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

dunstonh

zipman23 wrote: »

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

Ok, it sounds like the rep has taken upfront commission rather than non-indemnity. With that premium they would have been paid around £2600 up front. There is a four year claw back period and clawbacks are pro-rata. So, £2600 divided by four means that they have been paid about £666 so far.

That is more than the £450 that is in their agreement. In which case, you could argue that if they are insisting that the transaction is on fee basis then you should have the commission rebated as the commission received to date is higher than the fee they are after.

I would threaten them "politely" that their charging structure almost certainly falls foul of the FSAs "Treating Customers Fairly" guidelines (TCF is a hot potato at the moment). They cannot charge you £450 after they have been paid over £600 already. Also, if their fee is £450, then they should only take commission to the value of £450 with any surplus being used to reduce the premium.

They will huff and puff and threaten you with court but it wont go that far. Even if they filea small claims court claim, your response back will be that they have earned in excess of £450 in commission in both the mortgage and the life policy. They will be asked to disclose what commission they have earned to date and if its over £450 it will almost certainly be thrown out.

Most of these scumbags threaten but never follow through as they know once the fee agreement is examined and the commission earned to date is disclosed, they wont have a leg to stand on.

zipman23

I've had another phone call from the IFA asking where I want to take this...I ignored it. Well, I didn't ignore it as such, I just didn't hear it ring. My girlfriend wants it all sorted out. The reason for this is because she knows we don't have £495 and as she's the worrying type, she doesn't care as long as it gets sorted. I've tried explaining to her that we're probably paying for stuff we don't need but she won't listen. I'm gonna go down to see her and find out why this wasn't mentioned before I signed.

I am under the impression that you can change your policy if you find a better deal elsewhere...just like car/house insurance! Right? Can I take things off the policy like the critical illness cover and loss of earnings protection? Obviously I don't know whats gonna happen in the future but I'm only 23 and my girlfriend is 22 so do we really need this cover now? I don't smoke, I've never even tried it and I hardly drink because I can't afford it. Girlfriend doesn't smoke either.

Also, what is the difference between gauranteed and reviewable policies? Don't want to sound stupid here but I assume reviewable means it gets reviewed every year to get us the best deal whereas gauranteed means its fixed for a certain period? Surely if thats true then she should have told us that we could be getting a better deal instead of paying out so much bloody money!

Aaaaaaaaaaaah, I don't get it!

dunstonh

I've had another phone call from the IFA asking where I want to take this...I ignored it.

Is it an IFA or an L&G tied rep? If IFA you have much stronger grounds as an IFA cannot use commission or a fee structure which matches commission in a way that puts you off paying a fee.

Also, what is the difference between gauranteed and reviewable policies? Don't want to sound stupid here but I assume reviewable means it gets reviewed every year to get us the best deal whereas gauranteed means its fixed for a certain period?

guaranteed stay the same for the life of the policy. Reviewable has points where the provider can alter the premium. That is why reviewable is usually a bit cheaper (mainly with CI rather than life). Renewable term assurance is where the price can change yearly.

zipman23

I'm pretty sure she's an IFA. Its one of the first things they tell you. The reason we're with L&G is because our mortgage is through Northern Rock because they offered the best deal at the time as we didn't want to use the cash we had saved as a deposit. I rang the FOS as somebody kindly suggested and from what I told the guy, I've been told that I have more than enough to make a complaint against them as he said it appears that I believe I was mis-sold this insurance which is true. Just waiting for the complaints form to get here and I can take it from there. Until then, I've got life insurance with TI but no CI or loss of earnings protection etc as Norwich Union won't let me add it it on unless I cancel the original policy first and then take out a newer one.

the-chauffeur_2

Before you do anything else, you need to establish exactly what the advisor's status was - either he/she is independent, or is 'tied' to (or an agent of) an insurance company.

If you've got all L&G policies (and there's a loan or mortgage involved), it's possible you saw an advisor at somewhere like Barclays Bank - who have a formal appointed representative arrangement with L&G. That said, Barclays have two tiers of advisors - some can only recommend L&G products, others can recommend different product ranges. In any event, you really need to know exactly who you are dealing with.

Try to find all of the documents you were given when you got the advice first time round - including things like terms of business, fee agreements, illustrations showing commissions and so on. Then read them very carefully. And bear in mind that regardless of TCF, best advice, or any other regulatory initiative or directive, a contract is still a contract. Just because the service you received didn't result in a tangeable product or service (something you can see/touch like a like having your car fixed) does't mean the contract isn't binding.

At the same time, before you go to the FOS with a mis-selling complaint, put your arguments to the advisor as a formal complaint. You'll need to explain why you think the policies were mis-sold at the time you bought them; but be careful here - saying the policies are no longer suitable is not the same as saying they weren't suitable at the time they were sold, particularly if your circumstances have changed. If you go to the FOS without having approached the organisation you're complaining about first, all the FOS is likely to do is tell you they can't investigate until the advisor's organinsation has had a chance to look into the matter themselves. Again, read the FOS website section How TO Complain - http://www.financial-ombudsman.org.uk/consumer/complaints.htm - very carefully before taking your next steps. It contains some very sensible advice and it'll save you a lot of time in the long run.

zipman23

Yeah we started with all L&G policies as our mortgage is through Northern Rock but the woman works for Andrew Craig estate agents as that is where I had been going when I/we was/were house hunting so I imagine that makes her an IFA?

I have all the documentation except for this one about having to pay an early exit fee. She sounded rather surprised when I told her I didn't have a copy of it. Nothing in what I originally had said there was this exit fee to pay.

When I rang the FOS, the man I spoke to didn't advise me to read that link, he basically asked me for a little information. I've since had a third call from this woman trying to put the frighteners on me by saying that they (her employers) have had a few of these scenarios before and the managing director has no qualms about taking me to court over it. Not bothered. Especially if they've earned alot more than £495 from me in commission.

I've decided to reinstate the policy on Monday to stop all the hassle. Its now back to a joint £42 a month policy and includes terminal/critical illness. "Only" 3 more years before I can shop around! I wanna thank everyone for the help/advice they gave. I still don't understand it completely so maybe I shouldn't have bothered trying to change it in the first place?

dunstonh

but the woman works for Andrew Craig estate agents as that is where I had been going when I/we was/were house hunting so I imagine that makes her an IFA?

An IFA would be wasted in an estate agent. The costs of authorisation for investment class business when doing only mortgages would be wasteful. i.e. the costs for IFA are about 10 times more than mortgages.

Having checked the FSA register, Andrew Craig are tied to L&G for products.
http://www.fsa.gov.uk/register/firmPrincipals.do?sid=149178

As I said before, an IFA would find it harder to get away with it and you wouldnt expect it. L&G tied reps are well known for doing this.

Never make assumptions about IFA and tied status. You should never ever get advice from a tied agent. Hopefully the FSA proposals for 2009 will see the end of tied reps being able to use "adviser" in their title. So that should help.

I've decided to reinstate the policy on Monday to stop all the hassle. Its now back to a joint £42 a month policy and includes terminal/critical illness. "Only" 3 more years before I can shop around! I wanna thank everyone for the help/advice they gave. I still don't understand it completely so maybe I shouldn't have bothered trying to change it in the first place?

They have won. At least make a formal complaint and take it to the FOS if necessary. The system for fees/commission is that you either work on commission, fees or a hybrid where you agree a fee but have it paid out of the commission. There structure doesnt match any of those but the hybrid is closest. They say the fee is £450 but the commission they have earned is in excess of that so they cannot come back to you for more.

Retired_I.F.A.

Its sad to see a Geordie give in to pressure from a cowboy, I thought you guys were tougher than that.

As I said earlier I'd have just told them to get stuffed. But there again I'm a wulfrunian and Wolves always stuff Newcastle

zipman23

Gotta admit...we were absolutely humped on Saturday! Ah well, whats new?

I haven't given in as such though, I just don't understand the lingo in the slightest. I may end up reinstating the policy but I'll still be filling in that FOS complaint form. At least I now know a little bit more about her than I did before. All that talk about her being an independent advisor when she's clearly not has annoyed me! Then again, I still haven't reinstated the policy. If I am gonna do that, is there much point in me making a complaint? What good will it do?

I was telling my mam about it and she told me her mates son has had the same bother with this early exit fee balls. He paid it though because he had the money there and then to do that, I don't! I know from what people have said in this thread that it wouldn't stand up in a court if it ever went that far but because I don't know what I'm doing, I don't wanna take the chance!

Next thing up is the mortgage to be sorted out this time next year. Thats gonna be fun!

dunstonh

f I am gonna do that, is there much point in me making a complaint? What good will it do?

1 - Get you out of paying £495 or keeping a more expensive policy going
2 - Get a complaint registered against the adviser
3 - If taken to FOS, it will cost the adviser (or their boss that has this rule) £400
4 - perhaps it will get them to change their policy or alert the FSA to problems with their policy (FSA or compliance dept will review complaints to look for trends).