Can I reclaim PPI after successfully claiming on the insurance

DC2016

I was told by the Bank when I took out a commercial loan that I had to take out "Key Man " insurance to protect me in case of illness. I paid this for approx 7 years then had to claim on the insurance due to severe illness. The Bank made an insurance payment to me. However, can I still reclaim the previous 7 years policy payments I made before the payout as the policy was clearly mis-sold? I would welcome any advice on this!

Mersey_2

Watch Martin Lewis ITV+1 now or on catch up. Yes, that is mis-selling as PPI is not compulsory. You may not succeed, or you may be repaid the premiums plus interest minus the benefit used. Each case turns on the individual claim. The Ombudsman is impartial. There's a backlog, but it's worth pursuing. The FOS is a free service of appeal and your complaint can be referred to them by you by 'phone, online or by post.

jellie

DC2016 wrote: »

However, can I still reclaim the previous 7 years policy payments I made before the payout as the policy was clearly mis-sold? I would welcome any advice on this!

It doesn't work like this.

You would make a complaint that your insurance was mis-sold to you. If upheld, your refund would be reduced by the amount you received for your illness claim.

Be careful with your complaint allegations - the policy was clearly suitable for you, as you made a successful claim on it.

Insider101

There don't look to be any justifiable grounds for complaint here.

Firstly, the insurance described does not sound like key man cover, which usually pays the insured amount to a business in the event of the death of a named individual (hence the "key man"). This type of insurance would not usually pay out in the event of illness. However, regardless, if the lender requires the borrower to take out insurance to ensure the loan can be repaid in the event of illness or death then this is their prerogative.

It is actually more common with business loans than personal ones since they tend to be of a higher value. However, it is a legitimate exercise of the lender's commercial judgement. They feel it is too high a risk to lend the money unless the risk is mitigated by the insurance. If the OP doesn't like this then the alternative is to look elsewhere for the borrowing. It is not misselling (as long as the insurance genuinely was a condition of the offer of credit) and is not something FOS can consider a complaint about (the lender can object on the grounds of it being a legitimate exercise of its commercial judgement). There is no point agreeing to the terms and then complaining about the terms that you agreed to.

dunstonh

I was told by the Bank when I took out a commercial loan that I had to take out "Key Man " insurance to protect me in case of illness.

It is a quite common requirement that is allowed.

Watch Martin Lewis ITV+1 now or on catch up. Yes, that is mis-selling as PPI is not compulsory.

That is not correct. Sorry. Compulsory insurance is allowed as a condition of borrowing. It is very common in the commercial sector as the source of income may be heavily linked to an individual or individuals and its a way of protecting the borrowing. Key man tends to either be referring to life assurance or income protection. It is not a PPI product.

I paid this for approx 7 years then had to claim on the insurance due to severe illness. The Bank made an insurance payment to me.

So, it did its job. Excellent news that you had it.

owever, can I still reclaim the previous 7 years policy payments I made before the payout as the policy was clearly mis-sold?

You have given no grounds for mis-sale. So, I cant see why you say it was clearly mis-sold. Plus, its not PPI.

magpiecottage

Mersey wrote: »

Yes, that is mis-selling as PPI is not compulsory.

As dunstonh says, this is incorrect. A lender is perfectly entitled to impose insurance as a condition of a loan in order to protect itself. This is permitted under FCA Principle 8 (which was there in its previous incarnation as the FSA as well).

In addition, it was Keyman insurance, not PPI. This means the policy was part of an arrangement to protect the OP's business in the event of a "key" person - in this instance the OP - being unable to perform that key role.

The Ombudsman is impartial. There's a backlog, but it's worth pursuing. The FOS is a free service of appeal and your complaint can be referred to them by you by 'phone, online or by post.

You have the right to ask FOS to consider the complaint. However, you have a number of problems to overcome.

The first, as stated, it was not PPI - so, whilst it might be classified as such initially, it will then fairly quickly be recategorised.

Then, because it is a business arrangement, you will need to meet the EU definition of a "microenterprise" for FOS to look at it at all. This means there must be less than ten employees of the business (including the OP if it is a Limited Company) and have a turnover and assets of less than €2 million (or its Sterling equivalent).

Get over that hurdle and the bank is entitled to carry out a comparison of the cost of cover versus the amount paid out. If the benefits are more than the cost then FOS is unlikely to consider the merits of the complaint simply because there is nothing to redress - unless the OP wants to give the larger payout back in return for the smaller cost.