The Cumberland Building Society.

rewood1104

Newbie here and it is as a result of the Cumberland Building Society in Carlisle. I have had my mortgage with them for about 15 years and have about 4 years left. I have admittedly trusted them to do right for me as a customer and have never really looked into the products they have sold me. It took the PPI fiasco to cast doubts on this and I successfully reclaimed half of this money back from them. it is abundantly clear now they have effectively created a closed shop with Norwich Union/Aviva where selling and targets are the only thing that matters.

I recently got my home insurance renewal through and for the first time actually took time to look at it. Again, it abundantly clear that this is unsuitable for me and way over what I need. Needless to say, it is with Aviva. It was almost £400 and a quick check of compare the market resulted in a much more tailored policy coming in at £197. Plus, with £50 from topcashback due and a £50 Marks voucher on its way, it is a no brainer.

So, in I pop to the Cumberland to confirm I did not want to renew my policy. I'm asked to sign a declaration to say my new policy meets certain criterion which I'm happy to do. But then, the Cumberland say they want a £25 one off fee because I'm not now with 'their' insurer.

They have pointed out that this fee is mentioned in their Charges for Mortgage Linked Services document. I cannot argue with this, although I must admit I don't ever recall seeing this at the time we signed up, or indeed if had have, I don't pretend that I would have understood the significance.

The actual wording in the document is

The Society requires every mortgaged property to be insured on an indexed linked basis. If you choose not to insure your property through us or you cancel the insurance we have arranged for you at any time. a one off fee will be payable to cover the cost of the Society arranging cover in the event that your property is not adequately insured. You will be responsible for ensuring that adequate insurance is taken out to cover the re-instatement cost of the property.

It just does not seem right they can do this. I have put in a formal complaint, but knowing how they were on the PPI scandal, I'm not confident.

Is this right? Can they do this? it really has got my back up.

Quentin

See if your new insurer will refund this (legitimate) charge.

rewood1104

Never thought of that. But you reckon they can deffo do this? I would have thought in todays competitive world such a closed shop wouldn't be allowed?

thenudeone

It's quite common to have clauses like this. They are duty bound to ensure that the security for their assets is safe against losses by fire, flood etc. But it's also common for the new insurer to pay the fee in order to get the business.

I'd keep all the paperwork, though. This might be the subject of a super-complaint in years to come.

When I remortgaged away from Woolwich many years ago, they charged a £295 admin fee. The admin fee at the time of the original mortgage was only £95, but they wouldn't back down. Several year later they wrote to me saying effectively that the higher fee had been ruled unlawful, and I got a refund of the difference:beer:
The same MIGHT happen with these insurance fees, so keep the paperwork just in case.

*Scarlett

I do understand this if the building is being insured for a cost of rebuild.

But surely the requirement would be that the building is adequatley insured.

Many companies offer blanket cover £400k -£1m or unlimited.

Unless you live in a mansion you should be able to get cover from maimstream insurers for these amounts.

If they have a clause in the mortgage that you have to take an index linked buildings policy it might be unfair (http://www.fca.org.uk/) .

So if you can find suitable cover elsewhere cheaper that will more than cover the buildings, it sounds like they are trying to tie you in to this policy.

If you are changing insurer at renewal (insurance is normally a 12 month contract) then you should be able to do so without penalty.

If they are prepared to accept that you will be insuring the building with a new company and accept the cover limits then the £25 for index linked is surely irrelevant.



Make a formal complaint to them and if necessary escalate to

http://financial-ombudsman.org.uk/

rewood1104

Thanks for your all thoughts on this. I have made a formal complaint to the Building Society. I have to say again, they did not budge on the PPI issue and I'm not confident they will move on this. But, I think I will escalate to the Financial Ombudsman.


Watch this space.

dacouch

rewood1104 wrote: »

Thanks for your all thoughts on this. I have made a formal complaint to the Building Society. I have to say again, they did not budge on the PPI issue and I'm not confident they will move on this. But, I think I will escalate to the Financial Ombudsman.


Watch this space.

I wouldn't hold your breath as the government introduced the checking fee in response to mortgage providers no longer being allowed to insist you use their insurance provider

opinions4u

It's a fee that has existed for decades and is applied by many lenders. A minority will charge it annually.

The FOS will be highly unlikely to consider it unfair unless it's excessive, which it isn't.

magpiecottage

The point about this is that it pays for a contingency insurance.

If a borrower says they will insure the property but doesn't or (more likely) does not insure it for the full rebuilding cost and then a claimable event happens the insurer will not pay out - or only pay a percentage of the claim based on the percentage of the full rebuilding cost that the policy covers.

So the contingency policy covers the lender if that happens.

That means insisting on the policy is an exercise of legitimate commercial judgement and outside the jurisdiction of FOS.

rewood1104

Thanks again, I will probably not do the FOS then.

It does seem so unfair though because the Cumberland is in bed with Aviva and between them they have been charging me a fortune for this policy for many years now. It is only the PPI carry on and Aleksandr and his friends that made me look at the policy this year and is clear that it is far more than I need. Indeed, it was going to cost over £400 this year when Legal and General have a suitable policy for less than half that. Maybe I should have looked at it before, or indeed when we signed up to it. But, I genuinely thought the Cumberland would be doing the best for me as a customer.

How naive I was.

ACG

You paying over the odds makes no difference to the admin fee.
Thats your fault for not checking it.

It is also listed on the KFI document you received. If you didnt agree to it then you shouldnt have taken the mortgage. Most building societies charge this fee - mine is with a building society and they charged me the fee.

I would put this down to experience and be thankful you have managed to knock £200 off your insurance.

Sorry to be direct, but i can probably word it in a way the banks cant and be straight to the point.