Life Insurance - Mis-sold?

weby72

We bought our house in late 2004 with a 30-year interest-only mortgage that was arranged through a high street financial advisor (a small, one-man operation). He also arranged life insurance with Allied Dunbar, and his business card & letterhead (we still have them) state he was an agent for Allied Dunbar.

We trusted him to instruct us on a suitable life insurance product but he actually arranged a declining0cover mortage. This means that the life insurance soon became not fit for purpose as it didn't cover the outstanding balance of the mortgage.

I think there is grounds to claim mis-selling, but I don't know the process tyo do so (Allied Dunbar were subsequently bought by Zurich).

Any guidance on where to start would be appreciated.

TadleyBaggie

Is he still in business?

Woodstok2000

https://forums.moneysavingexpert.com/discussion/6674833/life-insurance-mis-sold

While it's not normally recommended, declining cover life insurance is not necessarily unsuitable for an interest only mortgage if whatever plan you have in place to pay off the mortgage at the end of the term would cover an increasing proportion of the lump sum.

You'd be best starting with a full review of your documentation, and then a complaint to this advisor to see what he says.

Are you making a claim on the insurance? If not, any "mis-selling" may have saved you a significant amount of money as level term policies are expensive!

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6674833/life-insurance-mis-sold

If they are tied agent then it would have been an unadvised sale and so the duty to ensure it met your demands and needs were on you rather than him. That said as it is pre 2005 the distinctions and consequences were not as clear as they are now. Generally its not possible for an unadvised sale to be missold

Secondly you are going to have problems with the law of limitations that give you 6 years from the incident in which to raise the matter… in some cases it can be deferred to the "date of knowing", when someone became aware of the problem that is heavily restricted to when they SHOULD have known not when they actually did. There will be a strong defence that you were told to check the documents and so the date of knowing will be the date they gave you the docs so well over 6 years ago.

Finally, are they even still in business? If the seller has closed down then it's harder still.

What was your repayment plan? Assuming it was savings/investments etc then a decreasing term could be a very relevant product and saves you money over a fixed sum insured.

user1977

You got advice here about the same thing almost 6 years ago. Have you taken any action since then?

Wrongly Sold Life Insurance — MoneySavingExpert Forum

weby72

We had no plan to repay the mortgage other than a 'oh, something will turn up'.

We've subsequently switched to a repayment a few years ago - extending the length of the mortgage.

The agent hasn't been in business for a number of years. My thinking was that as he was a registered agent of the insurance company he sold a policy on behalf of, the insurance company would be responsible for compensation.

What I would request is a refund of all premiums plus interest.

Given the low bar for and universality of the PPI claims, I feel I have a much clearer case of being mis-sold.

If I wanted to complain, I presume I do this initially to Zurich? Do I try to anticipate what docs they would need to asses, or wait for what they request? If that complaint isn't upheld, who would I approach?

dunstonh

We bought our house in late 2004 with a 30-year interest-only mortgage that was arranged through a high street financial advisor (a small, one-man operation). He also arranged life insurance with Allied Dunbar, and his business card & letterhead (we still have them) state he was an agent for Allied Dunbar.

Allied Dunbar only made their product available through their own sales force.

Back in 2021, you said it was independent, but clearly it isn't if it was an Allied Dunbar agent. The individual working for Allied Dunbar is not responsible for the complaint.

We trusted him to instruct us on a suitable life insurance product but he actually arranged a declining0cover mortage. This means that the life insurance soon became unfit for purpose, as it didn't cover the outstanding mortgage balance.

Late 2004 is post-mortgage regulation. To set up an interest-only mortgage in late 2004 would have required you to have a repayment vehicle. And with a suitable repayment vehicle such as a stocks and shares ISA, you would expect to have a decrease in term assurance.

What I would request is a refund of all premiums plus interest.

You probably won't get that. You have had life assurance for all these years. So you have received benefit for the premiums that were paid.

If the complaint is upheld, the likely option is they would compare the cost to a level term assurance and provide level term assurance cover for the remainder of the life assurance term. As it stands, you're financially better off if they did truly mis-sell you.

As you have paid far less than you should have done over those 22 years, there is unlikely to be any reason to give a refund. Maybe a small goodwill gesture of a couple of hundred at best.

The FOS’s overarching approach is that redress should reconstruct the position that would have applied if suitable advice had been given at outset. In insurance cases, that often means either replacing the policy with a more suitable one and refunding any “excess” premiums, or cancelling the policy and refunding premiums if there was no genuine need for the cover at all.

Now, if one of the insured had died. That would be a different matter but until that point, the policy holder has had a financial gain.

Given the low bar for and universality of the PPI claims, I feel I have a much clearer case of being mis-sold.

As mentioned, you would have been required to have a repayment vehicle in late 2004. So how did it get past the lender if you didn't? The lender wouldn't have checked, but they would have required you to disclose what you were using as a repayment vehicle. The Allied Dunbar agent would have noted what you said it was being used as a repayment vehicle. Indeed, that would have been their justification for using a decreasing term assurance.

Could it be that you lied on your mortgage application and stated that a repayment vehicle would be put in place? Zurich should have that information on their files. And if you did state there was a mortgage repayment vehicle being set up and you failed to do so, they could, if they wanted to, forward your complaint to the lender as mortgage fraud. Indeed, they could be obligated to.

So I wouldn't be as confident as you are.

Plus there are the time-bar rules. You have to complain within six years of the date of mis-sale or within three years of being reasonably aware of a problem. The six-year time bar was 2010. So that just leaves the three-year time bar. You are aware in 2021, possibly earlier. So, you could get time barred.

weby72

https://forums.moneysavingexpert.com/discussion/comment/82056422#Comment_82056422

Don't think your tone is appropriate, particularly the last section. I'm only asking for a little guidance and don't expect to be accused of being a liar.

I'd actually forgotten I'd ever posted previously about this (as in, forget after posting and don't think I ever checked responses)

The same broker organised our mortgage. He even completed the forms and we signed them. He talked us into a 'self-cert' mortgage (because although my job was salaried, I did some B2B sales and got some modest commission). But I didn't say anything about having a vehicle to repay the mortgage. He arranged the mortgage with Northern Rock.

We actually only spoke to him about a mortgage, but he also talked us into taking life insurance through him.

He was definitely an agent of Allied Dunbar (his card and letterhead state this)