legal and general mortgage insurance

Jsuk

Hello, about 15 years I got my first mortgage for a flat I lived in, when getting the mortgae from an independent adviser at my local 'horts' estate agent (now closed down) she sold me a l&g mortgage insurance policy which at the time she DID make me believe that I needed it for the mortgage and that it was good for me, I believed this and did not know that if I lost my job the government would help with payments etc, when I moved into my house 10 years ago I switched it still thinking it was right and needed for the mortgage, I cannot remember who my first mortgage was with but it was a separate company (not l&g) I recently was told that this is 'ppi' by a friend and that I could claim it back, is this correct? I have paid £35 a month for 15 years, and am still paying now, any advice would help. Thanks. Jake

Nasqueron

Jsuk wrote: »

Hello, about 15 years I got my first mortgage for a flat I lived in, when getting the mortgae from an independent adviser at my local 'horts' estate agent (now closed down) she sold me a l&g mortgage insurance policy which at the time she DID make me believe that I needed it for the mortgage and that it was good for me, I believed this and did not know that if I lost my job the government would help with payments etc, when I moved into my house 10 years ago I switched it still thinking it was right and needed for the mortgage, I cannot remember who my first mortgage was with but it was a separate company (not l&g) I recently was told that this is 'ppi' by a friend and that I could claim it back, is this correct? I have paid £35 a month for 15 years, and am still paying now, any advice would help. Thanks. Jake

Did the broker give you free advice? If so they are allowed to make you buy insurance through them so they get paid so long as it's suitable.

If you lose your job you get very limited benefits (job seekers etc), they won't help pay your mortgage

As the place is now closed and it was pre-regulation anyway (didn't start until 2005) then it won't go anywhere so no you can't complain. Frankly keeping your house is surely worth £35 a month!

societys_child

I recently was told that this is 'ppi' by a friend and that I could claim it back, is this correct?

Not really, you could make a complaint if you have valid reason(s). There's nothing wrong with MPPI.

I don't think

did not know that if I lost my job the government would help with payments

would be regarded as a valid reason.

As previous post, it's pre regulation and the company no longer exists.

dunstonh

Hello, about 15 years I got my first mortgage for a flat I lived in, when getting the mortgae from an independent adviser at my local 'horts' estate agent (now closed down) she sold me a l&g mortgage insurance policy

Are you sure it was an IFA?
Most estate agent advisers are mortgage brokers and not IFAs. Being an IFA costs a heck of a lot more than a mortgage adviser. So, it would be pointless having full permissions when your business is just mortgage and insurance. I do know of some small independent EAs who use local IFAs but that is more on a referral basis and is incremental to the IFA's main business.

Most estate agents are tied reps of insurers. L&G being one of the biggest.

The classification is important. 15 years ago, IFAs were not regulated for insurance. However, agents for insurers would have been.

I believed this and did not know that if I lost my job the government would help with payments etc,

There is a qualifying period and only the interest is covered. The qualifying period has changed over the years. 39 weeks is the current. So, MPPI covers the bulk of the period prior to support.

I recently was told that this is 'ppi' by a friend and that I could claim it back, is this correct?

Some types of PPI were bad or badly sold. Most of these were by banks. IFAs account for under 1% of complaints at the FOS overall and only a fraction are about PPI. Most of these get rejected by the FOS. Mainly as they are MPPI and not PPI. Most MPPI complaints are rejected as it is a more important product. MPPI is one of two types of PPI still retailed today. So, your friend is unlikely to be correct as nothing you have said suggests any wrongdoing, the type of PPI you have is the type where most complaints are rejected and the distribution channel is one that is not largely affected by the PPI issue.

Jsuk

Thanks, sorry, no it was not an independent financial advisor it was an independent mortgage broker who sold me the insurance alongside the mortgage.

jojomomo

Jsuk wrote: »

Thanks, sorry, no it was not an independent financial advisor it was an independent mortgage broker who sold me the insurance alongside the mortgage.

I also had something similar. When we took out a mortgage for our first home, the mortgage broker told us that life insurance was mandatory for mortgages, so we took out mortgage protection insurance as she advised. When we bought our second home and used a different mortgage broker, I asked about the life insurance, he said that I could have them all I like but it's not mandatory and has no bearing whatsoever on whether the lender will approve our application.

I do think that the first broker mis-sold the product by misleading, but I have no proof of this. With nothing in writing, it'd just be her words against mine, I suppose. From what I could tell, the insurance itself was a valid product, so I can't claim it to be faulty. It's just the circumstance under which I bought it that doesn't feel right.

Nasqueron

jojomomo wrote: »

I also had something similar. When we took out a mortgage for our first home, the mortgage broker told us that life insurance was mandatory for mortgages, so we took out mortgage protection insurance as she advised. When we bought our second home and used a different mortgage broker, I asked about the life insurance, he said that I could have them all I like but it's not mandatory and has no bearing whatsoever on whether the lender will approve our application.

You need to clarify what your products were - it might have been the case that life insurance was mandatory (especially for free advice) but then you said you took out mortgage protection insurance?

Second home was presumably a few years later so lender might have changed criteria

jojomomo wrote: »

I do think that the first broker mis-sold the product by misleading, but I have no proof of this. With nothing in writing, it'd just be her words against mine, I suppose. From what I could tell, the insurance itself was a valid product, so I can't claim it to be faulty. It's just the circumstance under which I bought it that doesn't feel right.

If you went to a mortgage advisor and did not pay a fee for the advice then they are allowed to operate a model where you have to buy insurance through them so they get commission rather than an upfront fee. This is allowed so long as the insurance is suitable.

The second situation - depends if you paid a fee or if the mortgage advisor got paid in some other way

dunstonh

I also had something similar. When we took out a mortgage for our first home, the mortgage broker told us that life insurance was mandatory for mortgages, so we took out mortgage protection insurance as she advised.

Until the very early 2000s, many lenders did have it as compulsory. Although more likely it was the it was compulsory to get the free mortgage advice. And as most people take out life assurance to cover their mortgage, it isnt an issue.

jojomomo

Nasqueron wrote: »

You need to clarify what your products were - it might have been the case that life insurance was mandatory (especially for free advice) but then you said you took out mortgage protection insurance?

Second home was presumably a few years later so lender might have changed criteria

If you went to a mortgage advisor and did not pay a fee for the advice then they are allowed to operate a model where you have to buy insurance through them so they get commission rather than an upfront fee. This is allowed so long as the insurance is suitable.

The second situation - depends if you paid a fee or if the mortgage advisor got paid in some other way

The first purchase was back in 2006/7. The first advisor was 'free' and she did say that she receives commissions from lenders and insurance companies, but never specified that we're required to take out any insurance product in order to obtain her service. She told us that lenders (not her) require applicants to have life insurance. What we bought was 'life & critical illness mortgage protection'. It was separate from the mortgage (not the same company) had the same length of term as our mortgage and the benefit would decrease every year (to reflect that the decreasing balance of the mortgage). Thinking about it now, it sounds like a bit of a stupid product... a normal life insurance with a fixed cover would make more sense. Anyway, we were keen to 'follow all the rules' of the lender, so took on the product.
Maybe it indeed was compulsory in 2006/7? Regardless, I have nothing to prove what she did or didn't say, so I don't think I can reclaim even if it wasn't compulsory...

Nasqueron

Possible your memory of the conversation is a bit faded and perhaps she said you had to buy insurance through her? If you didn't pay a fee they are allowed to demand you buy insurance through her - you do one or the other - if you refused to buy insurance through her you would have had to pay a fee

Life and critical illness insurance is sensible for anyone buying a mortgage - you talk about "we" suggesting at the least, a partner, if one of you died or were injured and unable to work for a couple of years you could lose your home without it.

dunstonh

The first advisor was 'free' and she did say that she receives commissions from lenders and insurance companies, but never specified that we're required to take out any insurance product in order to obtain her service.

Although you did say that you were told that insurance was compulsory.

It is not unknown, especially for estate agent advisers (which is the worst for reputation) to use wording that makes it sound like its the lender. So, it is quite possible, indeed, probable you were told in a way that was not totally correct. However, I bet none of the paperwork says that and you can bet your life, if you did complain, that nothing would be found to say that. They would then look at suitability of product and advice and as what you have is suitable, they would reject the complaint.

Thinking about it now, it sounds like a bit of a stupid product... a normal life insurance with a fixed cover would make more sense.

What you have is correct for the need. What you think makes more sense would actually be a mis-sale and the FOS have upheld complaints on that basis. What you have is cheaper than what you think is better. The aim is to cover the mortgage. No more, no less. So, no point paying any more than needed. If you need further protection (for example, family) then you take out a second plan or segment to cover that.