Mortgage cover mis-sold?

Derds36

Hi-I wondered whether anybody can help with regards to mortgage cover that I feel was missold to me a number of years ago. When my husband and I bought our first house, we were advised to take critical illness cover incase we ever had any time off work. I remember at the time clarifying that this was not terminal illness cover as I had a very good death in service cover through my employers. We agreed to the policy and paid a very high monthly payment for it. My husband then did have a critical illness a couple of years later (which he could have died of) and was in hospital for a couple of weeks. When he was well enough, he returned to work quite quickly and we decided to claim the critical illness cover. We received a response from the bank saying that as my husband hadn't taken 3 months off work, we could not claim anything-this clause was never pointed out and we would not have taken the policy out if it had been. We complained to the ombudsman who sat on the fence about it, and we also went to see a solicitor who said the policy was ridiculous and full of holes. At the time, I was expecting our 2nd child so was not in a position to challenge it further, but given all the PPI rulings, I wondered whether I should push this again? Any thoughts? Thanks

dunstonh

When my husband and I bought our first house, we were advised to take critical illness cover incase we ever had any time off work.

Critical illness has no impact on your ability to work or not. What you describe sounds more like income protection or payment protection rather than CI.

My husband then did have a critical illness a couple of years later (which he could have died of) and was in hospital for a couple of weeks. When he was well enough, he returned to work quite quickly and we decided to claim the critical illness cover. We received a response from the bank saying that as my husband hadn't taken 3 months off work, we could not claim anything-this clause was never pointed out and we would not have taken the policy out if it had been.

As CI doesnt need a qualifying period off work like that, it increasingly sounds like income protection (payment protection is possible but unlikely given the deferment period).

this clause was never pointed out and we would not have taken the policy out if it had been.

It seems unlikely it was not pointed out as it appears on the illustration and report and deferment period is one of the key decisions to make on an income protection policy.

We complained to the ombudsman who sat on the fence about it

The FOS does not sit on the fence. It either rules for or against you. Which was it?

we also went to see a solicitor who said the policy was ridiculous and full of holes.

If it is income protection then there are some budget ones that are low quality but most are not full of holes and a solicitor wouldnt know good from bad. However, as the solicitor would have told you (assuming he knew what he was talking about) that a bank can only recommend the product and services it offers in house. If the only option they have is a low quality plan then that is all they can offer. It is not something you can then complain about as that what seeing a restricted adviser means.

but given all the PPI rulings, I wondered whether I should push this again?

Firstly, this is not PPI. Secondly it appears the FOS ruled against you (so you cant complain again) and thirdly even the solicitor doesnt appear to have encouraged legal action.

As it stands, you do appear to be a bit mixed up on what you had. You say CI policy but you describe permanent health insurance (PHI). They are different things. What does the report and policy details say?

Derds36

Thanks for the info. Yes, the ombudsman said we couldn't do anything but the solicitor thought we could pursue it but costs were prohibitive at the time. I don't have the original documents to hand, so would have to look at the terminology but we were told it was critical illness cover and I seem to remember the policy document being titled in the same way, but would have to find the document before I can give you any more info. Thanks again

dunstonh

but the solicitor thought we could pursue it but costs were prohibitive at the time.

They will still be prohibitive and I'm surprised a solicitor would even consider taking it on because once he found out it was a tied agent sale, his argument would be dead in the water. Plus, the court would look at the FOS decision that there was no wrong doing within FSA regulation. So, what actual wrong doing could the solicitor prove? (noting that the FOS doesnt need you to prove wrong doing but the courts would)

kingstreet

Critical illness cover is predicated on you being able to claim for a diagnosis of one of a published list of illnesses set out in your policy booklet.

Some may have a minimum period of illness, such as multiple sclerosis where you have to have the illness for perhaps three months, or longer and be unable to perform different tasks/activities before the claim will be settled.

Critical illness cover pays a lump sum, following any minimum period. As dunston said, it is not based on inability to work, in any way.

It would be beneficial if you could tell us the condition your husband suffered and the definition in the policy on which you attempted to claim.

holly_hobby

I have to agree with Duns. from your description, this really sounds like a Permanent Health Policy (PHI). This is a policy that pays benefit on an illness forced absence from work.

Basically the benefits are recd in the form of a regular payment, designed to partially replace the claimants lost income whilst off work ill. Benefit payment commences after a specifiied waiting period (WP) has elapsed, which the policyholder may select, having considered their employer sickness benefits and when they cease, from an option of 4, 13 (which sounds like your policy WP), 26 or 52 wks (obviously the longer the waiting period, the lower the resulting policy premium). Benefit under each claim period (of which there may be several throughout the policy term), will generally (with a few exceptions) continue to be paid until the policyholder returns to work, reaches policy retirement age or their death - which ever occurs sooner.

This is completely different to a Critical Illness (CI) policy, where benefit and payment aren't capped, and typically paid in the form of a single lump sum (after which the policy ends), the benefit chosen usually when written as a mge support product, equal to the mge debt, although it can be more than this if affordable to the individual(s). Its payable upon diagnosis of a specified CI as detailed in the policy T&Cs (which depending upon the condition may involve a time delay from initial diagnosis until sucessful claim).

A CI policy has no deferred waiting periods as seen with a PHI policy, albeit payment will be delayed until the diagnosising Clinician or your GP, has provided formal confirmation to the Provider of the diagnosis supporting your claim or as I say, the condition requires an assessment period before it can be classed as a CI.

So, as you can see, I am almost certain you have a PHI policy, which is an income protection plan. It also sounds as though FOS having reviwed the sale, and all documentation from that time, felt the sale was suitable and appropriate, and accordingly did not uphold your complaint - what did they actually say their rejection was based on ?

Also, a point to note is whilst a FOS rejection (even at Ombudsman level), wouldn't prevent you from pursing through the courts, their decision and review of the sale would form part of the firms defence and also the Judge's consideration - so a successful court action may be touch and go (unless you know you can prove that both the Firm and FOS's review of the matter failed, and their rejection of your complaint was flawed and not based on all available material facts).

Hope this helps

Holly

Derds36

Thank you very much for the information-much clearer! I'm going to hunt out the original documentation tonight and I'll be in touch if I have anymore questions-thanks again