Business insurance mis-selling

Chris_JY

My brother and I set up a small business together back in 2002.  We had several meetings with a High St bank (one that my brother had used all his life up to that point), and were given the option of opening a business account with them, but in order to get the account (and possibly "free business banking", although we were charged for bank charges, so I don't know what was apparently free about it!), we were told that we would have to also get their insurance.  I remember asking if there were any alternatives to this, and was given the advice that there wasn't, but why would we want to do that as it would always work out more expensive if we had to pay to have the bank account. 

At the time, we were just a partnership, just starting out, and not a limited company, that came later, however we did have at least one insurance policy with them which was for "Business Start Up ESSENTIAL Cover" and I'm pretty sure that there was a critical illness policy too, and quite possibly life cover.  There may have been vehicle insurance too.

We continued with these policies for several years until our accountant advised us that we didn't HAVE to get these through the bank.  I dread to think how much this poor advice cost us, and I don't think that the bank manager was probably even qualified to give us advice on insurance policies anyway.

I've got a fair bit of paperwork from when we set up, I could more than likely find dates of meetings with the bank by going back through my old diaries, but probably nothing that specifically says that we were not really given any other options, just given some very dodgy advice.

Long story short, is there any point in my spending several days gathering all my info together and putting in a complaint to the bank, or would it be disregarded anyway due to being such a long time ago now?

Hope someone can advise us on this?  Thanks in advice.

MattMattMattUK

Chris_JY said:

My brother and I set up a small business together back in 2002.  We had several meetings with a High St bank (one that my brother had used all his life up to that point), and were given the option of opening a business account with them, but in order to get the account (and possibly "free business banking", although we were charged for bank charges, so I don't know what was apparently free about it!), we were told that we would have to also get their insurance.  I remember asking if there were any alternatives to this, and was given the advice that there wasn't, but why would we want to do that as it would always work out more expensive if we had to pay to have the bank account. 

At the time, we were just a partnership, just starting out, and not a limited company, that came later, however we did have at least one insurance policy with them which was for "Business Start Up ESSENTIAL Cover" and I'm pretty sure that there was a critical illness policy too, and quite possibly life cover.  There may have been vehicle insurance too.

We continued with these policies for several years until our accountant advised us that we didn't HAVE to get these through the bank.  I dread to think how much this poor advice cost us, and I don't think that the bank manager was probably even qualified to give us advice on insurance policies anyway.

I've got a fair bit of paperwork from when we set up, I could more than likely find dates of meetings with the bank by going back through my old diaries, but probably nothing that specifically says that we were not really given any other options, just given some very dodgy advice.

Long story short, is there any point in my spending several days gathering all my info together and putting in a complaint to the bank, or would it be disregarded anyway due to being such a long time ago now?

Hope someone can advise us on this?  Thanks in advice.

Yes, too long ago. Also difficulty proving it and it depends how much you were paying as to whether it would be worth it anyway.

dunstonh

We continued with these policies for several years until our accountant advised us that we didn't HAVE to get these through the bank.  I dread to think how much this poor advice cost us, and I don't think that the bank manager was probably even qualified to give us advice on insurance policies anyway.

Insurance sales were not regulated until January 2005.  So, there were limited requirements before that.    It is unlikely it was sold on advised basis.   

, but probably nothing that specifically says that we were not really given any other options, just given some very dodgy advice.

Banks only sell their own products.  So, you wouldn't be given any other options.  And as said, it is unlikely to be advised.

Long story short, is there any point in my spending several days gathering all my info together and putting in a complaint to the bank, or would it be disregarded anyway due to being such a long time ago now?

With no evidence available to back up your allegations, any complaint would then look at the suitability and whether there was financial need for it or not.  And from what you say, there would appear to be a financial need for it.

Chris_JY

Many thanks for your replies. 

Sorry DunstonH, please could you explain what "It is unlikely it was sold on advised basis" means?  The bank manager most definitely told us that we needed the policies in order to open an account with them, 100%.  As for banks only selling their own products, the insurance policies were from the bank, or at least one of their subsidiaries, I have a renewal letter from them dated Sept 2006 (and others too, I'm sure, if I go looking), the letter was from XXXX (the name of the bank) Insurance Brokers Limited.  When I asked if there were any other options, I was asking if we could get insurance elsewhere, sorry if that was unclear in my post.  There was no financial need for all the policies that we had, I think it was the critical illnesses policy especially, that one was cancelled after running for several years and we didn't have one for the next 15-20 years.  The bank account was always in credit and my brother younger and in excellent health.  It may well be that the time passed is too long to complain now, if that's the case then I guess we just have to accept it though, I accept that.

There is another issue with the bank.  We found that our registration on Companies House shows a business mortgage.  This should have been removed when we became a limited company, but it has stayed there.  Would it have been our responsibility to get it removed, or should the bank have done it?  We may have lost out on business or loan applications if we'd have done any, but I think this is another mistake by the bank.

Many thanks again for your help with this, very much appreciated.

dunstonh

Sorry DunstonH, please could you explain what "It is unlikely it was sold on advised basis" means?

It means they would unlikely have gone through an advised sales process.  Advised being an assessment of your needs, checking what you already had and then making a recommendation, including a written report of your needs and what they have recommended.    Non-advised sales do not have as much consumer protection as advised sales.

Prior to 2005, the requirements were very basic. 

 The bank manager most definitely told us that we needed the policies in order to open an account with them, 100%.

That isn't advice.  That is an instruction.    That instruction may have been valid or it may have been lies.    You are looking at the worst days of sales tactics and banks were notorious for using the "must have it" when you didn't.

 When I asked if there were any other options, I was asking if we could get insurance elsewhere, sorry if that was unclear in my post. 

Technically, yes you could have got it elsewhere but they were under no obligation to tell that you could unless you asked.

 There was no financial need for all the policies that we had, I think it was the critical illnesses policy especially, that one was cancelled after running for several years and we didn't have one for the next 15-20 years.  

That seems unlikely with a partnership.  i.e. two of you, if one dies or becomes ill, it will impact on the other in most partnerships.    So, having key man insurances is normally sensible or at least justifiable.    

The bank account was always in credit and my brother younger and in excellent health. 

That is the best time to buy insurances.  Waiting until it is too late is not a good idea

I am not suggesting you were not missold.  I am just highlighting the issues with a case from that long ago and one that was pre-regulation of insurance where no records on the sale itself are likely to exist.

There is another issue with the bank.  We found that our registration on Companies House shows a business mortgage.  This should have been removed when we became a limited company, but it has stayed there.  Would it have been our responsibility to get it removed, or should the bank have done it?  We may have lost out on business or loan applications if we'd have done any, but I think this is another mistake by the bank.

Partnerships don't appear on Companies House unless you are an LLP.   On the assumption you were not an LLP,  this would be a hangover from when the limited company was set up.

You are in control of your Companies House entry.  Although many people outsource it to the accountant.
When you do your annual confirmation statement to companies house (which confirms the companies house data is correct), do you do it or does your accountant?   

Chris_JY

Thank you very much for the information.  Just an update for anyone in a similar situation, our bank have told us that there is nothing that they can do as the claim would have to have been raised within 6 years.  They definitely did mis-sell to us, but hey, it was a long time ago and things were done differently back then.  Ah well, never mind!  Thanks again for the info.