Life Insurance - Missold - Can we claim?

Moonigan

Hi, I'm looking for some advice/guidance regarding a life insurance policy that my wife and I believe has been mis-sold/badly advised. Before I escalate this to the Ombudsman I'd like some advice on my chances of succeeding with the claim.  I'll try and keep it as simple as possible. Thanks in advance.

In 2003 after our daughter was born my wife and I took out a 20-year life policy with Norwich Union. The complaint isn't about this policy, but it is relevant in the complaint.

13 years ago we transferred our mortgage to HSBC. The term of the mortgage was 23 years. In the mortgage offer we were told that we needed adequate life cover for the term of the mortgage and we made an appointment with HSBC to discuss this. We visited the branch and took out a second policy to cover the term of the mortgage.

Fast-forward  to March this year and my wife received a letter from HSBC regarding the life policy, this was the first and only letter we had regarding this policy since it was taken out at the branch 13 years ago. I was concerned why the letter wasn't addressed to both of us so contacted HSBC who told me that the policy wasn't in my name and only covered my wife. Right up to that point we both firmly believed we were both covered, so I raised a complaint.

HSBC initially responded to say they had looked at their records and can confirm that we both had a review together with an advisor in the branch and that the review noted I had a policy with Norwich Union which was active, so no additional policy was recommended, but a policy was offered to my wife which she accepted.

I responded to HSBC with the following:

Thanks for this but there are couple of points regarding the Norwich Union policy:

1. It provides cover for both of us.
2. It expires in 2023 so was insufficient cover for the duration of the mortgage.

 This raises a couple of issues:

1. If it was felt I had adequate cover why was my wife sold a policy that she didn’t need.
2. Its obvious that the Norwich Union policy didn’t provide adequate cover so any policy would have needed to provide cover for both of us to cover the full term of the mortgage which is something made clear on our mortgage offer in the final paragraph.
   

 Both my wife and I believed the HSBC policy provided cover for both us and it was only when we received a recent communication, which was the first regarding this policy in over 11 years that we realised that we didn’t have sufficient cover. Either way the issues raised suggest we were mis sold a policy and badly advised on what we needed.

This was then escalated within HSBC and after a number of weeks we received the following e-mail to reject the claim.

My decision

Upon reviewing your complaint, I cannot see that we’ve done anything wrong when the plan was sold to Mrs M; this means that I’m unable to uphold your concerns.

Let me take this opportunity to explain why.

My findings

In February 2009 Mrs M came to see us as she was seeking life cover for a capital repayment mortgage that started in June 2008.

At the point of sale, Mrs M had an existing joint Norwich Union plan with you with a sum assured of £250,000.00. However, this was insufficient to cover the new mortgage as this plan only had 15 years remaining and the new mortgage had a term of 23 years.

The adviser Paul Price looked at options for protecting your mortgage and recommended ****70M. This gave Mrs M life protection and covered the entire mortgage term and its full amount. I’m satisfied that the recommendation made by Paul was a suitable one.

I will now turn to your complaint point that ****70M did not cover you, only Mrs M. I’ve noted on the sales file for when you took out your mortgage in June 2008 that it was highlighted your existing Norwich Union plan did not cover you for the full term of the new mortgage. The file states that new cover would’ve have been recommended for this and a referral was made to Paul.

However, our records show that only Mrs M needs were reviewed. I was not present at any meetings that led to Mrs M taking ****70M out, and therefore I’m unable to comment on the content of any discussions as to why your protection needs were not reviewed. However, our records appear to indicate that only Mrs M opted to have an overview of her cover by Paul and ****70M was subsequently arranged for her.

Despite this, you still would have had the opportunity to contact HSBC UK at any point in order to arrange cover.

Furthermore, at the point of sale, Mrs M would’ve been given the product documentation and policy schedule which explained how the plan worked. It would’ve also confirmed that the plan was in her sole name. Despite this, I cannot see that she contacted HSBC UK to query this.

The final findings appear to contradict what HSBC said previously when they said:

I’ve had the opportunity to review our records and acknowledge that in 2009 you had a review with an advisor in branch. The review shows that you held a Norwich Union policy which was active, therefore the advisor did not recommend any HSBC Life policies.

I acknowledge that your wife was with you during this meeting, and whilst I’m unable to provide any specific details regarding her policy, I can confirm that at the time the advisor did recommend an HSBC Life policy which she accepted.

[Deleted User]

Going to the FOS is free and risk-free (at worst they simply agree with the bank). Whatever your chances, you won't know unless you use them.

The bank have rejected your complaint, there is nothing else to do with them.

[Deleted User]

I wouldn't bother pursuing it. Your complaint is that you should have been paying for life cover for the last dozen years or so. 

The only solution to that is that you pay the premiums for that period and that the insurers confirms they would have given you cover for that same period, thus putting you back in the position you should have been. But that provides you with no benefit,  as you are currently up on the deal.

You (or more likely, your wife) also signed the agreement that covered only your wife.

Moonigan

Deleted_User said:

Going to the FOS is free and risk-free (at worst they simply agree with the bank). Whatever your chances, you won't know unless you use them.

The bank have rejected your complaint, there is nothing else to do with them.

Thanks for the reply. I understand the position the bank has taken, but I guess what I'm looking for is if its worth pursuing it with the FOS or just take it on the chin and move on?

[Deleted User]

Keep the money and move on.

There's no benefit to you to paying the premiums now as it's too late for you to die in the past. 

Moonigan

Deleted_User said:

Keep the money and move on.

There's no benefit to you to paying the premiums now as it's too late for you to die in the past. 

My main gripe is that we both thought we were covered so if either of us died then the other would have some financial security and the fact we didn't have any kind of communication regarding the policy we have both spent the last 11 years thinking that this was the case. However as it stands if I die in 2024 my wife would get nothing. The advisor knew we didnt have sufficient cover but continued to sell the policy to my wife and my wife alone.

I'll buy another policy and move on.

Cheers

dunstonh

My main gripe is that we both thought we were covered so if either of us died then the other would have some financial security and the fact we didn't have any kind of communication regarding the policy we have both spent the last 11 years thinking that this was the case. However as it stands if I die in 2024 my wife would get nothing.

It may be a gripe but the fact is that neither of you have died and you have got away with paying less in premiums had both of you been covered.  So, even if there was a missale, you are financially better off from it.

The advisor knew we didnt have sufficient cover but continued to sell the policy to my wife and my wife alone.

And the bank say the records make that clear but the adviser never dealt with you.   So, how would the adviser set up a plan for you if you were never involved in the process?
A lot of married couples maintain individual finances.  Some to quite extreme levels in my view.  If you have meetings for reviews and only one party is present and the other doesn't get involved then the best you can do is cover that one person.  
The bank confirms that your wife was made aware that the existing policy was insufficient and that only she was covered.   The date of the sale means that a statement of demands and needs was issued to your wife. So, this is all in writing.    

So, the bank are saying your wife was told (based on the documents issued at the time).  You are saying she wasn't but you haven't mentioned anything about what it says on the documents (as its the evidence that really matters in complaints).  You wouldn't be told as you never involved yourself in the process.   

Old_Lifer

You only need to read the policy schedule which will state the name of the life/lives assured.

Moonigan

Old_Lifer said:

You only need to read the policy schedule which will state the name of the life/lives assured.

This is one of the points. We don't have a policy schedule. We haven't had any communication from the bank regarding the policy since it was setup other than the letter we received a few weeks ago which is what prompted me to raise the issue.

Moonigan

dunstonh said:

My main gripe is that we both thought we were covered so if either of us died then the other would have some financial security and the fact we didn't have any kind of communication regarding the policy we have both spent the last 11 years thinking that this was the case. However as it stands if I die in 2024 my wife would get nothing.

It may be a gripe but the fact is that neither of you have died and you have got away with paying less in premiums had both of you been covered.  So, even if there was a missale, you are financially better off from it.

The advisor knew we didnt have sufficient cover but continued to sell the policy to my wife and my wife alone.

And the bank say the records make that clear but the adviser never dealt with you.   So, how would the adviser set up a plan for you if you were never involved in the process?
A lot of married couples maintain individual finances.  Some to quite extreme levels in my view.  If you have meetings for reviews and only one party is present and the other doesn't get involved then the best you can do is cover that one person.  
The bank confirms that your wife was made aware that the existing policy was insufficient and that only she was covered.   The date of the sale means that a statement of demands and needs was issued to your wife. So, this is all in writing.    

So, the bank are saying your wife was told (based on the documents issued at the time).  You are saying she wasn't but you haven't mentioned anything about what it says on the documents (as its the evidence that really matters in complaints).  You wouldn't be told as you never involved yourself in the process.   

You must have missed this bit at the bottom of my post which is from the first reply from the bank where they quite clearly state we were seen together by the same person.

I’ve had the opportunity to review our records and acknowledge that in 2009 you had a review with an advisor in branch. The review shows that you held a Norwich Union policy which was active, therefore the advisor did not recommend any HSBC Life policies.

I acknowledge that your wife was with you during this meeting, and whilst I’m unable to provide any specific details regarding her policy, I can confirm that at the time the advisor did recommend an HSBC Life policy which she accepted.

brettcta

As above though, you’ve benefitted from this though so I don’t see why you’re upset and getting worked up over something where you’ve ended up better off.

if you’d have kicked the bucket, the argument would’ve been for your estate to sort out. You haven’t died and you’ve ended up with an extra few quid in your pocket, I wouldn’t let your blood pressure get too high about it.