Mis sold Mortgage Protection Plan

greyhoundcrazy

In 2003 the member of staff who arranged our mortgage, at the Building Society, told us that we had to have a protection plan (including critical illness and redundancy) and that it had to be their own policy. It was sold to us with our mortgage. We were told that we could not have the mortgage without it.

I now know that this was not true.

Do you think I can do anything about it? I have read the articles about PPI on credit cards etc, but I don't really understand how it works for mortgage protection policies.

Thanks

dunstonh

You almost certainly cant prove what you were told. So, that point would likely fail. They would then look at whether you had a financial need for them. Most people do have a financial need for them. Which is why most mortgage insurance complaints fail.

Critical illness will certainly fail on complaint (its not PPI, suffers none of the same issues and is typically put in place under an advice process).

greyhoundcrazy

Ok thanks. I wonder if there is any point getting out our old employment contracts to see if there was adequate redundancy pay in place? I think we were entitled to enhanced redundancy packages. I know we didn't look at that back then because we were just told we had to have the policy.

Insider101

greyhoundcrazy wrote: »

Ok thanks. I wonder if there is any point getting out our old employment contracts to see if there was adequate redundancy pay in place? I think we were entitled to enhanced redundancy packages. I know we didn't look at that back then because we were just told we had to have the policy.

I would be very surprised if you had a redundancy package as a contractual entitlement. It's not really the norm and only senior managers who have the clout to negotiate their own contracts might have. Partly because redundancy pay, which is generally tax free, would become taxable if it was a contractual entitlement.

How can you be sure that it wasn't true that you wouldn't be offered the mortgage without it?

dunstonh

I wonder if there is any point getting out our old employment contracts to see if there was adequate redundancy pay in place?

MPPI pays out irrespective of redundancy payments. There is no overlap there. So, whether it was statutory minimum or large lump sum, it wouldnt make any difference. The MPPI would pay out.

greyhoundcrazy

dunstonh wrote: »

MPPI pays out irrespective of redundancy payments. There is no overlap there. So, whether it was statutory minimum or large lump sum, it wouldnt make any difference. The MPPI would pay out.

Maybe I have misunderstood? What I meant was, if I was entitled to enhanced redundancy, that means I am less likely to need a policy to cover my mortgage in the event of the redundancy. So arguably, I may not have needed the policy in the first place?

Thanks for your help.

magpiecottage

greyhoundcrazy wrote: »

if I was entitled to enhanced redundancy, that means I am less likely to need a policy to cover my mortgage in the event of the redundancy. So arguably, I may not have needed the policy in the first place?

The flaw in your argument is that, as Insider101 says, there is never a contractual right to a redundancy payment (other than a statutory amount which is normally less than £800).

dunstonh

aybe I have misunderstood? What I meant was, if I was entitled to enhanced redundancy, that means I am less likely to need a policy to cover my mortgage in the event of the redundancy. So arguably, I may not have needed the policy in the first place?

It is not a guaranteed benefit and again, redundancy payments would not stop MPPI paying out. The issue with many people is where the benefit they are paid stops the policy from paying out. Some PPI, for example, wont pay out if the employer pays sick pay. That is a reason for complaint. As redundancy payments wont stop MPPI paying, that is not a reason for complaint.

Even if you got a redundancy payment, you lose your income. Income is needed to pay your bills and mortgage. So, in the most basic analysis you have a need for it as it is covering something that would stop.

greyhoundcrazy

Ah ok. Thanks.

Yeah my employer paid sick pay. SSP and Contractual. So maybe I can argue I didn't need that aspect of the policy? I will find my old contract and see exactly how many months of sick pay I would have been entitled to. Also, I will check the PPI policy to see if it pays out on top of employers sick pay.

Thanks for your help.

dunstonh

Yeah my employer paid sick pay. SSP and Contractual. So maybe I can argue I didn't need that aspect of the policy?

Whilst that works well with credit card and loan PPI (short term) it doesnt work well with MPPI. The FOS have rejected complaints with MPPI using employer benefits as a reason. I read one recently that was rejected as partly as MPPI still tends to pay out and not be restricted and partly because its a major debt with lifestyle changing consequences if the mortgage is not repaid (unlike a loan or credit card). The timescale is an issue as well as mortgages are long term and a lot can happen in that period.