The Financial Ombudsman

Corky_Buczek

OK here goes

Decided to – finally – to take action with regards to PPI..

Had one through a Credit Card with HBOS. Took out the card in 2003 and did not want PPI – there is a copy of the application that confirms this. In 2005, I transferred a balance from another card and at this point they said it was taken out over the phone.

I have no memory of ever agreeing to this but I do know that I didn’t discuss cover, my employers redundancy policy, sickness pay, life cover etc and what cover it would give me.

At the time in 2005 I would have 6 months redundancy pay (which in reality equates to 7.5 months of net pay as I wouldn’t be liable for tax), 6 to 12 months sickness cover, life cover of more than 6 times salary. The only other debt I had was a mortgage which I had covered (by accident) two PPI polices. In 2008 I transferred the balance to another Ccard as I was sick of paying for it – I believed the PPI to be mandatory. In my credit history, I’ve had at least a dozen credit cards and two store cards. This HBOS Ccard was the ONLY one that I have ever had PPI.

Now HBOS said they didn’t accept that it was never discussed properly and that it still gave me elements of cover that I didn’t have – Personal accident.

By the time it was cancelled I was paying approx. £35 to £40 a month to basically cover me for Personal Accident cover on ccard debt of approx £5000 to £5500

So I took it to the Financial Ombudsman service. I sent them all the information I could. Surprisingly they looked into the matter after just two months.

They knocked back my claim. First they said they had received evidence from HBOS. When I queried this, they said that they were aware of HBO’s operating procedures for selling this type of insurance at the time. In other words, HBOS sent them their policy at the time on selling PPI but had no specific proof to my own claim to back up their version of events.

The Ombudsman then said that on the balance of probability, I had taken it out as my circumstances had changed since 2003 making it more likely for me to see the need for PPI. This was breathtaking. My salary had gone up by 12% from 2003 to 2005 (and I provided them with pay-slips to prove it), my redundancy cover at work improved substantially and my employer’s sickness policy remained in force with good cover. My CCard debt in that period had gone up by approx. £1500 but that was more than balanced out by an increase in earnings and better cover by employer. (my redundancy payment in 2003 would have been a lot less) The Ombudsman had been given proof that showed my circumstances – in my opinion – made PPI cover less attractive but decided somehow that I would have been more inclined to take it out.

The ombudsman accepts that by 2008 I was paying in £40 a month for covers, many of which were already insured elsewhere. Yet it would appear that HBOS do not have to back up how the insurance was sold, and the discussions that took place for a product where the commission to them is MORE than 50%. If I wanted PA cover, I could have £25K worth of it for £2 a month with my employer.

I am challenging the Ombudsman’s decision but I am not holding my breath. I have so little faith in them now after this.

dunstonh

In the UK, the law is that the person making the allegation is the one that has to back it up with evidence.

I have no memory of ever agreeing to this but I do know that I didn’t discuss cover, my employers redundancy policy, sickness pay, life cover etc and what cover it would give me.

life cover etc does not overlap with PPI. If it was a non-advised sale then they do not have to check this unless it would invalidate the claim, should one arise. It is only on advised sales that they need to check this and most Credit card PPI was non-advised.

Now HBOS said they didn’t accept that it was never discussed properly and that it still gave me elements of cover that I didn’t have – Personal accident.

Which means there is no evidence from you or them to suggest anything other than their sales process was followed. Remember the onus is on you to prove otherwise or for the available information to suggest otherwise.

They knocked back my claim. First they said they had received evidence from HBOS. When I queried this, they said that they were aware of HBO’s operating procedures for selling this type of insurance at the time. In other words, HBOS sent them their policy at the time on selling PPI but had no specific proof to my own claim to back up their version of events.

Unless you provide the proof of it not being followed or the available evidence suggests the sales process was not followed then that is the correct outcome.

The ombudsman accepts that by 2008 I was paying in £40 a month for covers, many of which were already insured elsewhere. Yet it would appear that HBOS do not have to back up how the insurance was sold, and the discussions that took place for a product where the commission to them is MORE than 50%.

They have backed up how it was sold by letting the FOS know the sales process at the time. In the absence of any evidence to suggest otherwise, there is no reason for the FOS to think otherwise.

If your commission was over 50% then you would have been notified in the rejection that they are considering the FCA ruling on this which is expected later this year. if the commission was under 50% then they would not state this and it would make your comment void.

I am challenging the Ombudsman’s decision but I am not holding my breath. I have so little faith in them now after this

Based on what you have said, it appears your complaint was weak and no evidence exists to support your allegations. So, the rejection from the FOS seems reasonable and fair.

Your argument seems to be on the basis that the FOS should believe everything you say and uphold the complaint. However, they don't know if you are telling lies or the truth or memory recollection is not strong.

If I was to say that you stole £10 out of my wallet, there would need to be evidence of that wrongdoing. You would not be required to provide proof that you didnt take it. Yet that is what you are expecting here with your complaint.

The ombudsman only overrule an adjudicator in around 1 in 10 cases and that tends to be on more complicated things. Yours is a bread and butter case for them. You may get lucky but I wouldnt hold your breathe.

Corky_Buczek

Mate

from looking at this forum, there was an inevitability of your reply like rain in the West of Scotland. Funnily enough I am well aware that I need more than just my word to back up my claim. So patronising comments such as your theft of £10 metaphor aren't really applicable.

If you bother to read what I actually wrote, the Ombudsman said that in 2005 I was more likely to take out cover than I was in 2003. I have sent them proof that that was NOT the case - the exact opposite in fact. In 2003 there is a form which proves I didn't want PPI. In the immediate aftermath, my salary went up and benefits that I received from my employer also increased making PPI less suitable - in that regard I have written evidence to back that up. For the Ombudsman to say otherwise is totally bizarre and when I challenged him on it, he immediately tried to change the subject.

I also sent the Ombudsman proof of the covers I had elsewhere.

And if you're selling insurance, should there not be some proof required of how applicable the cover is for the person buying it or in my case paying for it?

My point about the £40 per month for what was in effect Personal Accident Cover (because I already had financial protection for the other covers under the policy) and a sum insured of £5500 shows what an utter rip off it was. If HBOS had properly described what cover I would be getting I would have passed on it. On the balance of probability - a phrase the Ombudsman loves to use - I think the vast majority of folk would because that is extraordinary poor value.

tomtontom

Corky_Buczek wrote: »

Mate

from looking at this forum, there was an inevitability of your reply like rain in the West of Scotland. Funnily enough I am well aware that I need more than just my word to back up my claim. So patronising comments such as your theft of £10 metaphor aren't really applicable.

dunstonnh largely keeps this board running, his expertise is invaluable. It is unfortunate that he can't tell you what you hope to hear, but at least you can put this to bed knowing you have had solid, reliable advice.

WatchMan

Corky_Buczek wrote: »

And if you're selling insurance, should there not be some proof required of how applicable the cover is for the person buying it or in my case paying for it?

Kinda no.

This was probably a non advised sale. That means that the information the business gets from you is minimal. There is a lower standard set - and the business isn't making a personal recommendation.

Now what they probably didn't do very well was tell you about the costs of the policy. That's where your other insurance policies, sick pay and redundancy come into play.

The policy probably would've paid out for 12 months minimum. So, already, it is giving you a longer duration of cover the your redundancy and probably your sick pay.

The policy would also pay out on top of the other things you mention. So, for example, you can use your redundancy for other things which may be more pressing.

From what you've said, the outcome isn't surprising and seems fair.

Corky_Buczek

dunstonnh largely keeps this board running, his expertise is invaluable. It is unfortunate that he can't tell you what you hope to hear, but at least you can put this to bed knowing you have had solid, reliable advice

.

I posted on this forum to highlight a particularly bizarre conclusion that the Ombudsman came to, with regard to whether or not I was likely to take out PPI cover.

I also pointed out that I feel right royally ripped off by HBOS. £500 per year for glorified PA cover with sum insured of £5000.

Believe me, I have accepted that the Ombudsman is not likely to change his decision. So sympathy or not on here isn't going to effect the situation one iota. I just didn't appreciate his assumption that I didn't realise I had to back up my claim with evidence.

Corky_Buczek

Kinda no.

This was probably a non advised sale. That means that the information the business gets from you is minimal. There is a lower standard set - and the business isn't making a personal recommendation.

Now what they probably didn't do very well was tell you about the costs of the policy. That's where your other insurance policies, sick pay and redundancy come into play.

The policy probably would've paid out for 12 months minimum. So, already, it is giving you a longer duration of cover the your redundancy and probably your sick pay.

The policy would also pay out on top of the other things you mention. So, for example, you can use your redundancy for other things which may be more pressing.

From what you've said, the outcome isn't surprising and seems fair.

My redundancy at the time I took it out was for 7.5 months net pay. It was at 11 months when I cancelled it. So you are looking at a very limited pay out to begin with which was reduced to negligible in that regard by the time it was cancelled less than three years later.

As my only other debt was my mortgage - which I also had cover for in the event of unemployment or sickness - I would have been impossible to say that the redundancy payment was required for something more pressing.

The sickness cover with my employer would have covered most of the period and in the event of a serious illness would have extended beyond 12 months at the time they (HBOS) took it out. So again, very limited cover which reduced the longer the policy was in force.

At the end, the cover really was a glorified Personal Accident policy. £500 per year for £5000 worth of cover. If you thinks that represents fairness or value, we'll have to agree to disagree.

WatchMan

Corky_Buczek wrote: »

My redundancy at the time I took it out was for 7.5 months net pay. It was at 11 months when I cancelled it. So you are looking at a very limited pay out to begin with which was reduced to negligible in that regard by the time it was cancelled less than three years later.

As my only other debt was my mortgage - which I also had cover for in the event of unemployment or sickness - I would have been impossible to say that the redundancy payment was required for something more pressing.

The sickness cover with my employer would have covered most of the period and in the event of a serious illness would have extended beyond 12 months at the time they (HBOS) took it out. So again, very limited cover which reduced the longer the policy was in force.

At the end, the cover really was a glorified Personal Accident policy. £500 per year for £5000 worth of cover. If you thinks that represents fairness or value, we'll have to agree to disagree.

Bare in mind that any changes to your redundancy or sick pay during the life of the policy are irrelevant. This is all about your circumstances on the day the policy was sold.

You could've won the lottery a few months later and it wouldn't have mattered.

Corky_Buczek

Bare in mind that any changes to your redundancy or sick pay during the life of the policy are irrelevant. This is all about your circumstances on the day the policy was sold.[

You could've won the lottery a few months later and it wouldn't have mattered.

Thats hardly a good analogy.

The lottery is a game of chance. My redundancy payments were always going to increase provided I stayed with my employer - that was a certainty, And - by all means correct me if I'm wrong - if I had changed employer then the cover afforded by this policy would have changed too and exclusions would have applied to any claim.

And if banks can get 50% plus commission for getting folk to pay £500 pa for at best £5500 sum insured personal accident cover, can i suggest it is they who are winning the lottery.

WatchMan

Corky_Buczek wrote: »

And - by all means correct me if I'm wrong - if I had changed employer then the cover afforded by this policy would have changed too and exclusions would have applied to any claim.

The cover provided wouldn't have changed. In some policies it says you can only claim after x number of days into employment. But the cover would have been the same no matter who employed you.

The analogy I made wasn't regarding the chances of something happening - but the means at your disposal.

Corky_Buczek

If I changed employer, I assume that no cover would apply if I had been laid off in the first year. That is certainly an exclusion on a mortgage protection policy that I used to have (which was sold to me fairly)

There was no discussion of the policy cover at all when it was taken out by HBOS. Nowhere were there any questions about its suitability.

The bottom line was i was paying for an insurance that had limited cover compared to someone who had been in a job a year which offered little or no redundancy or sick pay. yet I was paying the same price as him or her. In addition, the cover kept diminishing to a point where I was paying a rate of about 10%pa for a personal accident cover with a pitifully small sum insured. As I mentioned earlier, I could have got cover elsewhere for 5% of what I was paying and a minimum benefit of nearly 5 times what was on offer with HBOS PPI.

Is it too much to ask that any insurance is discussed properly before its taken out so its applicability can be measured. The premium remained constant but because of my continued employment with the same employer, any potential benefits diminished. Is it not something that those selling the policy should point out ? If the policy isn't mandatory, should they not tell you that you can cancel at any point or at least what the cancellation clauses are ?

I am far more clued up than I was back then but interestingly, when I took out my broadband/tv/phone package, the seller went through all exclusions, clauses etc.

Everything was put in front of me, what I was signing up for, the clauses that were applicable, what if I wanted to leave etc.

Clearly that was too much to ask of HBOS in 2005.