Can life assurance be mis-sold?

lilysgirl

My father has been paying into a life assurance since 2001 when he was advised to do so in B&q whilst he signed up to the over 60's 10% discount card. Sadly my mum died last week and going through all paperwork there is no signed papers of policy it was sold by Cornhill who sold the policy to Britannic group in 2005 which was last letter received it was only seeing that the direct debit is now taken by Pheonix Group that I could chase it up. He has paid in over £1300 since 2001 and the policy only holds £1172.60 and is unlikely to increase. I cannot freeze the policy and if I cancel he will lose the £1172.60! Given he will now have to sustain him home with a single pension £10 per month is a struggle especially when it wont benefit the policy. Is this right and fair? Seems appalling to me. I feel sure my Mother would never have signed up for such a policy. What should i do? Any advice greatly received

dunstonh

Can life assurance be mis-sold?

yes but its rare.

Given he will now have to sustain him home with a single pension £10 per month is a struggle especially when it wont benefit the policy. Is this right and fair?

Yes it is fair. However, if he no longer has a need for the life assurance he can stop it and be thankful that he is still alive.

What should i do?

Nothing you have said indicates any mis-sale. Just life.

ChampionBob

Nothing you have said indicates any mis-sale. Just life.

Actually quite a bit does indicate a mis-sale. dunstonh said :

he was advised to do so in B&q

I could be wrong but I don't think B&Q employ financial advisers.

They could offer life cover but they could not recommend it.If this is so and they (your father) were advised to buy life cover then the transaction was completely unregulated. This means that B&Q and / or its agent have breached The Financial Services and Markets Act 2000. If this is the case then the policy was undoubtedly mis-sold.
1. First write to B&Q and Brittanic - send them the same letter.
2. Point out that you will report this to the FSA and the Ombudsman.
3 If you are not happy with their response, go to point 2

dunstonh

I could be wrong but I don't think B&Q employ financial advisers.

No. but they have trade stands and back then it was not uncommon to see insurance agents on those trade stands. I will ignore the rest as I am sure you are writing it in jest.

busicat

Sorry to hear about losing your Mum, lilysgirl. And I know it can be an uphill struggle sorting everything out. So I hope I can help here with the worry about the policy.

If the salesperson really has done something wrong, ChampionBob sets out the process to pursue it. But if it was me, I’d definitely not think it worth the bother, time, and stress for your Dad.

Even if the salesperson did actually do something wrong and misled your Dad, it will be difficult to prove it, the whole thing will drag on for ages and chances are low of getting anything back.

The thing is it depends how you look at it as to whether this was a bad deal. The product isn’t actually a bad one. Yes, your Dad could have got higher cover for that price if he was still quite a young over-60 and was in good health, by going through a whole palaver of medical questions and possibly doctors reports. But for a small policy, that’s not worth it for most people, hence why so many of these “guaranteed acceptance” policies are bought, compared to underwritten ones.

So that’s what makes it more expensive: older people mostly not in good health taking an insurance that’s definitely going to be paying out some time (as most people keep these policies going.) Like other insurances that aren’t investment products, some people get back more than they pay in, others get less. It might have seemed a really good deal if your Dad had died sooner. But thankfully he didn’t!

So assuming there’s no more need for it, like any other risk that no longer needs to be covered, he can just cancel it and feel lucky it wasn’t needed to pay out.

But there’s also another option if you feel it would be nice to see the benefit of the cover after all the premiums that have gone into it already. If your Dad would like to make a present of it to you (or someone else), he can let you take it over if you feel the £1172 would be worth starting to pay £10pm yourself. But if money’s really tight for your Dad, you knowing you’ll get the pay-out eventually might mean you feel you can chip in a bit with some of his other costs in the mean-time.

Maybe a daft idea, but if you wanted to take over the policy, you just need to get the current insurer to send out a DDM for you and an assignment form for your Dad to transfer the policy to you. Sometimes they call it a deed of assignment or “An assignment of absolute beneficial interest”. Your Dad signs as assignor and you sign as assignee to accept the transfer and send it back to the company.

Either way, at this difficult time, I figure the chances are your Dad will be better off not feeling as if he was ripped off nor feeling he has to take up a fight against big business. Unless that’s what makes him tick!

Good luck with everything

ChampionBob

I will ignore the rest as I am sure you are writing it in jest

No I am being serious.

Even if the person who sold the life insurance was a fully regulated insurance broker they would still have to demonstrate that they knew their customer (KYC) and that the life insurance they sold was appropriate for the specific customers needs. They would have to demonstrate suitability.

Somebody just saying to a customer “You should buy this life cover”, without any evidence to support the advice is still a mis-sale even of the person selling it is regulated.

gb12345

lilysgirl wrote: »

My father has been paying into a life assurance .... I feel sure my Mother would never have signed up for such a policy. What should i do? Any advice greatly received

First things first - you start off saying your father took the policy out then you end by saying your mother wouldn't have signed up - so who actually took out the policy?

lilysgirl wrote: »

He has paid in over £1300 since 2001 and the policy only holds £1172.60 and is unlikely to increase. I cannot freeze the policy and if I cancel he will lose the £1172.60!

It sounds like it is not just life insurance, but some form of with-profit/unit-linked savings plan as well.

Who has told you that you can't freeze the policy? They often have the facility to make them "paid up".

Also, do you have any policy detials - is the policy whole of life or does it run for a fixed term?

dunstonh

Even if the person who sold the life insurance was a fully regulated insurance broker they would still have to demonstrate that they knew their customer (KYC) and that the life insurance they sold was appropriate for the specific customers needs. They would have to demonstrate suitability.

Only on advised cases. If it was direct offer then suitability checks are not required.

ChampionBob

Only on advised cases. If it was direct offer then suitability checks are not required.

Absolutely agree but the claim is that the sale was “Advised”

If it was a direct offer sale, no need for an insurance agent. Look at Tesco’s checkouts!!

The points made by gb12345 are important. If it is some form of investment backed savings plan and it was sold by an agent – then it sounds like an advised sale to me.

kingstreet

I think this has all the hallmarks of an Axa/Sun Life Cashbuilder Plus situation, although from a different firm.

A directly-sold, advice-free, savings plan which turned out to be completely pointless for many people.

I would be very surprised if the advice and recommendation process was used in the way the OP describes. Often, people mistake information for advice and expect that someone established a product was in their interests when that was never the case...

If the OP could find the original sales documentation and tell us what there is, that would be helpful.

dunstonh

Absolutely agree but the claim is that the sale was “Advised”

How do we know? I personally doubt it was because its unlikely you could factfind and needs analysis these things on a trade stand within a reasonable timescale. Cornhill didnt operate an adviser arm IIRC. They did operate direct marketing though.

The product is probably naff and expensive for what it offers and quite probably unsuitable from an adviser point of view. But none of that matters if its a direct marketing case. As Kingstreet says, if it was advised, there would be an audit trail for advice.

If it was a direct offer sale, no need for an insurance agent. Look at Tesco’s checkouts!!

This was taken out in 2001. Tesco have purpose built marketing at tills to market their basic products. The likes of Cornhill needed trade stands. Much in the same way as you see Sky, AA, RAC etc in shopping halls and outside B&Q etc.