Life insurance misselling

leroux87

Hi,
My partner bought our house through the Help to Buy scheme in 2009. The original mortgage was with Halifax who insisted that she took out life insurance with Scottish Provident otherwise they wouldn't give her the mortgage. I know that this is often the case for mortgage applications, however it seems strange that there was no choice in which provider she could use.

Is this grounds for getting misselling compensation?

Weighty1

No. If the agent was tied to selling Scottish Provident products then that's all they can recommend.

ACG

If they insisted she had life insurance then yes it is miss selling. If they insisted it could only be done with Scot Prov then I do not think it would be miss selling as that is all they have to offer.

As far as I am aware there is no requirement under HTB to have life insurance.

dunstonh

If you have it in writing that life assurance is a mandatory requirement then you have no complaint as they have stated it is mandatory.

If you used a broker, then it may have been a requirement of the broker. It is a common model that they will give the mortgage advice but insist on the insurances being bought via them. That model is allowed as long as the insurance is suitable.

If you were told verbally that you had to have it but nothing supports that but you have no evidence of what was said then it is a complaint reason but it is a very weak complaint that is unlikely to succeed. A complaint on that basis would find no evidence to support your allegation and would fall back to check whether the insurance was suitable. if it is suitable then the complaint is rejected. So, the only real issue here is whether the policy sold was suitable for your needs.

however it seems strange that there was no choice in which provider she could use.

If it was via Halifax then Halifax are tied agents and can only sell their own product. Tied agents only put in place their own product. However, Scot Prov isn't retailed by Halifax. So, this would indicate a broker was used.

If you used a tied agent broker, then you would not get choice as they can only retail from their linked provider
If you used a panel based broker, then you would not get choice as the broker would pick the best on on their panel
If you used an independent, then you would not get choice as the independent would pick the best they believe from the whole of market.

cajef

ACG wrote: »

As far as I am aware there is no requirement under HTB to have life insurance.

Out of interest if it is requirement of the Halifax could they have refused the mortgage?

dunstonh

cajef wrote: »

Out of interest if it is requirement of the Halifax could they have refused the mortgage?

it isn't a requirement of Halifax. However, if the lender insists on it (which tends to be only on commercial borrowing nowadays) then yes, they will refuse to lend if you refuse a condition of borrowing.

kingstreet

Are you sure it's Scottish Provident?

As dunston said, Halifax, being part of LBG is tied to Scottish Widows and was in 2009, AFAIK.

If Halifax sold it, it's Scottish Widows. If it is Scottish Provident, it was probably sold by a third party intermediary, like a mortgage broker.

BTW HTB didn't exist in 2009, so it may have been HomeBuy Direct, FTB Initiative or FirstBuy if its a shared equity scheme;-

http://www.myfirsthome.org.uk/

the website of the outfit which administers all the Government shared equity facilities.