PPI when a mortgage adviser was used

Qwoin

I haven't been able to find information but both my daughter and her partner have been advised that they wont be able to claim back PPI if a mortgage advisor / broker has organised the mortgage for them. I understand that this is because the mortgage adviser will have made sure that any extras such as PPI are appropriate but has anyone been succesfully involved in similar claims?

Thanks to anyone taking the trouble to reply.

magpiecottage

There have been a few successful complaints about PPI against brokers. However, they are difficult because of the implications of being unable to maintain payments through incapacity or unemployment. You need to demonstrate that the policy would never have paid out - or a significant exclusion of which the policyholder was unlikely to be aware.

A single premium policy, with the premium added to the loan can be seen as a misselling reason but only if it was applied for before 14 January 2005. This is because FOS cannot apply modern standards to sales before then.

dunstonh

PPI is not generally regarded as an adviser failure. I have heard that under 1% of PPI complaints are actually against advisers and most of those fail.

In part that will be because advisers dont really get involved with loans and credit cards. And its those two types of PPI that see most complaints upheld. Mortgage PPI does see some complaints but most of those are rejected.

Another reason is that most mortgage advisers would not have been regulated until January 2005 (some would have been back to around 2000 but not many). However, the main reason is that advisers tend to have much better audit trails. Factfind, needs analysis and report. This was highlighted by the FOS a few years back when it commended advisers for their audit trails.

Another reason is that most advisers are personally responsible for the advice they give. So, if a complaint comes in, they suffer the financial consequences. That means advisers do in general take more care. However, when there is a complaint they tend to take the complaint personally and fight it much harder than a bank would. Many PPI complaints with a bank get auto payouts. You dont tend to see that on the adviser side as they dont have volume of complaints a bank has. Advisers tend to never get complaints or perhaps one every decade or so.

Finally, MPPI itself is not a bad product. It is still only one of two types of PPI still retailed. It covers a major secured debt with lifestyle changing consequences if it goes unpaid. So, it carries more importance. The FOS has been rejecting complaints on MPPI where people have had 12 months sick pay because of the long term nature of mortgages. Yet that reason works for short term debts with PPI. MPPi was also nearly always standalone (apart from the mortgage and with its own direct debit). That is how PPI should have been set up.

So, whilst its possible to complain, the above are some of the reasons why you see lower success levels when it comes to advisers and MPPI.

Qwoin

Thank you for the replies, it looks like they were given the right information.