Coerced into taking out a policy

Winger1

In the 90's, Barclays threatened to withdraw my over draft facility of £40,000, which I used as a sole trader to operate my business. My personal manager suggested that if I sign up via Barclays Bank for a life assurance policy, then I could continue to have the overdraft facility. I thought I had signed up to the £42 per month policy (which occasionally incurred interest as it sometimes came out of the over draft) until I was 60 years old, only to find on reaching 60 it actually ran for a further 10 years. I have not used my overdraft facility for many years, and have suggested cancelling the policy and withdrawing the overdraft facility (and the relevant monthly admin charges) to successful business managers only to be told that to do so might not be in my best interest as the terms and conditions - and thus the charges- would be reviewed (not favourably) . Do I have a case to complain, seek compensation and to whom?

dunstonh

In the 90's, Barclays threatened to withdraw my over draft facility of £40,000, which I used as a sole trader to operate my business. My personal manager suggested that if I sign up via Barclays Bank for a life assurance policy, then I could continue to have the overdraft facility.

Very common for lenders to insist on life assurance for commercial borrowing back then and you still see it today. Especially where there is a key employee/individual where the business would fail without them.

I thought I had signed up to the £42 per month policy (which occasionally incurred interest as it sometimes came out of the over draft) until I was 60 years old, only to find on reaching 60 it actually ran for a further 10 years.

Life assurance is set up for a term but after that, it is effectively pay as you go until the end date. You are free to stop it when you like.

Do I have a case to complain, seek compensation and to whom?

Cant see why. The bank is allowed to insist on insurance as part of the deal. However, they cannot insist on their own product being used (they could until some time in the 2000s). If you dont like their terms then you are free to take your business elsewhere.

TBagpuss

The bank was lending you £40,000, they let you now that if you wanted that size of overdraft at those rates they wanted you to have insurance, presumably in the hop that your estate would have the funds to repay the debt if you died. You could have said no to the insurance, in which case they may well have been willing to lend you less, or to lend you a similar amount but at higher rates to relect the greater risk to them.

If you no longer need such a large overdraft then you can cancel the uinsurance, and if that measn that they cancel the overdraftfacility then so be it.

if you do still ned it, then you are free to shop around to see if another bank will take you on, or indeed whether Barclays will offer you thesame facility but without the insurance, and what the costs of that would be.

They can't back-date changes to your terms but they are entitled to review the terms of your account to take into account changes in your situation. And if you want to change the terms (for instance, by lowering the overdraft or no longer having the insurance linked to it) then they are almost certainly fre to take the opportunityto review your account more generally, and if (for instnace) you have a partiualrly favourable rate in terms of interest or charges that may be reviewed.

ThinkingOutLoud_2

TBagpuss wrote: »

If you do still need it, then you are free to shop around to see if another bank will take you on, or indeed whether Barclays will offer you thesame facility but without the insurance, and what the costs of that would be. .

But surely as Dunstonh says - it may be much easier if you still need it - to go and get a standalone life insurance policy (no doubt cheaper than Barclays).
Barclays can insist on the life cover to protect them, but not that it arranged through them...
Getting another bank account sounds like the hard way, if the overdraft is needed.
And if you don't need as much overdraft - your policy will be for a smaller sum and so cheaper again.