Cancelling Life Insurance That Mortgage Broker Set Up

cwat27

Hi
I have an interest in this thread. I have cancelled a policy arranged by my mortgage broker, full letter attached (personal information has been removed) I paid the fee detailed in this agreement (£250) upon successful application for the mortgage.
Both myself and the broker signed the agreement.
Do I need to pay the fee that is now being requested from me?
Thanks

Weighty1

If you go on the Financial Ombudsman website you can see a lot of complaints about Mortgage Advice Bureau trying to reclaim their commission.  In the vast majority of instances the adjudicator or ombudsman doesn't seem to have any issue with this being sought.

I know that Dunstonh has previously posted about these sorts of agreements no longer being workable due to changes in the consumer credit act but the complaints I've seen date after these changes so at face value it appears they are able to claim the clawed back commission back.

cwat27

Weighty1 said:

If you go on the Financial Ombudsman website you can see a lot of complaints about Mortgage Advice Bureau trying to reclaim their commission.  In the vast majority of instances the adjudicator or ombudsman doesn't seem to have any issue with this being sought.

I know that Dunstonh has previously posted about these sorts of agreements no longer being workable due to changes in the consumer credit act but the complaints I've seen date after these changes so at face value it appears they are able to claim the clawed back commission back.

Thank you! I will take the hit... mortgage advice bureau have stated they are looking to reclaim a lower amount than is actually payable! 

dunstonh

They were just shocked as they are paying quite a bit less than what we were going to be. 

That doesn't mean they are comparing like for like.  We have seen dozens of times on this board people claim that same thing and it turned out they were leaving off critical illness cover as they thought it was the same thing as terminal illness cover.   Or going with yearly renewable term assurance instead of fixed premium term assurance.

Tied agents are usually more expensive. Sometimes much more.   I have seen cases quoted by tied agents that were 50% more than the IFA pricing for exactly the same policy and provider.   So, yes, it is possible.  However, it also makes sense to check it really is like for like.

The agreement has no reference to the insurance and only seems to be related to the mortgage fee.  So, no issues based on that.

I know that Dunstonh has previously posted about these sorts of agreements no longer being workable due to changes in the consumer credit act but the complaints I've seen date after these changes so at face value it appears they are able to claim the clawed back commission back.

The problem is that the change in the act was 2015. So, relatively recent and its only in the last 12 months that warnings started to be issued.  And its a legal issue rather than a regulatory one.  until it is tested in court, the FOS may sit on the fence.  Or it may need an ombudsman with a legal background rather than an adjudicator to decide on the case.

The reason why agreements arguing that the consumer is liable for the clawback are considered to be in breach of the consumer rights act 2015 in very simple terms are:

1 - Unless there is an amount defined, the consumer has no way of knowing what they are on the hook for.  (if a fee was agreed with commission offset then that is fine as it is defined).

2 - The commercial relationship is between the broker and the insurer. The consumer cannot be on the hook for terms that they are not party to themselves.  There are ways the broker could cover it.  e.g. stating the amount and stating what the clawback terms are using monetary amounts.

Some companies will just try it on knowing that in the majority of cases, they will get the person to pay up out of fear of the small claims court.  Some huff and puff and make noises and threaten, even sending you copies of the form they will submit to the court.  However, they then drop it at that point.  Some will go the distance.

Weighty1

dunstonh said:

I know that Dunstonh has previously posted about these sorts of agreements no longer being workable due to changes in the consumer credit act but the complaints I've seen date after these changes so at face value it appears they are able to claim the clawed back commission back.

The problem is that the change in the act was 2015. So, relatively recent and its only in the last 12 months that warnings started to be issued.  And its a legal issue rather than a regulatory one.  until it is tested in court, the FOS may sit on the fence.  Or it may need an ombudsman with a legal background rather than an adjudicator to decide on the case.

The reason why agreements arguing that the consumer is liable for the clawback are considered to be in breach of the consumer rights act 2015 in very simple terms are:

1 - Unless there is an amount defined, the consumer has no way of knowing what they are on the hook for.  (if a fee was agreed with commission offset then that is fine as it is defined).

2 - The commercial relationship is between the broker and the insurer. The consumer cannot be on the hook for terms that they are not party to themselves.  There are ways the broker could cover it.  e.g. stating the amount and stating what the clawback terms are using monetary amounts.

Some companies will just try it on knowing that in the majority of cases, they will get the person to pay up out of fear of the small claims court.  Some huff and puff and make noises but and threaten, even sending you copies of the form they will submit to the court.  However, they then drop it at that point.  Some will go the distance.

I figured that much of the issue would be that the ombudsman are just that and aren't necessarily looking at the situation from a legal contract perspective, more likely that "we've always done it like this and will continue until told otherwise".  It's completely right that it's unfair as well.  Imagine a £5k clawback notice being sent out for something that may not have caused the broker any more work than a £10/month policy they set up.  Madness

zagubov

Many jobs which offer life insurance need you to be in place for maybe up to two years before you're entitled to the full benefits (mine does). Have you been in post long enough to be sure you're covered?

Weighty1

zagubov said:

Many jobs which offer life insurance need you to be in place for maybe up to two years before you're entitled to the full benefits (mine does). Have you been in post long enough to be sure you're covered?

That's actually really unusual.  I've arranged a few death in service schemes for corporate clients and it's unusual that a eligibility period of longer than 3-months is used before a staff member is covered.