14 day cooling off penalty?

toppere43

Hi, I took out a van insurance policy on the 31st May 2014 and paid £2645.10 i cancelled it on the 12th because i got a cheaper quote for £1800. cancellation was done via phone and email. This was their reply.


"Amount Paid £2645.10
Made up of £2600.10 premium, £25 administration fee & £20 legal expenses (£25 and £20 are non-refundable).
From there, cancellation would normally be worked out on a short-period basis as per our terms of business, sent at inception (copy attached). Therefore 70% return premium would be £1820.07. We have however agreed more favorable terms as follows:-

350 days out of 365 remained on day of cancellation, therefore pro-rata return on £2600.10 is £2475.37.
£2,475.37 - £233.53 SIS Commission = £2,241.84
£2,241.84 - £25 Cancellation Fee = £2,216.84.

Whilst i agree to pay £45 admin and legal fees, i dont think i should have to pay the commision fee and cancellation fee. This was my reply.

Thank you for your email and the breakdown that you have provided. However you will note that this policy was taken out on the 31st May 2014 and cancelled on the 12th June, my emails confirm this. this policy was cancelled within the 14 day cooling off period allowed by law. I will accept the charges of £45 for admin and legal expenses and premiums for the 13 days covered.

Therefore 352 days out of the 365 remained on the day of cancellation, therefore pro-rata return on £2600 is £2507.40. I dispute your entitlement to charge me a commission fee of £233.53 or a cancellation fee of £25. Your own terms and conditions make it quite clear what charges i am expected to pay. Would you please refund to the card that was used at inception the sum of £2507.40.

Firstly i believe they are not allowed to profit under the FCA rules for cooling off period
and secondly it should not be construed as a penalty.

Any thoughts on how i stand? I've yet to receive a reply. thanks in advance.

Quentin

What does the policy say will happen on cancellation?

If it is different to what they are doing then it looks easy to rectify

But if they are charging in line with the ts + cs then you need to win a complaint that the conditions are unfair.

Either way make a formal complaint about the charges and take it from their reply. Escalate to the fos if you are unhappy.

toppere43

Hi, the T&C states that "Our own charges for all customer types are separate and if the policy is cancelled at anytime neither these nor the commission we earned for arranging the policy will be refunded"

To my knowledge the only time i was made aware of any commission was when the paperwork arrived. After reading the T&C, which i believe is one of the reasons for a cooling off period, decided not to proceed. I would think the company would be hard pressed to justify £233.53 for setting up a policy for 13 days without the implication that it is a profit. I believe this is an unenforceable condition

dunstonh

I would think the company would be hard pressed to justify £233.53 for setting up a policy for 13 days without the implication that it is a profit. I believe this is an unenforceable condition

The regulator don't have any ruling on what is fair or unfair. The broker has done the work and the work is actually a little more as you have cancelled than it would have been had it completed. So, the 13 days doesnt come into it. Whether you kept it or cancelled it, the work done in setting it up is the same.

When paying for work done, if you decide not to proceed then you still have to pay for work done. The regulator has no problem with that and nor would most people that run a business. However, where it is commission, then there is an element of cross subsidy and things become grey rather than black and white.

Your choice is to either complain using the free of charge complaints process or if take them to court and see how your unfair contract view turns out.