Issues with Life Assurance & Mortgage Broker

snowballs666

Hi all,

I'm after a bit of advice after running into a problem with our current mortgage/life assurance broker.

We took out a new life assurance policy in Dec 2011 with the firm who had previously sorted our mortgage application. We're in the process of moving house (ours is sold and we've exchanged on the new one - just waiting for the builders to finish, which will hopefully be in 5 weeks or so) and the same firm have organised our new mortgage. We're having to change our life assurance (decreasing term to cover myself and my husband for the new, higher mortgage amount) and found a policy with Aviva for a guaranteed amount each month (ie. no price increases) which seems to fit with what we need.

The problem cropped up when our broker mentioned the need for increased levels of insurance too - the 'cheapest' he can get is about £5/month more expensive for the same cover as we found independently. We told him we'd found it cheaper and he then informed us that if we don't take the cover with him, we'd have to pay them back the commission they got when they took out the policy for us in 2011 (just under £500) since our current provider would claim it back from them as it's within 4 years of the policy starting. They didn't provide any T&Cs at that time and no mention was made of us having to pay any amount if we cancelled the cover within 4 years - we simply wouldn't have taken cover out with them if we'd been informed about it!

Spoken to the FCA this morning and they advise raising it as a formal complaint with the parent company, which we're happy to do. The only issue is that we don't want to cause any problems with our mortgage/house purchase completion since the same guy is dealing with both.

We've had the mortgage offer through already - does anyone know if the broker needs to be involved to get the funds released on completion, or if the solicitors deal with that? And can anyone suggest if it's better to raise the complaint now, or if we're OK waiting until the sale completes in 5 weeks or so before we cancel the other policy in case he causes any problems with the purchase if we raise a formal complaint? We also wondered about first just contacting the guy dealing with it directly and telling him we were never provided with any T&Cs stating we'd be charged if we cancelled the cover and we're not willing to pay it, then escalating the complaint if he responds along the same lines as he currently is?

Any advice greatly appreciated :-)

dunstonh

The problem cropped up when our broker mentioned the need for increased levels of insurance too - the 'cheapest' he can get is about £5/month more expensive for the same cover as we found independently.

Actually, he is probably cheaper. However, the price he is showing includes his remuneration. It is that which is making it higher.

Spoken to the FCA this morning and they advise raising it as a formal complaint with the parent company, which we're happy to do.

The FCA will always tell you that as they do not handle consumer complaints. It is the default action if you have a complaint. However, the actual transaction can be quite compliant and indeed, favoured by the FCA.

does anyone know if the broker needs to be involved to get the funds released on completion, or if the solicitors deal with that?

No they dont.

And can anyone suggest if it's better to raise the complaint now, or if we're OK waiting until the sale completes in 5 weeks or so before we cancel the other policy in case he causes any problems with the purchase if we raise a formal complaint?

Depends on whether you have grounds for complaint. There is absolutely nothing wrong with an adviser getting you to pay the difference if there is a clawback. That is allowed within FCA rules. However, it has to be documented correctly.

The original agreement issued back in 2011 should state if there is you have to pay the difference if there is a clawback. If it does say that then you are stuffed. If it doesnt say that then the broker cannot enforce it.

We also wondered about first just contacting the guy dealing with it directly and telling him we were never provided with any T&Cs stating we'd be charged if we cancelled the cover and we're not willing to pay it, then escalating the complaint if he responds along the same lines as he currently is?

That would be the best approach. Going straight to complaint will sour things and burn bridges. Finding out first if you have a case or not is a better idea.

weighty1_2

Going off on a bit of a tangent, but is the mortgage term still the same as it originally was in 2011?

If it is, have you tried obtaining a quote just for the top up amount of cover needed?

Depending on the mortgage amount and term this could be more cost effective than going with a completely new policy due to pricing changes back in December when insurers were no longer able to price based on gender, along with certain taxation changes for insurance providers.

This could be a win win situation as the broker wouldn't suffer a clawback and you may actually get a cheaper premium overall as well.