Reclaiming Old Income protection

edited 30 November -1 at 1:00AM in Reclaim Bank & Credit Card Charges
2 replies 2.7K views
claireyMCclaireyMC Forumite
1 Post
edited 30 November -1 at 1:00AM in Reclaim Bank & Credit Card Charges
Hi,
Am looking for some advice.
When i got my first house (in 2007) I contacted a financial advisor, who set up an income protection policy for me. If i remember rightly I was paying about £70 odd a month. I realised about a year later after reading it properly, that it was not really great for me, as it only kicked in after 3 months of being off, and the payments only lasted about 3 years. I realised in 2008 that it was not worth it, and cancelled the policy, and stopped the direct debit.
However, I then very quickly received a very abrupt message form the financial advisor saying that because I had cancelled the policy, she would not be getting the comission she "deserved" for it, and that I would have to pay her about £1000 as that was what she was loosing out on.
It was only going to cost me the same to continue the policy for another 3 years, after which she would get her payment, and I could cancel without any charges, so that's what I did.
I now believe that I was mis-sold this policy, and none of the this cancellation policy was pointed out to me at the time. She gave me a wad of paper with tons of smallprint on it at the time, stating everything, but told me she needed it signed that day, and left me with another copy to look over. This did contain this cancellation information, but was only pointed out to me when I tried to cancel the policy, and not before.
I have never really thought much about it until now, but I believe I was mis-sold the policy, and I if can i would would like to claim it back, but I'm not really sure how to go about it.
All I have now is the name of the company (hollaway friendly) and that policy was with, and the policy number. I can't remember the name of the financial advisor, and I have none of the documentation now.
Any advice appreciated on whether or not this is a claim, and how i should go about it.
thanks very much in advance

Replies

  • NasqueronNasqueron Forumite
    7.7K Posts
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    Advisers are allowed to run a business model where you get free advice in return for buying insurance through them, cancelling the policy stops their commission income, hence the bill.

    You could have paid for advice and you wouldn't have had to take out insurance

    A minimum period before claiming like 3 months is perfectly normal and an MPPI policy paying for 3 years is also perfectly normal, you'd be expected to have got a new job by then (MPPI is NOT critical illness/PHI which may pay for longer if you were unable to work again)

    There is no miss-sale here, simply a misunderstanding of a perfectly legal business model
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  • dunstonhdunstonh Forumite
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    When i got my first house (in 2007) I contacted a financial advisor, who set up an income protection policy for me.

    Income protection is considered an important insurance. After all, your income is the source of everything financial.
    If i remember rightly I was paying about £70 odd a month. I realised about a year later after reading it properly, that it was not really great for me, as it only kicked in after 3 months of being off, and the payments only lasted about 3 years.

    income protection (known generally as permanent health insurance - PHI) has deferment periods. The minimum is 3 months and the maximum is 12 months (ideally matching employer benefits running out to see this kick in). The payment period in the event of a claim is typically until retirement. Although most PHI schemes allow you to select an age from 50 upwards).

    You mention that the provider is holloway friendly. They dont do two types of income protection. One is long term (ie. to retirement) and the other is short term at 12 months. There isnt one that does 3 years. The short term one is really for people on a budget who dont want to pay the £50pm plus that a proper income protection would likely be.
    However, I then very quickly received a very abrupt message form the financial advisor saying that because I had cancelled the policy, she would not be getting the comission she "deserved" for it, and that I would have to pay her about £1000 as that was what she was loosing out on.
    It was only going to cost me the same to continue the policy for another 3 years, after which she would get her payment, and I could cancel without any charges, so that's what I did.

    Fee offset by commission is quite normal for people not wanting to pay the fee upfront. It is allowed.
    I now believe that I was mis-sold this policy, and none of the this cancellation policy was pointed out to me at the time. She gave me a wad of paper with tons of smallprint on it at the time, stating everything, but told me she needed it signed that day, and left me with another copy to look over. This did contain this cancellation information, but was only pointed out to me when I tried to cancel the policy, and not before.

    If you signed an agreement allowing for commission offset of a fee then there is little you can do about it. The courts have ruled on these a number of times and as long as the commission is disclosed (which it is multiple times with PHI) and the agreement is signed then the courts will rule in favour of the adviser.
    I have never really thought much about it until now, but I believe I was mis-sold the policy, and I if can i would would like to claim it back, but I'm not really sure how to go about it.

    Why do you believe it was mis-sold? You mention the fee/commission offset but the evidence doesnt work in your favour. So, we can disregard that bit. Plus, the FOS would not consider a fee dispute as a mis-sale. What else do you have?

    It is possible the adviser didnt disclose everything as compliantly as they should which is why documentation and evidence is looked at. You have already confirmed documentation exists that shows the fee was allowed.

    Plus, finally, you can be timebarred on any complaint under the 3 year and 6 year rule. It was more than 6 years ago from purchase and it was more than three years ago that you became aware of the potential issue. I would expect a timebar to be applied.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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