Mortgage Protection Insurance - Scottish Provident

johng_1976

Hi,

I was wondering if anyone had any experience with claiming mis-sold Mortgage Protection Insurance.

I distinctly remember being being told by my Mortgage broker that my application would be refused if I didn't have Mortgage Protection Insurance
This was in 2001.

The schedule was written up by a company called Scottish Amicable, however, the actual insurance is with Scottish Provident. I have a copy of the schedule.

Any advice would be greatly appreciated.

Thanks,
John.

magpiecottage

This sounds incorrect.

Scottish Provident at that time was a subsidiary of Abbey National but sold through independent brokers.

Scottish Amicable had some reps but was largely sold by independent advisers as well.

Either way, no employee of one insurer would sell the other's product.

It seems most likely that you went to an independent adviser who perhaps considered a Scottish Amicable product but then decided to recommend a Scottish Provident one instead.

Either way, neither a Scottish Amicable nor a Scottish Provident policy will be PPI. You have not said it is but for the benefit of other readers, neither company had (or has) the required statutory approval to offer PPI.

The term Mortgage Protection suggests it is a life policy intended to release sufficient funds to clear the outstanding mortgage if you die and, since both Scottish Amicable and Scottish Provident were considered, it seems that your broker was independent.

This means that the insurance company will have no responsibility for the sale.

So you will need to complain to the broker not the insurer. This is where you are likely to start encountering difficulties.

The first of these is actually finding the broker. They may no longer exist.

Assuming they do, though, you need to prove, on the basis of the evidence (as opposed to your recollections) that they really did say what you assert. You do not need to prove beyond all reasonable doubt but you do need the evidence to show that it is more likely than not (and not merely equally likely) that your assertion is true.

Even then if it is true, or if it was simply that you had to take the policy to get the adviser to arrange the mortgage free, you will still lose.

Then you need to prove that the policy was unsuitable for you. That means proving it would never pay out but that is unlikely to work as there was always a risk of death.

Alternatively you could attempt to show that you would never have a family or partner to leave your home to - but how can you know with 25 year commitment?

So that is difficult. Then you face the issue that FOS this type of policy was not under its jurisdiction in 2001 (or that of its predecessor the Personal Investment Authority). Although insurers were subject to the voluntary jurisdiction of the Insurance Ombudsman, independent brokers were not.

So the evidence you have provided does not paint an encouraging picture. I'm afraid.

johng_1976

Hi,

Sorry, I should have said Prudential. The policy is with Prudential.

It looks as though Scottish Amicable were taken over by Prudential.

johng_1976

Thanks.

I thought that there wasn't much hope, but still pretty annoyed that they conned me into thinking i wouldn't get a mortgage if I didn't take their insurance.

There are a couple of things I am paying as part of the protection, that I am unsure of; Waiver Benefit Premium, Mortgage Payment Benefit Premium and a monthly plan charge.

Do you know what these are?

I understand the others; Basic Premium, Basic Critical Illness Premium and Unemployment Cover Premium.

Thanks again,
John.

magpiecottage

Ah - that makes sense now. Prudential bought Scottish Amicable.

Waiver is a benefit which will pay the premium for you if you are too ill to work. It is not PPI, though.

Mortgage Payment Benefit would meet your mortgage payments in the same circumstances.

The monthly plan charge could refer to an administration standing charge or the actual cost of the life cover. However, since there is a basic cover I think it is probably the former.

On the other hand, including an unemployment cover premium suggests there is a PPI element of some kind.

If the policy was sold by a rep of Scottish Amicable then Prudential (and FOS) may entertain a complaint. However, that does not in itself mean it was unsuitable for you so whilst you could make the complaint you are still some distance from an uphold.

addedvaluebob

If you don't have the original sellers details then you should contact Prudential to ascertain the name and status of the seller

If you understand all of the policy details then you need to consider your personal and financial circumstances at the time of the sale. For example, did you have cover elsewhere through another policy that could have been used instead of being sold this new plan. Mis-selling is not as simple as 'you could die, therefore you needed life cover. Did the mortgage benefit premium cover you for a period that may have been covered by employee benefits.

All of these factors and more should be taken into account to determine if you were sold something you didn't need or would not pay out in the event of a claim.

Do not give up without investing the time into this research.

If you then reach the conclusion that you were mis-sold you should put in the complaint to the broker, if they still exist, or Prudential if they were ultimately responsible for the original advice and recommendation

dunstonh

Mis-selling is not as simple as 'you could die, therefore you needed life cover.

It effectively is in the case of life assurance.

Did the mortgage benefit premium cover you for a period that may have been covered by employee benefits.

Which is largely irrelevant in the case of MPPI as we know from ombudsman decisions. As long as the MPPI would have paid out in addition to employer benefits, there is no issue with this (unlike loan and credit card PPI where it is a greater issue)

addedvaluebob

dunstonh wrote: »

It effectively is in the case of life assurance.

Not if they had an existing policy elsewhere that could/should have been taken into account before selling a new policy

Which is largely irrelevant in the case of MPPI as we know from ombudsman decisions. As long as the MPPI would have paid out in addition to employer benefits, there is no issue with this (unlike loan and credit card PPI where it is a greater issue)

But we don't know the exact policy details and the benefits. Did every policy pay out in addition? There are far too many providers, policies and individual terms to consider that changed during the life of any particular plan being marketed to say with certainty without seeing the original documentation

johng_1976

Hi,

The Schedule is definitely geared towards my mortgage, as the amount of money decreases every year e.g. the longer I pay the mortgage, the less money my next of kin would receive if I died.

I understand that it would be difficult to prove that I was actually mis-sold the Mortgage Protection Insurance, however, I am 100% sure that I was told that my mortgage application would not be processed (by Halifax or the broker) if I didn't have the insurance. Is it possible that Halifax had a clause where you required some kind of insurance, before they could process the application?

Unfortunately, the Mortgage Shop that I bought my house through is no longer there so I don't even know where I would begin to chase this.

I will email Prudential with my schedule number etc. and let everyone know how it goes.

Thanks again for your advice - it's really appreciated.

dunstonh

I understand that it would be difficult to prove that I was actually mis-sold the Mortgage Protection Insurance, however, I am 100% sure that I was told that my mortgage application would not be processed (by Halifax or the broker) if I didn't have the insurance. Is it possible that Halifax had a clause where you required some kind of insurance, before they could process the application?

Without evidence to support that allegation, that reason will fail. They would then look at financial need. Halifax didnt need life assurance in 2001. However, the broker may have needed it to give you free mortgage advice. It is a very common model for brokers to give the free advice as long as you purchase an insurance product through them. This model is allowed as long as it is suitable.

Unfortunately, the Mortgage Shop that I bought my house through is no longer there so I don't even know where I would begin to chase this.

Your purchase was 4 years prior to regulation and the FSCS protection only started in 2005 (although they would reject a life assurance covering a mortgage anyway as that is what most people do as the norm and you are arguing against the norm). I would put the odds of a Scot Am agent having a mortgage shop as very low. It is more likely it was an IFA office. However, pru will confirm if it was their agent or not.

johng_1976

Hi,

As I have said, I'm not sure if I will have any luck with this and simply looking for advice. The schedule is on Scottish Amicable headed paper with all the details, which I will send to Prudential if they require this.

If I am not entitled to anything, then fair enough. However, it does look like I have been naive (I was a young boy at the time) in taking out all of this protection when it doesn't look like it was really necessary. Even at the time, I felt a bit bullied by the guy selling me the insurance.

I have emailed the complaint to Prudential and will post the outcome as soon as I receive it.

Thanks again,
John.