Mortgage protection

conners1

5 years ago my girlfriend and I bought our first house.

We found our mortgage deal through an independent financial advisor. The mortgage its self was with a big provider and had no PPI on it, however we were told at the time, by the independent financial advisor, that we had to take out a life insurance policy which covered death and critical illness otherwise if we did not do this we would have to pay his costs. We did not choose the policy and we were told it had to be this type and with whom.

With all the PPI going on against banks, would we be eligible to make a claim against the company that the independent financial advisor worked for, or ultimately with who the policy was taken out with?

dunstonh

however we were told at the time, by the independent financial advisor, that we had to take out a life insurance policy which covered death and critical illness otherwise if we did not do this we would have to pay his costs

A very common pricing model and popular with consumers. Nothing wrong with it.

We did not choose the policy and we were told it had to be this type and with whom.

Why would you want to choose? It is the job of an IFA to do that which is why you use an IFA and not an FA.

With all the PPI going on against banks, would we be eligible to make a claim against the company that the independent financial advisor worked for, or ultimately with who the policy was taken out with?

The IFA hasnt done anything wrong (based on your post). What is it you want to complain about? Are you saying you dont want the IFA to be paid for the services they supplied?

magpiecottage

So do you think he should have provided his service for no reward?

If so, do you work for nothing?

If so, how can you afford your mortgage repayments?

_Andy_

Presumably had one of you died or had a CI then you wouldn't be harping on about 'reclaiming'.

newbie1980

_Andy_ wrote: »

Presumably had one of you died or had a CI then you wouldn't be harping on about 'reclaiming'.

this is what i was thinking

what a absolute joke this country is and we are all getting on the bandwagon
the ppi i feel that if people had become ill or needed it wouldnt be moaning one bit.
We need to stand up and smell the coffee and start standing up for what we believe in

conners1

dunstonh wrote: »

A very common pricing model and popular with consumers. Nothing wrong with it.



Why would you want to choose? It is the job of an IFA to do that which is why you use an IFA and not an FA.



The IFA hasnt done anything wrong (based on your post). What is it you want to complain about? Are you saying you dont want the IFA to be paid for the services they supplied?

I thought that the IFA takes a percentage from the provider that they sign you up to, which would then be their fee. If I am wrong on that thought, then it makes sense for them to charge a fee to myself and be paid for the work they have done.

How ever why would they suggest a policy that covers us for everything without suggesting to us any other types of policies i.e cheaper and less inclusive cover.

As there was no charge if we were to take the insurance cover suggests to me that the IFA takes a fee from the provider of the insurance company. This again is understandable if it is the only fee they are getting but if they have taken a fee from the mortgage provider as well then why would they have to suggest such an expensive policy or such an expensive cost for there work.

conners1

magpiecottage wrote: »

So do you think he should have provided his service for no reward?

If so, do you work for nothing?

If so, how can you afford your mortgage repayments?

No I do not think that at all. As stated in the reply to dunstonh I thought they get there fee from the providers of the mortgage and from the Insurers.

dunstonh

I thought that the IFA takes a percentage from the provider that they sign you up to, which would then be their fee.

No. Whole of market advisers can take a commission (typically around 0.3%) but independents have to offer a fee basis. The purchase of an insurance product is a way of paying that fee through the commission on the insurance product.

How ever why would they suggest a policy that covers us for everything without suggesting to us any other types of policies i.e cheaper and less inclusive cover.

An IFA has to recommend what they feel is the best solution for you. If you wish to put a constraint on that due to budget then you tell the IFA that you only want to spend £x amout instead and the IFA will then do a recommendation based on that budget. Typically the recommendation would then be documented as "I recommend you take out blah blah but because you feel you could not afford that, we agreed that you would leave off this that or the other and proceed with so and so covering you for whatever"

It is not the remit of the IFA to present options to you for pick. That defeats the purpose of using an IFA.

As there was no charge if we were to take the insurance cover suggests to me that the IFA takes a fee from the provider of the insurance company. This again is understandable if it is the only fee they are getting but if they have taken a fee from the mortgage provider as well then why would they have to suggest such an expensive policy or such an expensive cost for there work.

Not all lenders pay a commission. Whole of market advisers will only consider commission paying lenders. Independents will consider non-commission paying lenders as well as commission. The commission on mortgages is no that great. £100k borrowing with a commission lender would pay around £300 gross. By the time you cover cost of compliance, tax, ni and running costs, it usually is not enough to make it viable. Hence why so many add on the insurance product as a requirement to get "free" mortgage advice.

As it happens, from January 2013, on investment class products, the FSA is making it mandatory for it to be totally fee based with no commission option. The fee can still be factored into products but there must not be commission. It hasnt extended it to insurance or mortgages yet but many think it will come for those as well (mortgages would be easy to do but insurance would be difficult)

conners1

_Andy_ wrote: »

Presumably had one of you died or had a CI then you wouldn't be harping on about 'reclaiming'.

Obviously we wouldn't be! "Harping on". Simply asking as I didnt really agree with it at the time but we wanted to move in as quickly as possible and just went ahead, we were young and a naive.

People like you need to keep your thoughts to yourself! Had I wanted your thoughts I would have posted differently!

conners1

newbie1980 wrote: »

this is what i was thinking

what a absolute joke this country is and we are all getting on the bandwagon
the ppi i feel that if people had become ill or needed it wouldn't be moaning one bit.
We need to stand up and smell the coffee and start standing up for what we believe in

Again obviously but insurance all works on percentages/probability and they know that the probability of you actually using the policy is extremely small but still go ahead and convince you that you will most probably need the full work as without it could get into all sorts of trouble.

Yes people are smelling the coffee and realising they have been sold something that is not suited for there needs........your thoughts on this are not an issue as it has been argued in the highest of courts and a judgement has been past. It has been miss sold on a massive scale so of course there is going to be lots of people "on the band wagon"

dunstonh

Yes people are smelling the coffee and realising they have been sold something that is not suited for there needs...

It needs to be reflected though that PPI is not considered an adviser failing. Only 0.2% of PPI complaints at the FOS are adviser cases. Most are rejected. The FSCS only uphold 5% against mortgage advisers. (single premium MPPI is considered bad and accounts for many of those).

Also, whilst PPI seems a big thing (and it is for the scale of it), an awful lot of people are getting lucky because of retrospective reviews using modern rules when different rules existed and it doesnt mean that all insurances are bad. In the scheme of things, PPI is actually only a very small part of the overall insurance industry.

your thoughts on this are not an issue as it has been argued in the highest of courts and a judgement has been past.

That is a common mistake. The High Court ruling was not against the product. The banks wanted to stop the FSA applying modern rules to past cases when the rules did not exist and therefore allow the banks to effectively stop large groups of people succeeding in complaints. They lost that argument. So, it wasnt about the product or even whether it was mis-sold or not. Just whether people could complain or not.