Life Insurance connected to Mortgage

loobie

We are tied into our fixed rate mortgage until 30/11/08, but was just looking through the paperwork and we were sold a life Insurance policy and an ASU policy both for my dh at a cost of £91.61 per month. On the documentation, it says

" What you will have to pay us for this service - A brokers fee of 2% of the mortgage loan amount when the mortgage proceeds. To obtain this reduced fee you maintain in force any mortgage protection poliies taken out through us for a period of 4 years from thier inception and we will retain all product related commisions"

We are only tied into the mortgage for 3 years so I don't really understand how we can be tied into the brokers for 4 years.

Have we been mis-sold this policy? Is there a chance we could get some of it back?

TIA

Lou x

roguebrogue

The amount of time you are tied in to the policy doesn't relate to the mortgage at all, it's just the way the brokers/ifa's get their commision.

If you've got it in writing and signed this then I don't see there's a way out of it, although I'm sure someone a bit more knowledgable will be along soon...

loobie

roguebrogue wrote: »

The amount of time you are tied in to the policy doesn't relate to the mortgage at all, it's just the way the brokers/ifa's get their commision.

Does this mean we can cancel it then, without paying the 2% to the broker

roguebrogue

No, what I mean is they don't have to relate the tie in period for the insurance, to the tie in period for the mortgage.

As I said, if you signed for it and it's in your paperwork that you're tied in, then I don't think you'd get out of it easily...if at all.

dunstonh

A brokers fee of 2% of the mortgage loan amount when the mortgage proceeds.

Cricky! you agreed that?

loobie

yes, unfortunately. We were desperate at the time and coming out of a fixed rate. Is there anything we can do dunstonh?

dunstonh

Whilst this style of charging is really frowned upon by decent advisers, there is little you can do unless they havent documented it fully.

For example:

Did you sign a fee agreement?
Is the commission being earnt higher than the 2% charge?

You could complain that the fee being commission based would breach FSA TCF rules (fees should not be structured in a way to equal commission or be used to make fee option an unattractive option). Dont know what success you would have but I would love the FOS to look at a company with a 2% fee on top of commission and ask the question how that treats the customer fairly. It costs you nothing to complain and if they reject, you can take it to the FOS and ask them to rule on it. Frequent use of the Treating Customers Fairly phrase is recommended as that is the current hot potato.