Mortgage protection sold before 15th January 2005

mijoda

Hi everyone. Just wondered if anyone has had experiences with ppi sold on a mortgage before 15th January 2005. I received a rejection letter last week from Santander. In it they state policies sold before then were not regulated in the same way as now and 'financial services companies did not have to record the same level of information regarding the customer's circumstances or what they needed from a policy'. Just spoken to a girl at the FOS who said they should have established need at the point of sale as they admit advising the policy. I know they didn't ask the the right questions at the time but I have since given them all the information and they now conclude I was a suitable case so have rejected my claim. The policy was sold by Abbey in 2001. Anyone any advice or experiences to share on this?
Thanks
mijoda

dunstonh

There are multiple issues here.

1 - MPPI is generally regarded as the one PPI that is worth having. It is virtually the only PPI still retailed today
2 - January 2005 did change the regulatory standards. This usually only applies to mortgage brokers/IFAs though. Not banks who were members of an earlier body (brokers/advisers rarely were). Santandar are not rejecting it for that reason.
3 - Most MPPI complaints are rejected (including by the FOS). The most common upheld reason is single premium. However, Santander never did single premium. So, that will not apply.

Just spoken to a girl at the FOS who said they should have established need at the point of sale as they admit advising the policy.

ON advised cases that is correct. On non-advised cases that is not correct. Most banks did not provide advice on MPPI sales.

I know they didn't ask the the right questions at the time but I have since given them all the information and they now conclude I was a suitable case so have rejected my claim.

So, they are rejecting it because they are saying it was suitable for you. So, that is what you need to focus on. Why do you think it was not suitable? (i.e. what are your reasons for complaint)

mijoda

Hi dunstonh
Thanks for reply. The basis of my original complaint was I didn't think that they asked the questions to establish need. Had they done so I would have declared my employer's redundancy package to be 2 x statutory minimum and I was entitled to 26 weeks full pay if sick then 26 weeks 1/2 pay. The policy would have only paid out for 12 months to cover the mortgage repayment only, not other expenses. I also complained the mortgage was marketed as a package which included one year's free house insurance and the ppi and basically I only did the ppi to get the free house insurance and they had enticed me into buying a product I normally wouldn't have bought and didn't need. They have rejected all of this and state my employee benefits would have been insufficient but can't produce written evidence to prove they checked my personal circs in relation to ppi, but clearly state in their letter 'You were given advice which you accepted based on an assessment of your personal circumstances'. What chance do you think I've got at the FOS?
Thanks

dunstonh

The basis of my original complaint was I didn't think that they asked the questions to establish need.

There are very few questions required to establish need and the mortgage application covers virtually all of them.

Had they done so I would have declared my employer's redundancy package to be 2 x statutory minimum and I was entitled to 26 weeks full pay if sick then 26 weeks 1/2 pay.

redundancy package is irrelevant. It is not guaranteed. Plus, unlike many other types of PPI, MPPI usually pays out in addition to employer benefits. If it didn't, then that would be a strong complaint reason. If it does, then its a weak one.

I also complained the mortgage was marketed as a package which included one year's free house insurance and the ppi and basically I only did the ppi to get the free house insurance and they had enticed me into buying a product I normally wouldn't have bought and didn't need.

There is nothing wrong there. packaging like that is allowed.

What chance do you think I've got at the FOS?

We have no paperwork to see. So, its hard to say. It was set up correctly (as monthly premium) and its covering a major debt that typically would require you to have a year or two savings equivalent to your income to say you didnt need it financially. Redundancy package is irrelevant. Packing is irrelevant. Employer benefits would largely depend on how your personal savings was at the time.

The FOS reject most MPPI complaints. However, the uphold some. I wouldnt want to guess.

magpiecottage

mijoda wrote: »

Had they done so I would have declared my employer's redundancy package to be 2 x statutory minimum

That will not be a contractual entitlement and in any case is a lump sum of, from memory, up to about £1,600.

I was entitled to 26 weeks full pay if sick then 26 weeks 1/2 pay.

That MIGHT help you if the PPI did not pay in addition but since you would still have other expenses when on half pay it might not.

The policy would have only paid out for 12 months to cover the mortgage repayment only, not other expenses.

That is because it is there to keep the roof over your head not food in your belly.

I also complained the mortgage was marketed as a package which included one year's free house insurance and the ppi and basically I only did the ppi to get the free house insurance and they had enticed me into buying a product I normally wouldn't have bought and didn't need.

If true, it begs the question why did you not stop it after a year when you started having to pay for house insurance?

They have rejected all of this and state my employee benefits would have been insufficient but can't produce written evidence to prove they checked my personal circs in relation to ppi, but clearly state in their letter 'You were given advice which you accepted based on an assessment of your personal circumstances'.

They will have details of your income, employer etc because you completed a mortgage application.

What chance do you think I've got at the FOS?

Probably low. MPPI has a low uphold rate and if Santander are on the ball they will refer FOS to page 15 of the Mortgage Code Compliance Board's good practice guide which actually recommended getting a disclaimer from any borrower who declined it.

mijoda

Thanks for all the help. I always wanted to get this case checked and kept putting it off but was encouraged by a mate. He got £3000 and £3000 in interest from Lloyds TSB. He wrote one letter saying he didn't need it 'cos he had savings and they just rolled over and paid out. This was on a mortgage protection policy like mine. He even claimed on it when he was unemployed. I don't know what savings he declared though but I was honest in declaring next to none which has helped Santander's case a lot. I always knew there is a stronger argument for MPPI but notice they have blanked it over on the list of things they sell in the branch window just recently. Perhaps they think it leads to too much hassle. I think I'll just accept the decision now.
Thanks again
mijoda

[Deleted User]

mijoda wrote: »

I don't know what savings he declared though but I was honest in declaring next to none which has helped Santander's case a lot.

If you had been dishonest and said you had more savings than you had, the Bank would have wanted to see proof of this before awarding any redress.

You friend's MPPI could also have had other faults identified during the Bank's investigation which were not part of his complaint. The Banks don't actually divulge why complaints are upheld, so you'll never know for certain.

Keeping all this in mind, it's generally unwise to compare other complaints with your own.

mijoda

Maybe I am giving up too easily if I don't appeal. Have been on an IFA' s website who takes on rejected cases. Looking at the questions on his questionnaire he asks about whether they took info on your redundancy package, sickness entitlement etc. He also asks whether they told you only 20% of people who make a claim are ever paid under the policy and if you can do any other form of paid work but not your normal job you cannot claim because you can still work. They definitely did none of this. magpiecottage mentioned the mortgage code compliance board's good practice guide which suggests they get a disclaimer if a borrower rejects mppi but is this not more about stopping people who lose their jobs coming back and saying 'you never tried to sell me mortgage protection'?

magpiecottage

mijoda wrote: »

Have been on an IFA' s website who takes on rejected cases.

I hope he is registered with the MOJ as well as the FCA - a number aren't but are supposed to be.

Looking at the questions on his questionnaire he asks about whether they took info on your redundancy package

That is irrelevant as NO redundancy payment is a contractual one for two reasons:

1. If it is contractual, it is taxable whereas if it is not then the first £30,000 is tax free.
2. If you become redundant because your employer goes bust then you would just be another unsecured creditor.

sickness entitlement etc.

That MAY be a valid reason - but I have seen plenty of people on here say they were missold MPPI because they would have got Statutory Sick Pay - currently about £90 a week. Could you pay your mortgage and all other expenses on that?

He also asks whether they told you only 20% of people who make a claim are ever paid under the policy and if you can do any other form of paid work but not your normal job you cannot claim because you can still work.

That is the case with some forms of permanent health insurance but not with MPPI which pays out if you lose your income.

They definitely did none of this.

Possibly because it is not true.

I would like to see this IFA's website because it sounds like it may need reporting to the ASA.

magpiecottage mentioned the mortgage code compliance board's good practice guide which suggests they get a disclaimer if a borrower rejects mppi but is this not more about stopping people who lose their jobs coming back and saying 'you never tried to sell me mortgage protection'?

I do not know the basis on which you say that but allow me to quote from page 15 of the Mortgage Code Compliance Board's good practice guide:

"Mortgage Payment Protection Insurance

The importance of this cannot be ignored. Customers are to be advised of the options available to safeguard their income and mortgage repayments."

It does go on to say "Although the importance of protection insureance cannot be stressed highly enough, it is also important that customers are not oversold protection, especially as they may have some protection in force".

However, in your case you had, as I say, no more than about £1,600 on redundancy and if you fell ill then after six months you would have lost half your income. So, without knowing the exact details of the policy itself, there was a clear need for cover which the MCCB said it could not stress the importance of highly enough.

roonaldo

mijoda wrote: »

Maybe I am giving up too easily if I don't appeal. Have been on an IFA' s website who takes on rejected cases.

If its been rejected, a IFA cannot change that, an IFA is not going to be registered to take on claim activities if they are they are breaking MOJ rules (apart from scotland perhaps)

Looking at the questions on his questionnaire he asks about whether they took info on your redundancy package, sickness entitlement etc.

Which all firms will do when assessing complaints in line with FSA's PS10/12.

He also asks whether they told you only 20% of people who make a claim are ever paid under the policy

its an urban myth that PPI doesnt pay out, if you are made redundant & unemployed and are registered for JSA, you CAN claim. Many people claims thousands and thousands on the policies as they were intended.
I've come across so many failed/non attemped claims where people cant be bothered to be registered as unemployed or cant be bothered to see doctor if off sick.

and if you can do any other form of paid work but not your normal job you cannot claim because you can still work.

you cannot claim for unemployment if you are not unemployed! you can also work up to 16 hours and be registered as unemployed.