Is anyone clued up on HSBC Loan Protection?

lil_redhead

I have a Personal & Graduate Loan with Protection and I'm paying £68.21 per month for it. I've worked out that if I can cancel this I will save myself a whopping £2250.93.

I have looked at my original docs and it mentions the 30 day initial cooling off period and then it says for a full explanation of my cancellation rights see my policy document. I have had a look through the paperwork and cannot find any pol docs so have requested them from HSBC.

When I contacted them they advised me that if I cancel over the phone yet I will have to go through a NEW loan application just to get them to take the protection off... However when I insisted they send out a copy of the pol docs the female operator advised that if I wanted to, I could go into an HSBC branch and they have the power to take off the loan protection without doing a new loan application but its up to their discretion.

Has anyone had this situation? Any suggestions on what to do? Answers on a postcard please!

Rafter

Because removing the protection will change your repayment and potentially the term of your loan, the banks use it as an excuse to do a new application and try to up the interest rate they are charging you.

If they were charging a 'fair' price for the insurance this would not be an issue because they wouldn't be subsidising their loan rates.

If your credit rating is good and you think you could get a better loan rate elsewhere, I suggest you go to HSBC and give them an option. Either they remove the loan protection and keep your business or you will take your banking requirements elsewhere for the rest of your life and they will lose all your custom!

R.

Tomarse_2

It depends how the loan was set up.

What the banks usually sneakily do, is lend you the money (as part of the loan) to pay for the full amount of the PPI for the course of the loan.

E.g. If I wanted to borrow £1000, the bank's own PPI might cost me £200. They'll lend you £1200 and take £200 of it straight away to cover the PPI. So you still get £1000 to play with, and make one payment each month.

This is where it gets a bit grey I remember correctly (it was a few years back I worked in it). If you want to cancel the PPI, the bank will often attempt to make you take out another loan to pay off the first and take out a new one without the PPI. I seem to remember that they claim you owe them the money for the PPI over the course of the repayments, even though they "effectively" took it at the start. I'm not 100% sure if this is correct as it always got a bit confusing, but this was my understanding. I worked in the claims section and these disputes were usually settled in the banking branches (though even they used to phone us to try and make sense of the infinite policies and their loopholes!). The "new" loan will more than likely be at a worse rate than the original too.

The other setup (that NEVER seemed to happen cos it'd be too morally correct) was that the bank (or whoever) would set up payments for the PPI seperately. I.e. you'd see 2 payments come out of the account each month. In this circumstance, you can apparently just cancel the smaller of the monthly payments and write in/call to cancel the PPI.

Hope this helps. I've been trapped by it myself and was told that if I were to cancel my PPI, then I would owe more due to not being eligible for the rate at the start.

lil_redhead

Cheers for that, really appreciate you taking the time to write. It makes sense. x

robert_harper_2000

If you didn't understand the insurance or it isn't suitable. Then it is mis-sold and they need to refund it without penalties. I successfully took them to a small claims court regarding this.

lil_redhead

robert_harper_2000 wrote: »

If you didn't understand the insurance or it isn't suitable. Then it is mis-sold and they need to refund it without penalties. I successfully took them to a small claims court regarding this.

I'm quite intrigued about this option... Can you tell me more? I saw a template letter on another thread and a list of reasons with regards to the cover being unsuitable. What did you say? Did you write to your branch? How long was the process? Did your bank ever get funny with you with regards to the loan after you'd won?

Sorry for the million & one questions... maybe I should have said I'm very intrigued!

robert_harper_2000

lol there is a lot of people being mis-sold insurance and you would and should get a refund. If you for example were self-employed then you wouldn't be able to claim on it, so why then would you have taken it if it was properly explained- You wouldn't have!
consumeractiongroup.co.uk/forum
There are templates and everything, mine took 3 months ish I guess but didn't settle until full PPI refunded. Never any probs at the bank since, and I do all my business banking with them!

lil_redhead

robert_harper_2000 wrote: »

lol there is a lot of people being mis-sold insurance and you would and should get a refund. If you for example were self-employed then you wouldn't be able to claim on it, so why then would you have taken it if it was properly explained- You wouldn't have!
consumeractiongroup.co.uk/forum
There are templates and everything, mine took 3 months ish I guess but didn't settle until full PPI refunded. Never any probs at the bank since, and I do all my business banking with them!

I'm glad about there being no probs... Cheers for all of that, it really helps.