Mis sold Mortgage Protection? - 2003 Brain Injury

Laura_Chimes

Hi, I’m after some advice please on whether we may have been missold our mortgage protection insurance. I think it’s a complicated case so I’ll go back to the beginning.

In early 2003 my other half and I went into our bank (HSBC) to see the mortgage advisor. We were 22 years old and first time buyers. We subsequently had a mortgage agreed on a property. Unfortunately between the time it took from then until sale completion my OH had a serious accident at work. He was caught in a huge gas explosion on the 23rd April 2003. At first it was difficult to know what injuries would be permanent or life changing. He could walk and talk but his brain was not functioning normally – his cognitive functioning was impaired, severe head pain, lack of balance, hearing loss, tinnitus, and mental problems – shock, PTSD etc. My OH was obviously signed off work. We went back to the mortgage advisor and told him everything that happened. Drs said it could take months for him to get better and we hoped that my OH would be able to return to work in the future. We were worried that we would have the mortgage offer withdrawn but we were told that we could have it as long as we took out their mortgage protection insurance. Over the following months and years my OHs health deteriorated further – physically and mentally. It took a long time to get the diagnosis of a brain injury. It’s basically like ‘shaken baby syndrome’ so although there were no open wounds or blood the blast sent shock waves through his brain. I won’t go into details on here but it’s been 16 years of hell and specialist hospitals. He is registered disabled and gets disability benefit. Despite desperately wanting to work he has never been able to again.
The mortgage that we took out was for £140k on an interest only tracker for the life time of the mortgage. The insurance is in both of our names for £68 per month and the amount that would be paid out has been decreasing year on year. So at the time it was taken out it would have paid off the full £140k but now it would only pay £118k. We are still paying the monthly payments and still have the same mortgage. We have never been in a financial position to pay more than the interest only mortgage payments so the full £140k is still owed. We are now looking to sell the house and it is only now that I have been speaking to mortgage brokers about a mortgage just in my name that we have been told that we may have a case of mis selling.
We kept in regular contact with the bank over the first 5 years or so with updates on his health. When I enquired about 8 years ago if the brain injury diagnosis was covered by the insurance I was told no. No one ever said that the policy wasn’t suitable or wouldn’t pay out but now we are questioning that decision. It’s one of those policies that pays out on death or serious illnesses or accident like loss of limbs or cancer. But as the accident happened before the policy was taken out (We moved into our house on 25th May 2003) was it the right thing for us? Once they were aware of his permamant injuries should we have been told it wasnt suitable? How do we find out? Do we contact HSBC to discuss or should we speak to a solicitor? We have paid over £13k in premiums. We have no paper work and at the time we were young, inexperienced and would have signed anything we were advised to. We may not have a case at all but I’d be interested in any advice.
Many thanks,
Laura

The_squirrell

That sounds as though you have had a tough few years!


You should put your concerns in writing to HSBC and lay your case out as clearly as you can. If the mortgage is still ongoing then they should have the documentation available to review any complaint that you make. Once they have responded, you will have the option to take a complaint to the Financial Ombudsman if you disagree with any decision reached.


From what you have described, your policy would not seem to be appropriate.

SonOf

The insurance is in both of our names for £68 per month and the amount that would be paid out has been decreasing year on year.

That would be the life assurance. A decreasing term assurance. Often referred to as mortgage protection. it is suitable for repayment mortgages. Not interest only.

We are now looking to sell the house and it is only now that I have been speaking to mortgage brokers about a mortgage just in my name that we have been told that we may have a case of mis selling.

yes you do.
You were sold the wrong type of life assurance. You should have had a level term assurance. That would have stayed at £140k for the whole term and not decreased.

But as the accident happened before the policy was taken out (We moved into our house on 25th May 2003) was it the right thing for us?

I'm actually surprised they accepted the cover in the first place based on what you have said. Did you perhaps fill out the application before the accident but the cover started after the accident?

Once they were aware of his permamant injuries should we have been told it wasnt suitable?

The problem is not its suitability in what it covered. You still had a life assurance need. It is an issue on the fact it was decreasing and not level and potentially went on risk after a major incident suggesting non-disclosure.

We can help guide you but if you can answer the questions we have asked, it would help.

1 - you do have case but perhaps not in the area you suspect.
2 - the outcome may not result in a penny to you (bar an inconvenience of £50-£250).
3 - It could result in a refund of premiums plus interest

This is why we need more info.

Laura_Chimes

Thank you for the quick replies.
The policy is called HSBC Life- Mortgage Protection Plan with Critical Illness Benefit.
As far as I can remember the insurance policies were only discussed once we had told them about the accident. I definitely recall a face to face meeting with the advisor after the accident when the policy was arranged. I don't believe anything was in place before the accident. The advisor had to leave the room to discuss it with the bank manager. We waited quite some time in the office for him to come back with it all accepted. We were always totally honest about our situation.
I'm not sure if it makes any difference but just to add - I am and always have been a self employed decorator.
Thanks.

SonOf

As far as I can remember the insurance policies were only discussed once we had told them about the accident.

In which case, I am surprised the insurance company accepted the policy as the severity you mention is the type that you would expect the insurer to postpone acceptance whilst tests/investigations are still ongoing.

So, does this mean that the bank rep didnt disclose the details when doing the application?

We were always totally honest about our situation.

it more to do with whether the bank clerk was.

So, you have two real issues here
1 - You were incorrectly sold a decreasing term assurance to cover an interest-only mortgage
2 - you have concerns that policy may not actually cover you both due to the accident and you want clarification that it does.

Life assurance and CIC is suitable for the need. It was the wrong type (decreasing vs level) that is the issue. Neither would have paid out on what happened.

You write a complaint to HSBC basically putting what you have written in the first post and note what I have said as point 1 and 2.

Laura_Chimes

Thank you for your advice.
Should I use one of the PPI outline letters on here or do you think a simple complaints letter would suffice?
Do you think this complaint falls into the same deadline as PPI? Ive never written a complaint before, do I need to send it recorded delivery?
Thank you.
Laura

[Deleted User]

Your life insurance is nothing to do with PPI, so there's no deadline. You need to write your own complaint, giving details of your situation.

Any template letter gives the impression you have no real complaint but just want some free money. And you certainly don't want a template letter that complains about a different product.

Send it to their complaints department. Don't use recorded delivery as it takes your letter out of the system and it might not get to where it should.

Laura_Chimes

Thanks so much, I really appreciate your speedy response.
Laura

SonOf

What you wrote in your first post is fine. You could send that to HSBC. However, I would slightly amend it make it clear that it was applied for after his injuries and not before.

And maybe remove the bits about how to complain.

Bermonia

I agree with SonOf... the most likely outcome may be a token gesture for inconvenience caused. Whilst you may not have been sold the correct policy (paperwork from time will clarify this) you were still provide with protection, to have the ‘correct’ protection would’ve cost considerably more per month so you are not considered out of pocket and have been afforded some valuable protection.

Submit the complaint and expect very little and hope to be pleasantly surprised. Keep in mind that the advice received on here is based solely on that given in the post and your recollections from 16 years ago... the firms paperwork may tell a very different story.

SonOf

They may convert the decreasing term assurance to a level term assurance. (indeed, that is what they should do).

However, I am still concerned that the application for the life assurance took place after the injuries and the injuries appear sufficient to have expected the insurer to postpone a decision on the critical illness. So, did the bank clerk actually disclose the incidence on the application or perhaps understate the issues. That needs to be verified by the bank.