Life Assurance not PPI?

Willow1969

I'm not sure if anyone can help me, I've had a claim in for mis sold ppi regarding a loan my mother took out to start a business about 15 years ago.
The loan was for 15,500, taken out over a period of 60 months. The repayments were made each month from her business account & whilst the HSBC initially couldn't find any evidence of the loan due to the time scales involved, we managed to track down statements from this period to verify this, including when the loan was deposited into the account.
My mother clearly remembers being told that it was a condition of the loan than she take out insurance, despite the fact that my father had a joint life ins policy (with critical illness cover).

The insurance was paid from her personal account (Yorkshire Bank), again, statements submitted for this period clearly state 'Midland/HSBC ins' for the amount of £23.96 per month.
We've just had a letter back from the HSBC stating that the insurance does not relate to PPI, but a Life Assurance & critical illness cover.
I was led to believe that any insurance sold as an add on to cover repayments would be a valid claim, particularly as the policy was sold when my mother already had an existing joint policy & was told that it was a condition of the loan, & also, the duration of the insurance payments is the same for the loan repayments, 60 months.

So I'm unsure of what to do next, do I ask to see documentation supporting their claim...original contract etc?
I'm literally shooting in the dark here so any advice would be really greatly appreciated.

Many thanks.

societys_child

I'm sure someone will be along to give you a more detailed reply, but firstly it sounds like it was a business loan, so not sure how that effects things, and secondly, it's not PPI.

[Deleted User]

Life assurance is not PPI and does not suffer from the same widespread mis-selling. PPI is payment protection in the event of unemployment.

You can indeed complain about any insurance, if you can show it was mis-sold to you.

Unfortunately, you can only complain that you were told the insurance was compulsory if that wasn't the case. For the kind of loan your mother took out, however, it WAS a condition, so your "complaint" is completely invalid. The fact that you had similar insurance elsewhere is largely irrelevant and I'm not sure why you mention that the insurance only covered the period of the loan?

The bank are under no obligation to provide an original contract from a closed loan. You can, though, pay £10 for a Subject Access Request (SAR) which will net you everything they have on file for you, but I really fail to see where this will get you.

You really can't contest the rejection on the basis of a "complaint" founded on a mistaken belief that every bank insurance policy must somehow have been mis-sold.

Insider101

If the insurance genuinely was a condition of the loan then that is a legitimate exercise of the lender's commercial judgement. It's not something FOS will consider a complaint about. If your mother wasn't happy with this then she could have looked elsewhere for the loan.

It's only if she was told it was a condition when it actually was not that grounds for complaint exist.

Willow1969

Many thanks for your reply...as I said, I was literally shooting in the dark & I think my confusion comes from the fact that I thought PPI was any kind of an insurance that was sold to cover repayments in the event of unemployment/sickness etc, & it being mis-sold due to the fact that it was sold as a compulsory condition of the loan when she already had a similar policy.

I stated that the insurance premiums covered the duration of the loan repayments as the insurance was obviously pertaining to the loan & not a general insurance policy taken out over a random 5 years.

They said they are still looking into it however, so I'm unsure if there was actual PPI attached to the loan itself as we don't have any original documentation, only the statements.

Apologies for being ignorant on the subject & I hope I'm making sense.
It was a genuine question as to where we stand given the above, but many thanks for shedding light on the issue.

dunstonh

My mother clearly remembers being told that it was a condition of the loan than she take out insurance, despite the fact that my father had a joint life ins policy (with critical illness cover).

Nothing wrong with that. Condition of insurance as a requirement of borrowing is allowed. It used to be normal for all mortgages from banks but nowadays you only tend to see it on commercial borrowing where there is a key worker (i.e. business reliant on a key individual)

We've just had a letter back from the HSBC stating that the insurance does not relate to PPI, but a Life Assurance & critical illness cover.

That is also correct. PPI is product. it stands for payment protection insurance. Life assurance is a totally different product and stands for life assurance.

So I'm unsure of what to do next, do I ask to see documentation supporting their claim...original contract etc?

none of which will do you any good as a) it will not appear on there and b) there is no wrongdoing here.

& it being mis-sold due to the fact that it was sold as a compulsory condition of the loan when she already had a similar policy.

That is not a mis-sale reason. Condition of borrowing is allowed.

addedvaluebob

If your mother already held enough protection elsewhere this should have been taken into account before selling her another policy. It is not acceptable for a bank to just flog another policy as part of a lending arrangement. The salsperson should have undertaken a review of her overall circumstances and give her best advice not just sell a stand alone product.

It was not necessarily a compulsory insurance, this should have been detailed in the terms and conditions of the loan. If it is not there and the policy was sold because it was 'standard practice' within the bank that doesn't make it right.

Go back to HSBC and tell them she did not need the policy and they have failed to provide best advice to your mother, requesting a refund of premiums for this policy

dunstonh

If your mother already held enough protection elsewhere this should have been taken into account before selling her another policy. It is not acceptable for a bank to just flog another policy as part of a lending arrangement. The salsperson should have undertaken a review of her overall circumstances and give her best advice not just sell a stand alone product.

That is incorrect. If the life assurance was a condition of borrowing, then it is being made so for the benefit of the lender to ensure they are repaid. There is absolutely nothing wrong with this if it is a condition of the borrowing.

Insider101

addedvaluebob wrote: »

If your mother already held enough protection elsewhere this should have been taken into account before selling her another policy. It is not acceptable for a bank to just flog another policy as part of a lending arrangement. The salsperson should have undertaken a review of her overall circumstances and give her best advice not just sell a stand alone product.

With the greatest of respect, this comes across as an attempt to talk jargon and come across as "in the know", which is being got embarrassingly wrong.

Firstly, people don't take life cover out for no reason. So if the OP's mother held life cover elsewhere then it was presumably for a reason (mortgage protection, family protection etc...) this means that the cover would be likely to be insufficient for the original purpose and for paying off the debt. Secondly, it IS perfectly acceptable for them to require a life policy to be taken out alongside the borrowing, this is a legitimate exercise of the bank's commercial judgement made by the lending/underwriting department. If the OP's mother did not wish to accept this then she could have looked elsewhere for the loan.Thirdly, it is likely that the policy would have had to have been assigned to the bank. Fourthly, the salesperson is exactly that, a bank clerk and not a holistic financial planner.

It was not necessarily a compulsory insurance, this should have been detailed in the terms and conditions of the loan. If it is not there and the policy was sold because it was 'standard practice' within the bank that doesn't make it right.

Go back to HSBC and tell them she did not need the policy and they have failed to provide best advice to your mother, requesting a refund of premiums for this policy

The OP is likely to get precisely nowhere following this advice. The policy would not have been legally compulsory, however, they are entitled to make it a condition of the lending. As per the above, this is legitimate commercial judgement/risk management. You appear to be getting bank clerks, who are there to offer the loan and help with the application, confused with financial advisers, who are there to assess the client's financial circumstances. Whilst we are all aware of your pathological dislike of financial services firms, it is not fair to either the OP or the bank to encourage the making of frivolous complaints about non-existent wrongdoing and act as though this is somehow a legitimate grievance.It's not.

addedvaluebob

With the greatest of respect, this comes across as an attempt to talk jargon and come across as "in the know", which is being got embarrassingly wrong.

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I have forgotten more about financial services regulation than you will ever know, particularly if you take away access to google

Firstly, people don't take life cover out for no reason.

Yes they do when the bank lie to them and tell them it is a condition of the loan when this is 'standard practice ' to ramp up commissions regardless of need

So if the OP's mother held life cover elsewhere then it was presumably for a reason (mortgage protection, family protection etc...) this means that the cover would be likely to be insufficient for the original purpose and for paying off the debt.

But the bank didn't ask the question so how would they know

Secondly, it IS perfectly acceptable for them to require a life policy to be taken out alongside the borrowing, this is a legitimate exercise of the bank's commercial judgement made by the lending/underwriting department.

But it needs to be documented from the outset that life cover is a condition, without this it is just another sale on the back of a loan. Do you know that this was explained the outset or are you just re-iterating what the banks put out

Thirdly, it is likely that the policy would have had to have been assigned to the bank.

It is likely that we know nothing of the circumstances particularly as policy assignment was not as commonplace in 2001 because of the cost of monitoring and tracking the policy. Maybe this was before your time

Fourthly, the salesperson is exactly that, a bank clerk and not a holistic financial planner.

It is the bank that has the duty of care to the customer if they choose to sell policies via bank clerks then they leave themselves open to challenge by a failure to provide best advice

The policy would not have been legally compulsory, however, they are entitled to make it a condition of the lending.

Can we please see a copy of these terms and conditions that relate to this case because if not then 1) we don't know and 2) it is misleading to the OP to suggest that this 'standard practice' was part of the package

I have a pathological dislike of attempts to put people off pursuing complaints based on a bunch of half thought out, ill informed members of staff from the very banks people want to complain about. Banks have ripped people off in their millions, slapping up customers who want bank loans for a bit of life cover without taking the time or effort to see if this was the right thing to do is just one more example of potential mis-selling

Insider101

True let's forget the pretence. (Text removed by MSE Forum Team) The old "I'm normal it's everyone else who's mad" syndrome. If you have all this knowledge then why do you never show it or quote any specific regulation, as opposed to making vague statements about departments failing in their supposed duties. (Text removed by MSE Forum Team) Incidentally, I am a compliance professional with decades worth of experience.

Yes they do when the bank lie to them and tell them it is a condition of the loan when this is 'standard practice ' to ramp up commissions regardless of need

I rest my case!

But the bank didn't ask the question so how would they know

But it needs to be documented from the outset that life cover is a condition, without this it is just another sale on the back of a loan. Do you know that this was explained the outset or are you just re-iterating what the banks put out

1) Under what regulation is that a requirement then? 2) Do you know that it wasn't? (Text removed by MSE Forum Team) 4) They don't need to ask a question. If their commercial judgement dictates that this should be a condition of their offer to loan funds then that is that. End of.

It is likely that we know nothing of the circumstances particularly as policy assignment was not as commonplace in 2001 because of the cost of monitoring and tracking the policy. Maybe this was before your time

The usual vague "we know nothing of the circumstances" nonsense. I will reiterate for you, in the event of a complaint being made, the onus is on the complainant to establish that cause for complaint exists.

It is the bank that has the duty of care to the customer if they choose to sell policies via bank clerks then they leave themselves open to challenge by a failure to provide best advice

No they don't because bank clerks are not advisers. A discrepancy which should be evident to anyone who has even a basic knowledge of the industry. There is a massive difference between a professional adviser and someone relaying the decisions made by the risk and underwriting departments. It is very worrying that someone who professes to have such a wide compliance knowledge does not understand such a basic fact.

Can we please see a copy of these terms and conditions that relate to this case because if not then 1) we don't know and 2) it is misleading to the OP to suggest that this 'standard practice' was part of the package

(Text removed by MSE Forum Team) It is not misleading. The OP's mother was told that taking insurance was a condition of the offer of a loan and accepted it gladly. It is like accepting a buy one get one free offer then complaining that you were missold because you had to buy the first product. If you don't like it go elsewhere. End of.

I have a pathological dislike of attempts to put people off pursuing complaints based on a bunch of half thought out, ill informed members of staff from the very banks people want to complain about. Banks have ripped people off in their millions, slapping up customers who want bank loans for a bit of life cover without taking the time or effort to see if this was the right thing to do is just one more example of potential mis-selling

It is not misselling. It is a legitimate exercise of commercial judgement and if you don't like it you are free to look elsewhere for the lending. People like you are the reason this country is going to the dogs, nobody accepting responsibility for their own actions and always trying to manufacture some kind of grievance.

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