Life Assurance / Share Ownership tenants scam

LASA

Hello. I live in a property bought under the shared ownership scheme. A Mortgage broker company who helped all potential residents with mortgage advice at an open day said that Life assurance was mandatory. As I have been researching the PPI and other mis-selling reports I realised this was a total lie. Has anyone had success in challenging either the third party advisor/broker or the insurer? The insurance company says they have no responsibility because it was mis-sold by a third party.
For the last 10 years I have wasted thousands of pounds on insurance I was told was mandatory. What's even more disgusting is that as shared ownership tenants, the reason why we were buying under the scheme is because we couldn't afford property on the open market!
Any insights, shared experiences or advice would be welcome.

kingstreet

It may have been mandatory to purchase insurance through the broker for you to receive cheap/free mortgage advice.

The commission paid on your average SO mortgage doesn't cover the cost of administering the business, so brokers use insurance sales to subsidise it.

GDB2222

"A Mortgage broker company who helped all potential residents with mortgage advice at an open day said that Life assurance was mandatory."

Mandatory in order to get his advice, perhaps?

Out of interest, would your partner have been financially secure and able to pay the mortgage if you had died?

GDB2222

kingstreet wrote: »

It may have been mandatory to purchase insurance through the broker for you to receive cheap/free mortgage advice.

The commission paid on your average SO mortgage doesn't cover the cost of administering the business, so brokers use insurance sales to subsidise it.

When did term assurance start being regulated? For a long time, it wasn't. Do you remember when it changed?

kingstreet

Jan 2005 a few months after mortgage regulation.

dunstonh

It is a common model for brokers to require insurance as a condition of giving free mortgage advice. This model is allowed as long as insurance is suitable. i.e. if you had no financial need for life assurance (e..g single with no dependents) then they should not put in place a life assurance. They could put in place alternative insurance that was suitable though.

LASA

Thanks for the responses.
No - I bought as a single person.
Nowhere on my paperwork does it say that the life insurance was linked to the mortgage advice. I would have happily paid a one off fee for this, and not now racked up what I consider to be losses.
Why is it mandatory for a 3rd party mortgage advisor to insist I sign life insurance with one of the major companies? Do they earn commission?

dunstonh

Nowhere on my paperwork does it say that the life insurance was linked to the mortgage advice.

You wouldnt expect it to.

I would have happily paid a one off fee for this, and not now racked up what I consider to be losses.

In which case you could have shopped around for a broker that did that.

Why is it mandatory for a 3rd party mortgage advisor to insist I sign life insurance with one of the major companies?

Its not.

It is a choice for their business model to offer free mortgage advice as long as insurance is purchased.

Do they earn commission?

Yes. Hence why they require it in their business model to allow the provision of free mortgage advice. Its a cross-subsidy model. It is less common nowadays.

GDB2222

LASA wrote: »

For the last 10 years I have wasted thousands of pounds on insurance

Forgive me making a joke of this, but it's better than claiming.

Has your position changed, so you do now have dependants?

LASA

The shared ownership scheme didn't allow you to shop around.
Mortgages were offered by two companies in 2008 only.
The mortgage broker service came attached to the housing association.
If I want to sell the property now, they insist I can only use their property assessor who charges more than most and over values a property in an uncertain London market.
It was a bundle of financial advice if that makes sense.

No dependents

kingstreet

Was life cover the only option offered?

If you were single no dependents, I'd expect a discussion about income protection and critical illness cover.

Was there any discussion about who the property would pass to in the event of death?