Mortgage payment protection exclusions

Insider101

perlot wrote: »

Hi all, first timer here!

I am in "discussion" with a bank regarding reclaiming the mortgage payment protector payments I made. I have got the first reply basically saying "no you can't reclaim them". Their argument is that it was a non-advised decision and everything was made clear. I have two questions:

1. The bank ceased selling the product, or anything like it, in 2008, can I use this as proof that they know it's not a valid product?

2. I have a vague memory of enquiring about claiming on the insurance once, and was told that my redundancy payout and savings would be taken into account first i.e. if I got redundancy money the insurance wouldn't start paying out until that was used up, and that if I had savings these would need to be used up too. Is that correct or am I remembering that wrong? Is that a normal part of a policy?

Thanks all.

p.

Just to give my two cents, though it is mainly a reiteration of Roonaldo's comments.

Firstly, the problem with PPI was never about the product itself, but about the way it was sold to people. Basically people being misinformed or wrongly informed about what the product was and what it covered, not being informed of conditions which are likely to impact them, or sometimes being provided with unsuitable advice regarding it.

In response to point 1) It is not correct to state that it is "not a valid product". If someone is correctly informed regarding the product, what it is and what it does then there is not really any such thing as an "invalid" product (unless maybe you weren't actually eligible for it).

Mortgage PPI is a good product for the majority of people and is only a variant of Accident, Sickness and Unemployment cover which is still widely sold. The reason many banks have stopped selling it is because it was being tarred with the same brush as other types of PPI which may have been more flawed and less valuable. The ambulance chasing industry which has sprung up on the back of PPI by and large does not have the knowledge to differentiate, nor does the mainstream media, and as a result peeople are either looking or being coerced into making complaints about it which are often a complete waste of time but still need to be investigated. Therefore, from a commercial standpoint, it has become more trouble than it is worth to continue to offer it.

As regards point 2) I think you need to check your terms & conditions, but what you say does not sound correct to me (though it is certainly possible that you could have been misinformed to this effect by general bank staff without the real knowledge of the product to make an informed comment). Usually the policy will have a short deferred period of 30-90 days in which you can't claim. The purpose of this is to prevent the admin costs involved in processing claims where policyholders have only been sick or out of work for a few days. After this deferred period you can usually claim regardless of any redundancy pay or whatever savings you may have.

The one thing which does usually impact claiming is payment in lieu of notice, which means for example if you have a three month notice period and they make you redundant but place you on "gardening leave", i.e. pay up your contract and let you go with immediate effect. In such circumstances, you are still deemed to be receiving employment income until the end of your notice period, hence are not considered to be out of work until that period expires.

[Deleted User]

perlot wrote: »

Yes, looking at the letter they are calling it a "full and final" reply as you say, but I'm not going to let that stop me!

But it will "stop" you. Your only recourse now is to refer it to the Ombudsman where it will languish for around eighteen months.

Brokerwise

Insider101 wrote: »

Just to give my two cents, though it is mainly a reiteration of Roonaldo's comments.

Firstly, the problem with PPI was never about the product itself, but about the way it was sold to people. Basically people being misinformed or wrongly informed about what the product was and what it covered, not being informed of conditions which are likely to impact them, or sometimes being provided with unsuitable advice regarding it.

In response to point 1) It is not correct to state that it is "not a valid product". If someone is correctly informed regarding the product, what it is and what it does then there is not really any such thing as an "invalid" product (unless maybe you weren't actually eligible for it).

Mortgage PPI is a good product for the majority of people and is only a variant of Accident, Sickness and Unemployment cover which is still widely sold. The reason many banks have stopped selling it is because it was being tarred with the same brush as other types of PPI which may have been more flawed and less valuable. The ambulance chasing industry which has sprung up on the back of PPI by and large does not have the knowledge to differentiate, nor does the mainstream media, and as a result peeople are either looking or being coerced into making complaints about it which are often a complete waste of time but still need to be investigated. Therefore, from a commercial standpoint, it has become more trouble than it is worth to continue to offer it.

As regards point 2) I think you need to check your terms & conditions, but what you say does not sound correct to me (though it is certainly possible that you could have been misinformed to this effect by general bank staff without the real knowledge of the product to make an informed comment). Usually the policy will have a short deferred period of 30-90 days in which you can't claim. The purpose of this is to prevent the admin costs involved in processing claims where policyholders have only been sick or out of work for a few days. After this deferred period you can usually claim regardless of any redundancy pay or whatever savings you may have.

The one thing which does usually impact claiming is payment in lieu of notice, which means for example if you have a three month notice period and they make you redundant but place you on "gardening leave", i.e. pay up your contract and let you go with immediate effect. In such circumstances, you are still deemed to be receiving employment income until the end of your notice period, hence are not considered to be out of work until that period expires.

Indeed, I received a complaint from a client last year who had claimed on his cover for 8 months after losing his job who openly admitted he would have been homeless without it (this was via a CMC) It even went to FOS when I dismissed the case:(

roonaldo

Brokerwise wrote: »

Indeed, I received a complaint from a client last year who had claimed on his cover for 8 months after losing his job who openly admitted he would have been homeless without it (this was via a CMC) It even went to FOS when I dismissed the case:(

the most I have seen is £45k of claims! but still mis-sold according to them.

dunstonh

1. The bank ceased selling the product, or anything like it, in 2008, can I use this as proof that they know it's not a valid product?

No. Banks have pulled out of retail of many products (especially since the RDR). However, that doesnt affect suitability.

2. I have a vague memory of enquiring about claiming on the insurance once, and was told that my redundancy payout and savings would be taken into account first i.e. if I got redundancy money the insurance wouldn't start paying out until that was used up, and that if I had savings these would need to be used up too. Is that correct or am I remembering that wrong? Is that a normal part of a policy?

Redundancy is never taken into account. The only bit on redundancy that can be an issue is Payment in lieu of notice (PILON). However, that doesnt prevent claiming. It is just your employer putting you on gerden leave or similar and giving you a leaving date which may not be exactly the same as your "dont come to work any more" date.

I think from a legal stand point, if a company has stopped selling a product because they acknowlege that it is not fit for purpose

The product hasnt stopped being sold. Indeed, today it is one of only two types of PPI that are still retailed. Most MPPI complaints fail (both at bank and at FOS) because it was largely a suitable product. The fact a bank has changed its distribution doesnt impact on the sale of the product years earlier.

If I understand it right, Mortgage Payment Protection is very different to the other PPI issues and much harder to claim back for due to the nature of the product it is insuring.

It is a form of PPI but has less of the problems of loan and credit card PPI. The FSA recognised this in its own review of PPI. However, it doesnt mean it cant be mis-sold. Its just less likely to be.

Insider101

Brokerwise wrote: »

Indeed, I received a complaint from a client last year who had claimed on his cover for 8 months after losing his job who openly admitted he would have been homeless without it (this was via a CMC) It even went to FOS when I dismissed the case:(

Sign of the times unfortunately.