was missold insurance by LTSB about 10 years ago...in fact, thinking about it, they sold it to me when I was unemployed (well, a student) and then lied about how much I would get back if I ended the loan early (Which I did, hence the problem arose)

I don't know legally wheteher there is anything you can do about being missold the policy but what I will say is make sure they refund not only your premium but also any interest they are charging you/have charged you on the premium. On your loan agreement it should show as being "borrowed" on top of your original loan amount and will probably incur interest along with the loan.

I wonder if it is worth putting everything in writing to your account manager and branch manager citing your circumstances at the time of accepting the refund. If you can get an agreement to pay out you will have to repay the premiums. I personally don't understand what the OP being out of work has to do with buying a premium which she later tries to use to claim for illness....now unemployment, I could understand!!

And those of you being harsh to the OP, could you not be a little nicer? It's not like she is trying to break the law or get away with breaking the law, just trying to find out her options.