Life Insurance/Critical cover etc...I think I need help!

zipman23

Right, I've been in my house just over a year now. All insurances were through Legal and General and were sorted out by a Financial Advisor. I got a renewal quote for buildings and contents but decided that I could get a much cheaper quote by looking myself...which I did. Renewal was £383, I went through Halifax and got the exact same for £151.

Now here comes the tricky part...

I rang L&G up and said that I had been getting some quotes for Life Insurance and as they were a hell of alot cheaper, I wanted to cancel my existing policy after the year was up. I was advised that they would cancel it on their end and that I would need to contact my bank to cancel the direct debit which I did.

I got a phonecall the other morning from the Financial Advisor saying that she had received notification from L&G that the DD's had been cancelled and that I owed her (or her employers) an early exit fee of £495. Oops. She tells me that I agreed to be tied in for 5 years and that I signed the forms to say I agreed. Obviously it was over a year ago but I would have remembered if someone had told me that I would have to pay a fee if I changed my Life Insurance.

Does anybody know if this is true as I was planning to change the policy regularly and go with the cheapest quote I could get?

My girlfriends sister and her boyfriend (my best mate...keeping it in the family you see haha) got advice from the same woman and they have also changed their policies to cheaper quotes and they haven't been contacted about this fee even though they changed theirs before we did!

Save meeee Jebus!!

Retired_I.F.A.

Have a look at what you signed for regarding this exit fee and get legal advice on wether its binding or not.

Even if it is personally i'd tell them to get stuffed.

I'mcomingbackasaman

Do you have the paperwork you signed to check the details and compare with your best friends that he signed up for? If not I'd ask the financial advisor to send you the copy that you signed.

Hope you can get out of this 'tie in' if there is one.

zipman23

I'mcomingbackasaman wrote: »

Do you have the paperwork you signed to check the details and compare with your best friends that he signed up for? If not I'd ask the financial advisor to send you the copy that you signed.

Hope you can get out of this 'tie in' if there is one.

I've looked at the policy and all I can see is that it says my premium is guaranteed for the first 5 years of the policy and then a review will be carried out to determine whether it will be changed or not. Its ridiculous the amount I was paying which was why I changed it. As far as I know I did it like for like and the only thing I changed was the length of cover - reduced it by a year to tally with my mortgage.

I told my mate that I had mentioned him and he's not best pleased. Oops. My view on that is that if they were "tied in" for 5 years too and they cancelled theirs then the Financial Advisor will find out regardless.


She said she's gonna send me a copy of this thing I've supposedly signed but surely if she's there to give advice then she should have advised me about it. As if I've got 495 bean to give her!! She "advised" me and my g/f to take a 2year fixed mortgage but "advised" my mate and his g/f to take 5yrs fixed (!) The cow.

dunstonh

L&G tied reps are quite strong on this. Whenever this gets on mentioned on the forums, it always appears to be them. However, thats what you get for buying your products from a salesforce (and a tied one as well).

The terms of business issued should include a fee agreement. If its in there then they are allowed to do it If its not in there then they have no grounds to come to you after. In either case, expect them to threaten court action. If they have a valid fee agreement, expect them to follow through with that threat. If they dont have a valid fee agreement then expect them to go quiet.

Its not nice, its frowned on by many financial advisers but the FSA allow it.

Retired_I.F.A.

Personally i'd love to sit in on a court case where an adviser has "insured" his commission in this way.

Dunstonh, you get the pinks and such dont you? have you ever read of such being upheld?

edit..
(by Pinks I'm refering to what were a couple of trade newspapers printed on pink paper)

dunstonh

You could argue under TCF that the commission should not equal the fee (as is one of the examples often quoted for TCF).

However, if an adviser gets you to sign an agreement that the cost of their services is xyz but they will waive this fee if you buy a product but reserve the right to charge a fee if you cease the contract during the clawback period, then there is little you can do. The FSA accept that commission can offset a fee. However, the fee should not equal the commission.

Many of those trying this on though forget or dont bother with the fee agreement. If you get one of these trying it on then ask them for a copy of the fee agreement.

You should also make an official complaint and if they dont back down, take it to the FOS so the adviser then gets hit with a £400 complaint fee.

zipman23

Right, ok, I got the letter today. It goes a little like this...

Point 2

The fee payable by the Client for the Arrangers services shall be not more than 1.5% of the amount of the Loan ("the Fee"). £495 of the fee is due on engagement of the arranger with the balance of £0.00 due immediately upon completion of the Loan

Point 5

Subject to clause 4(a) above, the Fee will be due immediately, if, for whatever reason:

a) the Protection Insurance does not come into effect or is cancelled within 6 months of its start date;

b)the premiums payable under the Protection Insurance are not maintained for a minimum period of 48 months, but shall be reduced by 1/48th for each monthly premium payment made by the Client under the terms of the Protection Insurance.

I'd love to know why she is the only one to have a copy of this so called "agreement"

I reckon we've signed this without her actually explaining to us what it was for because if I knew then what I know now I wouldn't have "agreed" to it!

Any more ideas? As Retired I.F.A said...can I really tell her to stick it?! The reason I changed it in the first place was because the monthly payments were bordering on the extortionate

dunstonh

They are not claiming the correct amount. £495 if the fee but what about the commission that has been paid for the period that you have held it for?

How much is the life assurance premiums that you pay?

The L&G policies clawback pro-rata so they may very well have earned more than £495 on commission meaning you dont have to pay a penny.

Indeed, I would write back and state that as the fee is £495, you would be happy to reinstate the policy but be paid all the commission in excess of £495.

If the adviser was an IFA, that agreement would fail.

zipman23

I can't remember the exact amounts but for both me and my girlfriend its costing us roughly £100 a month!

jessjess_2

Take it to the FOS, if you were made to sign something without being told what it is, then they look down on this, read some of the test cases online...very informative.