Payment Protection Question

Roman_Coin_Man

Hi All,

I'm a new poster with a question. If this has been covered before I apologise but I couldn't see it with a quick scan, and I apologise for the length of this post in advance.

OK, the scenario is as follows. Quite a few years ago my wife received a letter from her bank offering her a credit card with an attractive rate. She was asked various questions, and was subsequently offered the card with a fairly substantial limit. Now over the time we have used and repaid the card multiple times, but stopped using it when I was recently made redundant, and now want to claim on the payment protection policy. Easy, you might think.

The problem is as follows. The card issuer is saying that only my wife is covered for redundancy.

When she took out the card she was asked what the household income was and I assume the credit limit was set from that figure. However, as 97% of that figure was my earnings, my argument to them is simple.

If you purely take my wife’s earnings, she has been given a card with nearly 8 times her yearly income as a limit. (There can't have been any mistake on that as the issuing bank are stating that they conduct a full credit appraisal before issuing the card, and as all of her earnings went into a bank account with the same bank, they can't claim they didn't know what she earns.) So, as it is obviously not justifiable that any card issuer would give a card with such a crazy limit, the limit must have been worked out using my income figure as well.

So if that is the case, surely the payment protection should also cover my earnings loss?

As a secondary point, at no time was she ever informed that it was only her that was being covered when she requested payment protection, (although bizarrely despite being told initially that I am not covered, I am now told that I am apparently covered if I were to die!)

And just to put the payment protection into perspective, the payment is currently £115 per month, so we are not talking a base level insurance cover here, my wife truly believed that she had covered all of the bases.

I have already spoken to the bank, and despite various promises to escalate my call, or to have a "supervisor" call me back, I have spoken to no one higher than basic call centre staff. They all have the same message of "you are not covered" and try to get me off of the phone as quickly as possible.

So my question is, how would you approach this issue?

regards

Mark

ad44downey

It just shows what a complete and utter rip-off any insurance product offered by a credit card company is. It's money for old rope as far as they're concerned.

ad44downey

Inform them that if they refuse to pay out then you want them to issue you with a letter of deadlock so you can take the entire matter to the Financial Ombudsman. That might scare them a bit and it'll cost them a few hundred quid if it goes to the ombudsman which will be some satisfaction to you even if you don't win.

Roman_Coin_Man

But surely payment protection on the account is to insure against the loss of earnings that pay for the account. If they state that the insurance only covers my wife, they are by implication saying that the card and it's limit has been agreed against only my wifes earnings. So essentially they are stating that they have lent my wife 8 times her annual salary on a credit card.

Surely that is a very clear case of irresponsible lending, don't you think?

And isn't that is something that the authorities are taking a very dim view of if I make a complaint? (By the way is that the OFT or the FSA for the complaint?)

MarkyMarkD

You haven't got a case.

It's your WIFE's account and any insurance covers her and her alone. Credit card PPI always covers the card holder, not anyone else. In fact, any loan PPI always covers the card/account holder, not anyone else.

There's nothing irresponsible about taking account of household income. That would be normal practice.

There's no obligation for anyone to have PPI and the amount lent is not based on whether PPI is in place or not. Their decision that the credit limit was appropriate would have been based on your household income, on the assumption that your circumstances didn't change.

No different to YOU having taken out the card, but not taking insurance. No difference in irresponsibility/responsibility of lending.

Taking things to the FOS when you have no case at all is not sensible, ad44downey. It simply clogs up the FOS system and delays the processing of valid claims.

jonesMUFCforever

If your wife is the principal cardholder and you a secondary (or non card holder?) then the insurance will only cover her.
Whether the insurance was miss sold you will need to persue the bank or Ombudsman.

On purely what you have written you have no case regarding your redundancy IMO

This query also relates to Personal Loan PPI whereby unless stated to the contrary a joint loan PPI only covers the first named!

Roman_Coin_Man

MarkyMarkD wrote: »

You haven't got a case.

It's your WIFE's account and any insurance covers her and her alone. Credit card PPI always covers the card holder, not anyone else. In fact, any loan PPI always covers the card/account holder, not anyone else.

There's nothing irresponsible about taking account of household income. That would be normal practice.

There's no obligation for anyone to have PPI and the amount lent is not based on whether PPI is in place or not. Their decision that the credit limit was appropriate would have been based on your household income, on the assumption that your circumstances didn't change.

No different to YOU having taken out the card, but not taking insurance. No difference in irresponsibility/responsibility of lending.

Taking things to the FOS when you have no case at all is not sensible, ad44downey. It simply clogs up the FOS system and delays the processing of valid claims.

Do not misunderstand Markymarkd, and maybe I should have made this clearer. It is a joint card account although because the card spawned from my wifes original bank account, the bank has me down as a secondary card holder. As joint card holders we never knew that there was a difference between us, and believed that the PPI covered both our incomes. We are genuinely shocked to find that apparently it does not.

And Markymarkd, you state that taking the household income into account is normal practice. I would venture that if that is the case then it is a deeply flawed practice that should be reviewed. There is no way we would have taken out, and continued to pay for, an insurance that nearly costs what my wife was earning per year if we knew that it only covered her earnings. And therefore as far as taking valid claims to the FOS to prevent cloggin up of the system, the last time I looked, the misselling of financial products has always been a valid case. At least it has been since I was a LAUTRO qualified financial adviser, so going back 20 years or so!

ejones999, we were never made aware of any differentiation of primary and secondary card holder cover, and as such I believe that you are right and the PPI was missold to us. Thank you for a far more positive post than others have been:j

P.S. When I first rang to check how we could make a claim on the PPI, the initial rep I spoke to said that she wasn't sure but she thought that the secondary card holder would be covered under this PPI, and it was only after some 10 minutes of me being on hold and her asking around that she decided this wasn't the case. Might kind of explain our lack of understanding if the bank themselves are not sure!

Tootsie_Roll

Another fine example of why reading the T's & C's is so vital. Had you done this originaly you would have read that you were not covered and cancelled the policy immediately thus saving money. Now it's the banks fault for not pointing it out to you and you beleive you are due some redress !!

nickmack

If you were told when you took out PPI that it covered both you and your wife, you may have a case to get a refund for mis-selling.

Unfortunately, if this is not the case, they will refer you to the Terms when you signed the PPI agreement.

Clive_Woody

Might be more of a general question, but can you have a joint credit card account?

My understanding was the person whose account it is could request additional cards but they remained liable for debts run up on those cards, and the account was in there name alone. As such any insurance they took out would only cover them unless they negotiated to add an additional person (and no doubt paid an increased premium).

If you are paying £115/month for the insurance alone, this suggests you have a very big outstanding balance on your card. If possible you really want to get this transferred onto a 0% interest card ASAP, then when you get back on your feet work at getting this balance paid off. I won't ask what interest rate you are paying on your card, but no doubt it's not good.

Roman_Coin_Man

Yes, when she first took out the card she was told that the PPI would cover us. Then when we try and claim it we get told first that it does, and then that it doesn't. Either the bank lied to her, or they themselves were confused, but ultimately when you are young you tend to believe this stuff without referring to the T+Cs.

TBH, using an analogy, it's like asking to have a named driver added to your comprehensive insurance with the same excess and other details as yourself. The insurance company do this and only when the named driver has an accident do they then confide that the named driver is covered, but actually not for accidents, fire or theft! Yes it may have been hidden somewhere in the T+Cs, but would you have checked that as you were an existing policy holder anyway? Unlikely

The fact that even now when we ring we get mixed messages on whether we are covered or not says to me that this is not clear cut, and is more likely the result of a misinformed salesperson, rather than someone out to hit their target.

(Tootsieroll, glad to see you like your name in print but not really a constructive post was it? I'm not frantically finger pointing as you lamely try to assert, I am genuinely angry that I believe we have been misled. I guess now I am as old and as cynical as you appear to be, I would always read the fine print, but there are some things that legally a financial adviser is required to point out regardless of whether you can find the clause buried in the body text of the T+Cs somewhere. And if you have asked a direct question you shouldn't expect to have to check the answer in the fine print from a salesperson within a highly regulated environment.)

Also T+Cs should, but don't always cover everything, and can also be wrong! Maybe wrong is not the right word, but to explain my comment, on my mortgage insurance the T+Cs say that I have to wait 90 days before claiming. When I called to start the claim the rep told me that I only had a 60 day wait time on my account!