Cancellation charges and 14 day period

cheekymonkey1234

Hi everyone

I just wanted to ask about the cooling off period as I have seen quite a few people post statements that whatever it says in the policy documents is the final word. I have pasted below an extract from the FSA's Conduct of Business rules which insurance companies have to comply with:

1A consumer has a right to cancel, without penalty [MY HIGHLIGHTING] and without giving any reason, within:

(1) 30 days for a contract of insurance which is, or has elements of, a pure protection contract or payment protection contract; or
(2) 14 days for any other contract of insurance or distance contract.

[Note: article 6(1) of the Distance Marketing Directive in relation to a distance contract and article 35 of the Consolidated Life Directive in relation to a pure protection contract]
ICOBS 7.1.2
A firm may provide longer or additional cancellation rights voluntarily, but if it does these should be on terms at least as favourable to the consumer as those in this chapter, unless the differences are clearly explained.
Exceptions to the right to cancel

ICOBS 7.1.3
The right to cancel does not apply to:

(1) a travel and baggage policy or similar short-term policy of less than one month's duration;
(2) a policy the performance of which has been fully completed by both parties at the consumer's express request before the consumer exercises his right to cancel;
(3) a pure protection contract of six months' duration or less which is not a distance contract;
(4) a pure protection contract effected by the trustees of an occupational pension scheme, an employer or a partnership to secure benefits for the employees or the partners in the partnership;
(5) a general insurance contract which is neither a distance contract nor a payment protection contract, sold by an intermediary who is an unauthorised person (other than an appointed representative); and
(6) a connected contract which is not a distance contract.

[Note: articles 6(2)(b) and (c) of the Distance Marketing Directive and 35(1) and (2) of the Consolidated Life Directive]
ICOBS 7.1.4
A 'similar short-term policy' is any policy where the event or activity being insured is less than one month's duration. 'Duration' refers to the period of cover rather than the period of the contract.

This basically, I think, says that you have a right to cancel without being penalised in the first 14 days after you receive the policy documents. You are to be charged for the insurance cover from the start of the policy until you cancel, however, I do not think they are allowed to charge you a cancellation fee (i.e., penalty) within the first 14 days. This is the law from what I can see but I would welcome anyone's comments on this.

FYI I have come to write here today because my mother is experiencing this same problem with Sabre (and I had the same problem myself a while ago with the Post Office). After I told the post office I have a right to cancel without penalty within the first 14 days they gave in, and only charged me for the insurance.

However, Sabre are still insisting that they can charge a cancellation fee within the first 14 days. I don't know how they can insist on this, when, if they are allowed to do this, what is the purpose of the 14 day cooling off period, as provided for in the rules? It's not just there for a laugh, it is supposed to mean something! What I mean is, you can cancel your policy at anytime throughout the year and pay the cancellation fee and insurance to date, provided you haven't made a claim. So what is the point of this cooling off period? It only makes sense if you are entitled to cancel without a cancellation fee during the 14 days.

ANy comments very welcome.

Cheeky Monkey