Miss-sold? Please help!

rcboy

Please can someone help? About six months ago I remortgage my house to give the potential to release some equity to allow me to purchase another property and rent my current property out. At this point I have an offer accepted on another property.

My IFA arranged a mortgage that would allow me to do this. At this point he suggested that we take out insurance to cover both my current property and future property in case of life or critical illness. On his advice we agreed and this was set up and payments made.

The move then fell through, and we have now decided not to move in the short term but we have been left with over £300000 worth of insurance for a £90000 mortgage!

I have cancelled the policy’s relating to the property we were looking to purchase, however the IFA now wants me to repay over £1000 in commission that he will have to repay to the insurance company. When I took out the policy I signed to say that I would hold the insurance for 4 years! This was not explained to me; however I did sign the form.

Surely I should have been advised not to have started the policy for the new property until we had exchanged?

I was also told by the IFA that we would be given £200 from his commission if we took out the policies – this never happened.

Have I been miss-sold or just given bad advice?

dunstonh

When I took out the policy I signed to say that I would hold the insurance for 4 years! This was not explained to me; however I did sign the form.

When done correctly, it is a valid charge. i.e. adviser goes fee based, issues you a fee agreement with set amount which you read and sign to agree. Any commission received offsets that fee with you paying any shortfall or receiving back any surplus.

Under FSA guidelines for treating customers fairly, the fee should not equal the commission and should be representative for the work carried out. This includes work carried out for business that did not proceed.

Surely I should have been advised not to have started the policy for the new property until we had exchanged?

If the need exists only at the point that the property is exchanged, then you are correct.

I was also told by the IFA that we would be given £200 from his commission if we took out the policies – this never happened.

Check your fee agreement to see what it says. That is the legal document that sets down the remuneration between you.

Have I been miss-sold or just given bad advice?

Cannot say without knowing the facts.

If fully disclosed then it is a valid way to do things as a fee option removes any potential bias. However, when done incorrectly it allows the adviser to earn a stupid amount for doing little.

The key to this is in the contract you signed. The FSA guidelines do allow some charge to be retained but they do not expect you to pay the full amount if the business does not go ahead.