Is this legal - help needed

ScottAnne

Can anyone clarify if the following is legal.

My husband and I recently saw a Financial Advisor/Broker who arranged our mortgage. He was pushing Insurance products on us but we were due to get married and advised that we did not want to go any further than quotation stage at that moment and we would be back in touch at a later date (Mortgage not completing until Nov 30th).

We arrived home from honeymoon to find an Insurance Policy document referring to our new policy and details of the monthly direct debit etc... I was furious and spoke to the Insurance company who advised that we ''Must'' have agreed to the policy as we had given over very personal details. I agreed that we had done so but for the purpose of a quotation. I then proceeded to ask for copies of what I had signed agreeing for them to debit my account etc and acceptance of the policy and I was told that the insurance company would have no such thing because the policy was instructed through a broker therefor it was legal......

I contacted my broker to advise that this was totally unacceptable and that i had instructed the Insurance company to cancel this policy.

My broker has advised that I am now liable for I quote ''Thousands'' of pounds, based on his time and loss of commission based on the policy!!!!!

Firstly can an Insurance policy be legal in the first instance when the policy holders have not signed any paperwork/Direct debit etc???? and secondly can I be charged ''Thousands'' as he said for my decision to cancel a policy I never agreed to in the first place...

Can anybody shed some light on this subject, I am really worried.

dunstonh

Firstly can an Insurance policy be legal in the first instance when the policy holders have not signed any paperwork/Direct debit etc????

Yes it can.

and secondly can I be charged ''Thousands'' as he said for my decision to cancel a policy I never agreed to in the first place...

No you cant.

Can anybody shed some light on this subject, I am really worried.

No need to worry. There are some inconsistencies here though.

You have a right to cancel the policy so do that. However, how did the adviser know your doctors name and address, your height, weight and medical information and bank details to be able to submit the application?

At some point you must have completed an application for the adviser to be able to submit that information online. The advising firm will have a copy of that information.

If you have a fee agreement with the adviser where you agreed to pay X amount then you are liable. Commission can be offset against the fee (and it is a common remuneration method to agree a fee and commission level). So, ask the firm for the fee agreement (you should have a copy) that states that you agreed the fee (bet they didnt issue one).

The firm is going to have problems enforcing the fee if there is no fee agreement and under the FSA's treating customers fairly guidelines (which the FOS work to) then they are going to have job demonstrating (as its all about proof) that you were made aware of the fees. It is possible that their fees are disclosed in their initial disclosure documents "key facts about our services" and menu. So take a look at those.

Your best bet at this stage is to put a formal complaint in to the firm. Then if they uphold your complaint, its finished with in your eyes and the firm will deal with that adviser. If they dont uphold it, they will allow you to go to the FOS. This will cost them £400 regardless of whether the complaint is upheld or not. It wont cost you a penny. The FOS will see if they have failed with adequate disclosure and are acting within TCF rules.

You would expect the FOS to rule in your favour if there is no fee agreement but rule in theirs if there is.

ScottAnne

Many thanks for your reply.

We did give our broker all the information you mentioned as in height weight etc but were told it was for quotation purposes. I had an idea how complex the Insurance policies he was referring to were, hence our decision to wait until we were free and able to give it 100% of our concentration, but my understanding now is that with this information alone he was able to submit the application when we were away. I have cancelled the policy.

You mentioned Fee agreement in your reply. During my discussion with the broker he did refer to such a thing and advised that he would issue me document to refer to but I don't remember signing anything other than an agreement of fees for ''setting up the mortgage''. Is this the same as a fee agreement you are referring to.

dunstonh

You mentioned Fee agreement in your reply. During my discussion with the broker he did refer to such a thing and advised that he would issue me document to refer to but I don't remember signing anything other than an agreement of fees for ''setting up the mortgage''. Is this the same as a fee agreement you are referring to.

Most trying this sort of thing wont issue a fee agreement. They try and scare you into paying by threatening small claims court and things like that. These are the scum of financial services. No other way of putting it. However, you can play ball too as they havent got the documentation and if you put in a formal complaint, that adviser has a complaint put on their record and the firm has to hold on it file for review.

He may have issued a key facts about our services document which gives an indication of the charges. However, just giving it to you or not even giving it to you at all is not enough. It has to have the key bits explained. Also, if you are incurring charges, you need to be told the point after you become liable for those charges to give you the opportunity to put an end to the appointment. The fee agreement is the document you sign to say you agree to be charged x amount and for that what service they will provide. You must be given a copy of that agreement.

If they start to threaten you, make a note of the date and time and log it. Tell them you will take a complaint to the FOS if necessary as you never agreed a fee and were never told you were incurring charges and you never applied for the life assurance and that the adviser fraudulently placed the application. I would start the complaint anyway because the sooner these scumbags are driven out of the industry the better.

Ian_W

Excellent and helpful post dunstonh.

and that the adviser fraudulently placed the application.

Hmmmm. Bordering on plod being interested I would have thought, certainly trading standards at your local town hall should be, both of which you could mention on your complaint, which I would suggest is in writing due to the seriousness of what the advisor has tried on with you.

ScottAnne

Thanks Dunstonh & Ian W for your responses.

I am going to draft a complaint and send it to the Insurance Company. It true what you say, the sooner these people are driven out of the industry the better. I think it's disgusting that people like my husband and I who are obviously not aware of the in's and out's of such complex things are taken advantage of.

Thanks again, your help has been greatly appreciated.

dunstonh

Dont send the complaint to the insurance company. They have no liability (unless it is a tied agent). The advising company is responsible here and you should complain to them.

ScottAnne

Hi I am hoping you can help me once more.

Re my earlier post. I received a set of documents from the broker and amongst them is a fee agreement which we have signed unfortunatley. It does make reference to comission etc but states that his typical fees are £399 and anything over this is always advised before going ahead.

He also included 2 letters both dated 6th June. One is a letter of recommendations based on our meetings and he refers to the insurance policy and how he thinks it is suitable for our needs. The second is a detailed letter of the costs involved should we cancel.

Never did we receive either of these letter and I firmly believe that they are fabricated and are following our heated discussion last week when I tried to argue my case.

I looked out all our paperwork and noticed that the policy documents from the insurance provider is dated 20th April. Surely under the FSA rules we should have received notification of the penalties and costs involved if we were to cancel the policy before 20th April and not on 6th June as per his letter????

In the T&C's of his fee agreement, it states that fees are notified to clients prior to documents being issued and also makes reference to a cooling off period.

I have prepared and sent a letter of complaint to him and in it I make refernece to the timescales he claims he sent the letter and the dates on the policy documents.
Surely this shows how we were not aware of the fees (a cool £1773.26) he claims we owe him.

Am i right??

dunstonh

I looked out all our paperwork and noticed that the policy documents from the insurance provider is dated 20th April. Surely under the FSA rules we should have received notification of the penalties and costs involved if we were to cancel the policy before 20th April and not on 6th June as per his letter????

No. The letter has to be issued prior to the cancellation rights running out (changes in November to being in advance).

Continue with the complaints process. If that gets rejected, then take it ot the FOS. You will be told you can do this once the outcome of the complaint is finalised with the adviser.

Points in your favour:
1 - No signature on the application.
2 - Fees should not equal commission. If you transact on fee basis, then the fee should be agreed in advance.
3 - If charged a fee, you need to be notified in advance at the point the fee starts being incurred.
4 - Stating that a typical fee is £399 but then trying to claim £1773 is misrepresentation.
5 - You are acusing the adviser of fraud. I am listing this here because that is a serious accusation. If correct, the adviser could lose his licence. However, if it is shown that you did indeed agree to the application, the FOS would basically look at everything you say in unproven areas with a pinch of salt (that also applies to an adviser as well).

If you go to the FOS, he will have to pay a £400 charge (whether the complaint is upheld or not). He cannot claim this fee back from you. So, you need to make it clear in your complaint that if you do not get a satisfactory reponse to your complaint you will take it to the FOS.

The FSA has Treating customers fairly guidelines "TCF" which counter this sort of thing. However, there are no hard set rules. Its an interpretation as to what is and isnt fair. I think you have a good case based on what you have said.

ScottAnne

Thanks again for your reply.

Can you explain what you mean by -

No. The letter has to be issued prior to the cancellation rights running out (changes in November to being in advance)

I don't really understand. How were we to be aware of the cancellation rights when we had'nt received any notice from him what so ever?

When do cancellation rights run out?

Anne