Mis Sold Landlords Insurance?

twopick

Apologies in advance for the length of this post. I've tried to make it as clear as poss. I'm hoping someone will be able to help.

I took out a landlord's insurance in September 2018 with a household name selling financial products to the over 50s. The property is an old cottage built of cob and stone, a common traditional method of building here in the South-West. However, I am aware that not all companies will cover this so I took the precaution of calling the insurance company and checking with them. They approved the policy (this is all on a recorded call which they've since listened to).

In Dec 2020 I got another quote from the same bunch for insurance on a property I'd just bought. It was surprisingly (worryingly) inexpensive so I made another call and during the course of this I checked the details of the insurance on the other property. This, I was informed, was now listed as being of "stone construction" which I queried immediately. The representative I spoke to said that she needed to check on what had been said in the call made when the policy was taken out in 2018. 

A phone call later, I was informed that the policy did not cover "cob and stone" - this had been checked with the underwriters. However, it was also confirmed that, yes, I had made a call to check whether cob and stone was covered and, yes, the policy had been approved. I was told that the policy would be cancelled but I would "not be charged a cancellation fee". This seemed somewhat inadequate and I said so stating that I believed the policy had been mis-sold and that I wished to register a complaint.

A couple of weeks later I received an e-mail which invited me to offer any information I considered might be pertinent to the complaint. I replied stating that I had responsibly made a call to check on the suitability of the product and that the company should, on receipt of that information, have declined selling the policy. Furthermore, I pointed out that had there been a claim (worse case scenario involving life and limb) I would potentially be faced with the nightmare of establishing liability. I concluded by stating that I believed the policy had been mis-sold and that it was not unreasonable to expect a refund of all my premiums paid on a product clearly not fit for purpose.

A couple of weeks ago I received a call from someone dealing with the complaint who opened by assuring me that there was no argument over the fact that a mistake had been made and I had been sold something that was unsuitable. I recall three predominant factors from what ensued:- 

First of all, I discovered that a month down the line the policy hadn't yet been cancelled and when asked how this could possibly be was informed "we would have written to you, sir, if we were cancelling it - we'll now cancel from the date you took out a replacement policy". 

Secondly, I was asked if I would reconsider insuring with the company again if the criteria could be approved with the underwriters. I said, "no, I've obviously had to make new arrangements and I've already been informed that your suggestion has been declined". I wondered at the time how such a proposal could seriously be made let alone repeated. How much time had this person put in to checking on what had been said to who?

Finally, when the issue "repayment of premiums" was raised I was told that the company would in the event of a claim have accepted liability. This seemed like the perfect hindsight, "get out of jail free" card in so far as this assurance was never ever put to the test and now never would be. I again raised the question of a serious claim and having to argue this case - this is not why I took out the policy or what I paid for, insurance is supposed to provide peace of mind, after all.

I have since done a little homework prior to calling the company yesterday. A payment had appeared in my account for an amount which looked like a refund of part of this year's premium. Incidentally, this without any notice or communication despite assurances that "we would write to you if we were cancelling the policy". Having confirmed that this indeed was what the payment was for I eventually spoke to the same person handling the complaint. I was informed that there would be no refund apart from this post-cancellation premium repayment. So I quoted something I'd come across on the Financial Ombudsman Service website in its advice to business. It appears that in cases of mis sold insurance they usually ask the company in question to act as if the policy had never been sold and therefore repay all premiums plus 8% interest. This was not specifically in regard to home/buildings insurance but I have seen similar info posted on a reliable consumer website like this one which states that there is no reason why this ruling should not apply across the board. The person I was talking to would have been aware, surely, of this procedure. He informed me he would contact the FOS himself to check. However, I have the feeling we will not be unlocking horns over this one.

After all of this (and thanks for bearing with me) my question is simply do I have a case and if I don't get my premiums back is that a green light to elevate the complaint to the FOS?

tacpot12

I would say you have got a complaint that could be elevated to the FOS, and it would be more desirable to have the policy made null due to mis-selling, as you will be asked if you have ever had a policy cancelled previously when you come to take out other property insurance and this could limit the number of companies you might use, and thus have to pay a higher price. I would say that you should not penalised in this way for their mistake. Therefore I would suggest that you ask them to mark the policy as ENDED; NOT cancelled, NOT VOIDED, NOT declined and NOT refused.

You need to be able to answer No the question "Have you ever had a policy cancelled, voided, declined or refused. If you can't do this honestly at the end of your complain with the insurer, complain to the FOS.

I would recommend that you offer to let them keep the premium that they took for the period of insurance as you were insured and they would had had to have paid out, and you would not have had a big job to prove liability. You saved the money that you would have spend for insurance during most of that period. 

twopick

tacpot12 said:

I would say you have got a complaint that could be elevated to the FOS, and it would be more desirable to have the policy made null due to mis-selling, as you will be asked if you have ever had a policy cancelled previously when you come to take out other property insurance and this could limit the number of companies you might use, and thus have to pay a higher price. I would say that you should not penalised in this way for their mistake. Therefore I would suggest that you ask them to mark the policy as ENDED; NOT cancelled, NOT VOIDED, NOT declined and NOT refused.

You need to be able to answer No the question "Have you ever had a policy cancelled, voided, declined or refused. If you can't do this honestly at the end of your complain with the insurer, complain to the FOS.

I would recommend that you offer to let them keep the premium that they took for the period of insurance as you were insured and they would had had to have paid out, and you would not have had a big job to prove liability. You saved the money that you would have spend for insurance during most of that period. 

Thanks very much for your advice. Hadn't even considered the point you raise with regard to nullifying the policy.

Sandtree

One thing to be aware of is that the FOS decisions don't make a binding precedent and whilst there are trends in their decisions there are plenty of outliers too. There is no harm in pointing to previous FOS decision but it wont automatically mean you'll get the same outcome.

"Miss-selling" is normally associated with advised sales, where a product is recommended to you. Most consumer and increasingly SME insurance is sold on a non-advised basis. If you are looking at cases on FOS try and find ones where is a miscommunication between an intermediary and an insurer rather than a poor choice of product recommended.

You said to be sure you telephoned Saga, does that mean you got an online quote beforehand where they had Cob in their drop down menu? As far as I am aware Saga was a tied agent to RSA at the time of your policy. 

twopick

Many thanks for this. No, there was no drop-down menu which had “cob” as an option which is why I made the call. I suppose you could say that I was asking to be “advised” on whether their policy was suitable. There are no specific cases on the FOS website that I could find that are directly comparable to mine but the request to treat the policy “as if it had never been sold”, cancellation of it from the beginning and refund of all premiums plus interest is cited several times as a broad policy rather than a judgement on individual cases. Again, much appreciation for your comments.

Sandtree

twopick said:

I suppose you could say that I was asking to be “advised” on whether their policy was suitable. 

Giving advice is a regulated activity and the paperwork required etc for an advised sale is much more extensive than for a non-advised sale. When the distinction came in a decade ago or so lots of direct insurers etc had to retitle a lot of their contact centre staff from being "advisors"... was one of my most tortuous projects as after finally landing on Customer Service or Sales "Executives" an 11th hour message came from the CFO that he felt customers may think they are talking to board members and so vetoed the terms (the company in question had 6,000 sales and service staff at the time, it wasnt a realistic concern).

Compliance teams are very hot on listening into calls to ensure that operators don't stray into the territory of giving advice and some take it to a silly level - one chap got a disciplinary for telling a customer a Ferrari is a nice car (the disciplinary was quashed once we got wind of it... its a statement of fact not advice)

In a non-advised sale they simply inform you of the product details and price and it is your decision on if the policy is suitable or not... this is a key element that differentiates an advised sale from a non-advised sale. Now clearly the issue here is that the operator entered the wrong information into the system and therefore presented a price which they would not have been able to do had they entered the correct information.  

Its always worth being a little careful around using words like "advised" which have particular meanings as it can result in a knee jerk response based on its industry meaning.

I cannot comment for RSA but certainly I have dealt with several claims over the years where we shouldnt have insured a risk but have honoured claims without material hesitation because the customer states they did fully declare the situation and upon listening to the call recording it was clearly an error on our agent's part. In the two cases that spring to mind it was a total loss situation and so the insurance naturally concluded but we did say that whilst we were settling they wouldnt be able to renew with us.

twopick

That’s very interesting and helpful, both on the issue of advised sales and your own experience of this kind of situation in the last paragraph. From this I would infer that if the complaint were elevated the likelihood is that any ruling would very likely accept that the insurers would have accepted liability. Once again, many thanks for the time and trouble you’ve taken.

naedanger

twopick said:

That’s very interesting and helpful, both on the issue of advised sales and your own experience of this kind of situation in the last paragraph. From this I would infer that if the complaint were elevated the likelihood is that any ruling would very likely accept that the insurers would have accepted liability. Once again, many thanks for the time and trouble you’ve taken.

I think you should complain to FOS if you are unhappy.

(My own thought is that the company are correct. Had a claim arisen, given the circumstances, I don't see how they could have escaped liability, advised sale or not, and therefore I don't think they will need to refund the premium. I thought, but may be wrong, that even on non advised sales the seller would have an obligation to bring the main features to your attention, and clearly you raised the matter of the type of construction carefully with them prior to the sale. Had their reply been "we can't advise you about what construction you should select" or something similar then it would obviously be different. But they didn't and your mind was put at rest. But obviously my view counts for nothing in this matter.)

twopick

No, your view is most welcome and helpful. Thanks very much for taking the time.

Sandtree

naedanger said:
Had a claim arisen, given the circumstances, I don't see how they could have escaped liability, 

Their only possible out is that the sale and the mistake was made by Saga and not by RSA however normally in these tied agent type arrangements the companies agree that the insurer deals with the matter and the two companies sort out who's pocket it comes from afterwards as not to disadvantage the customer. 

MIC_78

Personally I can't imagine a mis-sale claim succeeding, but ultimately it's your decision so if you really want to do so then why not go for it and escalate to the FOS. However whilst there does seem to have been poor service from the company, you don't appear to have actually lost out on anything - they've said any claims would have been honoured (which isn't uncommon in my experience), so the cover you paid for has been provided and fortunately you didn't need to test their word regarding claims.

You might get a small payment in recognition of any distress or inconvenience encountered, but I'd consider just drawing a line under it and making sure you avoid the company in future.