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Insurance Overcharging (Warning, very long)
Wyke
Posts: 5 Forumite
First, can I appologise if this post turns out wordy and long, but this is the first time I've been able to talk about this problem impartially.
In June 1998 I bought my small terraced house with a mortgage from HSBC, then Midland bank. The mortgage being for £23,500, Not a huge one on the scale of things.
As part of this process I also had to take out a number of insurances with the bank, Payment protection, One to recoup any shortfall should the house be repossesed and auctioned off, and of course buildings and contents cover.
It's with the Building and contents cover which my problem comes.
The original policy was for £301pa at monthy payments of £25.15. I was more then happy with this, it covered me for more or less needing to totaly rebuild the house if need be and my important contents would be replaced.
Now I will admit to not being the best of finantial managers, often going into the red, not by huge amounts, but enough to have to pay interest and penalty payments on occasion. But at the time my attitude was, that I knew about what would happen if I went overdrawn, and if not exactly happy with what the bank took accepted their charges. In addition, at that time I was struggling with a number of other major life events, so my finantial management was an even lower priority.
Then, sometime in the past, the bank seems quite vague about the exact date. My insurance was "Outsourced" to the Royal and Sun Alliance and my insurance shot up to over £15000pa, approx £125 pw. How I missed this hike in price even I don't know. I certainly have no memory of getting any letter warning me, nor signed anything agreeing to it. Even when I did notice it I guess I excepted that as how things are now. I'm not the sort of person who discusses my finances with people on a casual basis.
I suppose I puddled on for a few more years, not particularly paying attention to what I was paying the bank until may 2005.
The year before I had taken out a large loan to do some much needed renovation work to my house. As is the nature of these things, I went over budget, plus I had bought a new car and there was an error in the initial payments which led to a double payment being taken from my account. The end result being that I was starting to regularly go overdrawn by some £200-£300 a month.
I tried to deal with this for a couple of months but I was unable to recover the situation, mainly because the bank charges and intersts were now adding to my problems.
For the first time I did the sensible thing and went and talked with a very nice lady at the bank. She was able to agree a consolodation loan for me, I would surrender my credit card, my overdraught agreements set to zero and I would comfortably re-pay the loan over a 3 year period. Unfortunatly, she was not able to finalise this as the bankls computer system had crashed. So it was agreed that I would go to a doctors appointment that I had, and go back to the bank later that day to sign the papers.
Unfortunatly, the visit to my doctors, for a small, but growing and painful rash on my legs, turned out to be much more serious then I thought and led to me being admitted to hospital from my GP's surgery, and where I spent the next 8 weeks fighting not to have one, if not both legs from being amputated!
The bank, though fully aware of this continued to pile on charges. When I was finally discharged, it would be a further 4 months before I could return to work. Thankfully the other sensible thing I had done, was that my mortage, bank and car loans all had sickness protection with them which once that started paying out. This helped me stabalize the situation greatly and deal with loosing a big part of my wage due to being on a basic wage and not getting enhancements for working unsocial hours.
When I finaly returned to work, in the October of 05, Because the sickness protection payments had helped me restabalize my account, it was agreed that I didn't need the consolodation loan, and the outstanding I owed the bank, approx £1000 overdraught limit and £1500 on my credit card I could recover in my own time as they were both within agreed limits.
I puddled on for a few more months and while I was able to keep my account stable was unable to make any real headway into clearing my overdraught and credit card.
So last summer I again went to the bank and so an advisor who decided he couldn't give me a consolodation loan, but could refinance the loan I took out to do the house renovations. This I stupidly agreed to, I would be paying a lot more for the loan, as I wanted to it to finish at the same time as when I took it out, but the extra would pretty much be the same as paying the original and a consolodation loan. In addition to add insult to injury he insisted that I need to be on a new bank account, one that I am now paying monthly for.
This seemed to be the way forward but then in Novemebr last year I was again taken sick. I have had an arthritic condition in my right ankle for some years now. In Novemeber it finally collapsed on me and I now need to wear a calliper to walk. This has in effect ended my career as a ward based nurse, though thankfully my employers are looking at re-deploying me to an area thatcan accomodate my disability. I just this week started my return to work program.
As soon as I realized that this was going to be another long term health problem, I imediatly went to the bank and saw another very nice, but this time very helpfull lady. As she was going through my finances with me, as soon as she saw what I was paying for house insurance, her exact words were "That is extortianate". I immediatly decided to cancel any further payments, when the bank then threatened me with legal action to recover the outstanding payments, she pointed out in no uncertain terms to the department involved that for several years now I have been grossly overcharged and managed to get them to back down.
She also started an official complaint on my behalf.
After a wait of some two months, and a short telephone call with somebody from their complaint department HSBC decided that there is no case to answer to and dismissed the whole thing.
Their justification for this being that
1. The reason my premium shot up was because R&SA decided that my house was in danger of flood damage because it is within proximity to the River Hull. That is despite the fact that the River Hull is a tidal river, not prone to flooding and protected by a tidal surge barrier.
2. That I couldnot provide proof that I could get much cheaper insurance on line, averaging around £300pa, and that included a quote from HSBC, because my printer is not working so could not send her a copy of the quotes.
I am now left thinking about the next step. I'm guessing that it must be the banking Onbudsman. But I guess all these words is me asking if it will be worth while bothering with. As I accept that most of this problem as come about by me not watching what the bank is doing and being too complacent in my finantial management.
Oh yes, and two final things to add injury to insult. Apparently sometime last year HSBC brought all their insurance accounts back in house, yet continued to charge me the extortianate rate, while offering much lower quotes on my property, and, the one time I tried to make a claim on my house insurance I was simply 'blown out of the water' and told "No" We are not paying out.
For the folks who have read this through. Thanks for your time. This is the first time I've sat and written about this, and if nothing else has helped me focus on everything.
I know I should at least put this to the Ombudsman, and will follow up to let folks know what the outcome is
In June 1998 I bought my small terraced house with a mortgage from HSBC, then Midland bank. The mortgage being for £23,500, Not a huge one on the scale of things.
As part of this process I also had to take out a number of insurances with the bank, Payment protection, One to recoup any shortfall should the house be repossesed and auctioned off, and of course buildings and contents cover.
It's with the Building and contents cover which my problem comes.
The original policy was for £301pa at monthy payments of £25.15. I was more then happy with this, it covered me for more or less needing to totaly rebuild the house if need be and my important contents would be replaced.
Now I will admit to not being the best of finantial managers, often going into the red, not by huge amounts, but enough to have to pay interest and penalty payments on occasion. But at the time my attitude was, that I knew about what would happen if I went overdrawn, and if not exactly happy with what the bank took accepted their charges. In addition, at that time I was struggling with a number of other major life events, so my finantial management was an even lower priority.
Then, sometime in the past, the bank seems quite vague about the exact date. My insurance was "Outsourced" to the Royal and Sun Alliance and my insurance shot up to over £15000pa, approx £125 pw. How I missed this hike in price even I don't know. I certainly have no memory of getting any letter warning me, nor signed anything agreeing to it. Even when I did notice it I guess I excepted that as how things are now. I'm not the sort of person who discusses my finances with people on a casual basis.
I suppose I puddled on for a few more years, not particularly paying attention to what I was paying the bank until may 2005.
The year before I had taken out a large loan to do some much needed renovation work to my house. As is the nature of these things, I went over budget, plus I had bought a new car and there was an error in the initial payments which led to a double payment being taken from my account. The end result being that I was starting to regularly go overdrawn by some £200-£300 a month.
I tried to deal with this for a couple of months but I was unable to recover the situation, mainly because the bank charges and intersts were now adding to my problems.
For the first time I did the sensible thing and went and talked with a very nice lady at the bank. She was able to agree a consolodation loan for me, I would surrender my credit card, my overdraught agreements set to zero and I would comfortably re-pay the loan over a 3 year period. Unfortunatly, she was not able to finalise this as the bankls computer system had crashed. So it was agreed that I would go to a doctors appointment that I had, and go back to the bank later that day to sign the papers.
Unfortunatly, the visit to my doctors, for a small, but growing and painful rash on my legs, turned out to be much more serious then I thought and led to me being admitted to hospital from my GP's surgery, and where I spent the next 8 weeks fighting not to have one, if not both legs from being amputated!
The bank, though fully aware of this continued to pile on charges. When I was finally discharged, it would be a further 4 months before I could return to work. Thankfully the other sensible thing I had done, was that my mortage, bank and car loans all had sickness protection with them which once that started paying out. This helped me stabalize the situation greatly and deal with loosing a big part of my wage due to being on a basic wage and not getting enhancements for working unsocial hours.
When I finaly returned to work, in the October of 05, Because the sickness protection payments had helped me restabalize my account, it was agreed that I didn't need the consolodation loan, and the outstanding I owed the bank, approx £1000 overdraught limit and £1500 on my credit card I could recover in my own time as they were both within agreed limits.
I puddled on for a few more months and while I was able to keep my account stable was unable to make any real headway into clearing my overdraught and credit card.
So last summer I again went to the bank and so an advisor who decided he couldn't give me a consolodation loan, but could refinance the loan I took out to do the house renovations. This I stupidly agreed to, I would be paying a lot more for the loan, as I wanted to it to finish at the same time as when I took it out, but the extra would pretty much be the same as paying the original and a consolodation loan. In addition to add insult to injury he insisted that I need to be on a new bank account, one that I am now paying monthly for.
This seemed to be the way forward but then in Novemebr last year I was again taken sick. I have had an arthritic condition in my right ankle for some years now. In Novemeber it finally collapsed on me and I now need to wear a calliper to walk. This has in effect ended my career as a ward based nurse, though thankfully my employers are looking at re-deploying me to an area thatcan accomodate my disability. I just this week started my return to work program.
As soon as I realized that this was going to be another long term health problem, I imediatly went to the bank and saw another very nice, but this time very helpfull lady. As she was going through my finances with me, as soon as she saw what I was paying for house insurance, her exact words were "That is extortianate". I immediatly decided to cancel any further payments, when the bank then threatened me with legal action to recover the outstanding payments, she pointed out in no uncertain terms to the department involved that for several years now I have been grossly overcharged and managed to get them to back down.
She also started an official complaint on my behalf.
After a wait of some two months, and a short telephone call with somebody from their complaint department HSBC decided that there is no case to answer to and dismissed the whole thing.
Their justification for this being that
1. The reason my premium shot up was because R&SA decided that my house was in danger of flood damage because it is within proximity to the River Hull. That is despite the fact that the River Hull is a tidal river, not prone to flooding and protected by a tidal surge barrier.
2. That I couldnot provide proof that I could get much cheaper insurance on line, averaging around £300pa, and that included a quote from HSBC, because my printer is not working so could not send her a copy of the quotes.
I am now left thinking about the next step. I'm guessing that it must be the banking Onbudsman. But I guess all these words is me asking if it will be worth while bothering with. As I accept that most of this problem as come about by me not watching what the bank is doing and being too complacent in my finantial management.
Oh yes, and two final things to add injury to insult. Apparently sometime last year HSBC brought all their insurance accounts back in house, yet continued to charge me the extortianate rate, while offering much lower quotes on my property, and, the one time I tried to make a claim on my house insurance I was simply 'blown out of the water' and told "No" We are not paying out.
For the folks who have read this through. Thanks for your time. This is the first time I've sat and written about this, and if nothing else has helped me focus on everything.
I know I should at least put this to the Ombudsman, and will follow up to let folks know what the outcome is
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Comments
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Did I read this correctly, the RSA premium was £15,000 per annum? If so it is outrageous and you should be approaching the Financial Services Ombudsman who took over from the insurance and banking ombudsman bodies.
You have gone down the formal complaint route with HSBC and got nowhere so now the way is open for the ombudsman to look into matters. Normally they do not get involved unless you have exhausted the financial companies in house procedure.
I work in insurance and one thing they always told us was - charging more premium for a risk does not make it a better risk. If they were so concerned about the flood issue they should have either withdrawn that cover or imposed a large excess (say £1000).
Good luck and keep us informed. Hopefully the FSO can recover overpayments for the entire period and not apply the normal 6 year limit.
Their site is here
http://www.financial-ombudsman.org.uk/0 -
That has to be a typo as an unexpected premium that size would do more than put you overdrawn by £200-£300 a month.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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Even so, for a small terraced house in Hull the rate is pretty steep. The Hull flood defence system is pretty comprehensive and is shown on the Environment Agency maps.
The firm I currently work for insures the shopping centre in Hull on Princess Quay. I've surveyed that and said it is okay for flood cover. The property sits in the middle of a dock, literally.
Edit - pic of the shopping centre. http://www.funkinghull.co.uk/places%20to%20visit/shops/princess_quay_shopping_centre.jpg0 -
Did I read this correctly, the RSA premium was £15,000 per annum? If so it is outrageous and you should be approaching the Financial Services Ombudsman who took over from the insurance and banking ombudsman bodies.
You have gone down the formal complaint route with HSBC and got nowhere so now the way is open for the ombudsman to look into matters. Normally they do not get involved unless you have exhausted the financial companies in house procedure.
I work in insurance and one thing they always told us was - charging more premium for a risk does not make it a better risk. If they were so concerned about the flood issue they should have either withdrawn that cover or imposed a large excess (say £1000).
Good luck and keep us informed. Hopefully the FSO can recover overpayments for the entire period and not apply the normal 6 year limit.
Their site is here
http://www.financial-ombudsman.org.uk/
Sorry no. That should be fifteen hundred, My mistake, I've edited that out. Thanks for the heads up0 -
I will comment without any emotion or opinion to rights or wrongs. So don't misinterpret the plain speak to be a judgement of any sort.
You would have been notified at renewal of the premium change. It wouldnt have occured without notification. You are paying monthly and you get written notifications once a year. There was ample information supplied to you and ample opportunity to change insurer if you wished.
How the insurance company decide to price a risk is up to them. If you dont like it, then you can take it away from them.
I am looking for an error from the bank and I cannot see one. Pricing isnt something you can complain about as its a free market and they will be able to see that notifications went out every year to tell you the premiums so you cannot say you were not told.
Cancelling a direct debit for an insurance doesnt cancel the policy. That would explain why the bank continued to chase premiums.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I haven't got anything positive to say. I think you've been ripped off on many fronts... but because you didn't query things or complain at the time, you 'apparently accepted'. Duty of care and all that .. them to be competitive and reasonable ... you to be 'on the ball ' spotting the problems. I feel for you, hindsight is wonderful, but they've mugged you and you didn't notice. It's probably too late but best of luck with the ombudsman.0
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