Newcastle Building Society PPI Claim

MC24

Hi Guys, 

I am a bit confused about a PPI claim made against Newcastle Building Society (i will abbreviate it to NBS from now onwards) which is currently being handled by the FOS as NBS rejected the claim. FOS has also initially said they are NOT upholding the complaint - i have asked the ombudsman to make a final decision. 

So basically my dad got a Mortgage from NBS in 1990 in a face to face meeting. The forms were filled in partially by my dad and mum (personal details) and the rest by the advisor at the meeting. The PPI page was filled in by the advisor. At the meeting my dad was given no information about PPI (no leaflets or didn't sign anywhere to agree to it), all that is present is a TICK in the PPI section of do you want it and who for - but that tick was made by the advisor and not my dad. He was told by the advisor that it is beneficial for you to get it to approve your application. Basically my dad only got it based on the fact that he wanted the mortgage approved.  A note to take into consideration is my dads understanding of english wasn't great at that time if that makes any difference.

NBS in their original reply to the PPI claim had sent us the documents and there was a separate document which is a leaflet which explains PPI and has a section to sign, name and date - which is BLANK. My dad had never been given this and there being no signature, name or date on it also shows that. 

On top of this, in 1993, my dad was put on sick from his service as a bus driver due to a irregular heartbeat. He received sick pay from First Bus for 6 months in full and 6 months half pay. As he had no understanding of PPI, what it does or anything - he made no claim on the policy. In 1994 he lost his job. 

Were you told it was compulsory? - No, rather they told my dad to get it to help in the approval of the mortgage which was what my dad was desperate to get - the mortgage approved and the advisor took advantage of that. Nothing was explained to him, no leaflet given to him to explain it.

Now i'm confused as to what i'm missing out, as both NBS and initially the FOS has decided NOT to uphold the complaint. Am i explaining things wrongly to them? or not making my point to them clearly enough? 

I hope someone can shed some light on this case as i'm confused. I am happy to provide any more information requested.

brettcta

You’ve not said what points they rejected it on.

it’s very unlikely it’ll be overturned at this point as it’s rare for the initial decision to be overturned on appeal.

MC24

brettcta said:

You’ve not said what points they rejected it on.

it’s very unlikely it’ll be overturned at this point as it’s rare for the initial decision to be overturned on appeal.

My bad, it was so long that i thought i'd keep it shorter! I will paste the reasons for why it was rejected here.

Having weighed up all this information, I am recommending that we do not uphold your complaint about how your PPI policy was sold to you.

I have explained my reasons in more detail below, and set out what this means for you. You can also read more about the approach I took to your case in the PPI information on our website.

Your circumstances when you bought the policy

In December 1990, you took out a regular premium PPI policy on a mortgage. You took the policy out during a meeting.

The cost of the PPI policy was £12.66. If you made a successful claim, the PPI policy offered a monthly benefit amount of £276.45. This would have been paid for up to 12 months per claim.

Mr C, at the time you were around 34 years old and a UK resident. The business has provided evidence which shows you were employed by XXX City Bus Ltd as a bus driver for five years and six months earning around £X per annum. In an email dated 19 May 2020 it was clarified that you were entitled to six months full followed by six months half sick pay and had savings of around £5,000 you could use to make your repayments.

Mrs C, at the time the policy was taken you were around 29 years old and also a UK resident. 

Mr C was the person covered by the policy, so I’ve mainly looked at his circumstances in assessing this complaint, and he will be the person I’m referring to when I say ‘you’ in the rest of the letter. However, because this was a joint mortgage,
I’ve also considered Mrs C's circumstances.

Newcastle Building Society has given us information that shows the mortgage agreement you took out PPI with started in December 1990 and ended in April 2001.

I’ve relied on all this information when looking into your complaint – so if something isn’t right, it’s important that you let me know.

The main factors in your case

When we assess complaints, we start by establishing whether or not the financial business recommended that you buy the policy. If they did recommend it to you, they had a duty to make sure the policy was suitable for you.

If they did not recommend it to you, they still had a duty to give you the information you needed to decide whether to take out the policy. That means they had to draw the main features of the policy to your attention, and to present the information in a way that was clear, fair and not misleading. From the information I have gathered, I do not think Newcastle Building Society recommended you take out the policy. I have kept this in mind in looking at your case.

• Were you eligible for the policy?

We look at whether you were eligible for the policy, as it was Newcastle Building Society’s responsibility to check this - or to give you clear enough information to let you check for yourself. Factors that could have made you ineligible for the policy include your age, country of residence and employment status.

When I checked the terms of your policy, I found you were eligible for the policy when you took it out.

• Did the business make it clear to you the policy was optional?

We check whether the business made it clear to you that you had a choice about whether or not you took out the policy. For example, if the paperwork stated the policy was optional, it might suggest that the business made this clear to you.

Looking over your policy and all the information Newcastle Building Society gave you when you took it out, I have found that you made it clear you wanted to take out the policy in your application.

Because of this, I cannot fairly say that Newcastle Building Society did not make it clear to you the policy was optional.

• Would you have been caught by any other important limitations in the policy?

We check whether you would have been affected by any other restrictions in the policy’s terms - for example, if the terms stopped you from claiming for a medical condition you already had. Or if they made it difficult for you to claim unemployment benefit as a self-employed person.

Looking at the policy’s terms and your circumstances when you took out the policy, I cannot see that you would have been caught by any of its main limitations.

• Were the policy’s costs and benefits made clear to you?

We check whether the business set out the costs and benefits of the policy clearly. If we think they did not, we look at your circumstances at the time and consider whether you might still have taken out the policy if you had been given clearer information.

Looking at the information you were given on the cost and benefits of the policy at the time of sale, I think Newcastle Building Society could have made the information clearer to you. But having considered your circumstances, the cost and the level of benefit provided by the policy, I think the policy would have provided a useful benefit to you.

What else have we considered?

The Supreme Court decided a case that involved the commission on a PPI policy – Plevin v Paragon Personal Finance. And the Financial Conduct Authority (FCA) – who make the rules for financial businesses – introduced some new rules and guidance for businesses to follow when they’re looking at PPI complaints. This means businesses will sometimes need to give consumers back some of the commission paid on certain PPI policies.

But this only applies to credit agreements taken out on or after 6 April 2007, or agreements taken out before then which were still running on 6 April 2008. From the information I’ve seen, your credit agreement doesn’t fit into these dates - and so I don’t think Newcastle Building Society have to refund any of the commission you paid on your PPI policy.

brettcta

That all seems above board and about right. They’ve looked at every aspect and they also look at precedent from other complaints from the same lender at the same time with regards to business practise at the time in weighting their decisions.

as I say, it’s incredibly unlikely to be overturned but if you’ve put your point across you’ll find out soon enough.

MC24

brettcta said:

That all seems above board and about right. They’ve looked at every aspect and they also look at precedent from other complaints from the same lender at the same time with regards to business practise at the time in weighting their decisions.

as I say, it’s incredibly unlikely to be overturned but if you’ve put your point across you’ll find out soon enough.

I appreciate your response, thank you for your time. I guess the initial points which were mentioned for mis-selling are unclear as point 1 - which mentions were you told its compulsory? - was told to my dad and the PPI part of the form was filled in by the advisor. Yet still the claim is not upheld up to this point.

Maybe its not as simple as the mis-selling checklist says it is, as i thought it was a clear case of mis-selling however the FOS advisors perception seems to think otherwise. 

dunstonh

So basically my dad got a Mortgage from NBS in 1990 in a face to face meeting.

So, that gives us three bits of useful info.

1 - Its MPPI. So, that has a very low uphold rate on complaints.  

2 - NBS only sold regular premium MPPI - that is how it should be set up. So, no issues there.

3 - 1990 is 15 years prior to regulation of insurance.  So, criteria for insurance sales is a little more lax and expectations/requirements much lower.  The complaint is measured on the requirements in the year of the sale.

 The forms were filled in partially by my dad and mum (personal details) and the rest by the advisor at the meeting. The PPI page was filled in by the advisor. 

In 1990, it is highly unlikely a building society would have used an adviser for this.  It almost certainly would have been a clerk with a non-advised sale. Indeed, the FOS response confirms this.

Now i'm confused as to what i'm missing out, as both NBS and initially the FOS has decided NOT to uphold the complaint.

Evidence is the problem.   It is not a strong complaint reason and rarely succeeds by itself.    It is effectively an unprovable allegation.   The audit trail that does exist indicates that you chose to buy it.

Based on what you have said and the response (which is pretty typical and almost template like from the FOS), the outcome seems correct.

I appreciate your response, thank you for your time. I guess the initial points which were mentioned for mis-selling are unclear as point 1 - which mentions were you told its compulsory? - was told to my dad and the PPI part of the form was filled in by the advisor. Yet still the claim is not upheld up to this point.

What evidence exists to back up that allegation?

Maybe its not as simple as the mis-selling checklist says it is, as i thought it was a clear case of mis-selling however the FOS advisors perception seems to think otherwise. 

Its not as simple as the list.   Each case is looked at on its merit but its similar to law (although slightly more consumer biased).   There has to be evidence or sufficient information, on the balance of probability, that a wrongdoing took place.   They cant just accept your word for it.  Especially since all the fraudulent try-it-on complaints always list that as a reason as well (and they accounted for as many as half of all complaints made according to some in the industry).

MC24

dunstonh said:

So basically my dad got a Mortgage from NBS in 1990 in a face to face meeting.

So, that gives us three bits of useful info.

1 - Its MPPI. So, that has a very low uphold rate on complaints.  

2 - NBS only sold regular premium MPPI - that is how it should be set up. So, no issues there.

3 - 1990 is 15 years prior to regulation of insurance.  So, criteria for insurance sales is a little more lax and expectations/requirements much lower.  The complaint is measured on the requirements in the year of the sale.

 The forms were filled in partially by my dad and mum (personal details) and the rest by the advisor at the meeting. The PPI page was filled in by the advisor. 

In 1990, it is highly unlikely a building society would have used an adviser for this.  It almost certainly would have been a clerk with a non-advised sale. Indeed, the FOS response confirms this.

Now i'm confused as to what i'm missing out, as both NBS and initially the FOS has decided NOT to uphold the complaint.

Evidence is the problem.   It is not a strong complaint reason and rarely succeeds by itself.    It is effectively an unprovable allegation.   The audit trail that does exist indicates that you chose to buy it.

Based on what you have said and the response (which is pretty typical and almost template like from the FOS), the outcome seems correct.

I appreciate your response, thank you for your time. I guess the initial points which were mentioned for mis-selling are unclear as point 1 - which mentions were you told its compulsory? - was told to my dad and the PPI part of the form was filled in by the advisor. Yet still the claim is not upheld up to this point.

What evidence exists to back up that allegation?

Maybe its not as simple as the mis-selling checklist says it is, as i thought it was a clear case of mis-selling however the FOS advisors perception seems to think otherwise. 

Its not as simple as the list.   Each case is looked at on its merit but its similar to law (although slightly more consumer biased).   There has to be evidence or sufficient information, on the balance of probability, that a wrongdoing took place.   They cant just accept your word for it.  Especially since all the fraudulent try-it-on complaints always list that as a reason as well (and they accounted for as many as half of all complaints made according to some in the industry).

Hey dunstonh,

Thank you very much for your detailed reply. From what you have said, things do make a bit more sense in some areas so i really appreciate that.  A couple of points which i would point towards is the fact that when my dad was on sick in 1993 for 1 year, eventually leading to the loss of his job - he didnt make a claim on the PPI insurance. Had he understood what it was, he would have done so, but as he had no idea what it was and its purpose, he therefore made no claim. Would that show that he was mis-sold it and advised to get it solely for the success of the mortgage application? 

edit: inserted the word "he" and took out the word "he" from the same sentence lol 2 edits

brettcta

That wouldn’t be sufficient. I’ve got contents accidental damage cover on my home insurance and despite it being necessary recently, I didn’t claim because I’m fairly certain they’ll use any excuse to ramp up my premiums after a claim.

Not using insurance isn’t reason for it being missold. He was paying it monthly and had plenty of time to question it and stop paying. If he didn’t understand he could have asked at any point since 1990

MC24

brettcta said:

That wouldn’t be sufficient. I’ve got contents accidental damage cover on my home insurance and despite it being necessary recently, I didn’t claim because I’m fairly certain they’ll use any excuse to ramp up my premiums after a claim.

Not using insurance isn’t reason for it being missold. He was paying it monthly and had plenty of time to question it and stop paying. If he didn’t understand he could have asked at any point since 1990

I don't think that comparison really works to be honest as the process of home insurance is very different and the conditions of claiming it are very different with excess, premium increases etc. You choose not to use it (in the scenario above) because of a possibility of a increase in premiums. My dad had no reason whatsoever not to use it - as neither would premiums increase nor would he lose out on anything - as is in your example. He had only to gain by using it, and the only reason he did not use it is purely based on the fact that it was mis-sold by the advisor who told him to get it for the success of the mortgage application and thats all, with no information or leaflet provided to explain what it was.

One point i remembered and forgot to include is that - my dad cancelled the insurance in 1994 when he lost his job. Even then he could have made a claim yet he didn't. Now either he is very unintelligent or as is his truth - he had no idea or understanding of the policy. In 1994, due to the loss of his job, he reviewed his finances and realised that he was making a extra payment for something he had no idea of, so cancelled it - thinking he is saving money - when in fact he would have been financially better off having claimed. As someone who had just lost his job due to a sickness, and a young family to take care of- he would have welcomed any form of income or payout via insurance had he been aware.

I agree he should have asked earlier but it was not in his awareness at that time after the mortgage was approved - and with 3 very young kids to look after between the ages of 0-4 years old and a job he loved, it had slipped his mind and only when illness struck he took a step back and looked at his situation with better clarity. With the point being the mis-selling at the point of sale. I don't think you can tell people who had PPI refunded for loans, credit cards etc (both paid monthly) that they should have asked what it was and why they were paying it and stopped paying it - many got 10's of thousands of pounds refunded after many many years of not questioning it and paying it. I don't think people are all that silly and the sale of it was rather deceptive.

Just my perspective of it. 

-taff

It looks due to the his comprehension of english he didn't understand what he was agreeing to, but unfortunately, lack of english comprehension isn't going to help him overturn a rejection.

MC24

-taff said:

It looks due to the his comprehension of english he didn't understand what he was agreeing to, but unfortunately, lack of english comprehension isn't going to help him overturn a rejection.

Well let me clarify that a bit better as i feel i may have put a statement earlier which is unclear and could be interpreted in too many ways and it is my fault in writing something without explaining it better, i should be more careful with doing so in the future. His technical terminology in terms of finance may not have been there, but as a bus driver obviously he had a good enough grasp of the english language otherwise he would not able to work in such a environment, i think his occupation would point towards that. My dad is very clear he was never told what PPI was and its purpose - he was simply told that he should get it to help the success of his mortgage application and he was deceived by the advisor.