C&G - Forced to take their products if we wanted their mortgage

caroline999999

I hope somebody will be able to help. Let me set the scene...

In August 2005 we moved house. We were already tied into a fixed rate mortgage with C&G, which we ported across to the new house to save on fees. We opened a sub-account with C&G for the additional amount we needed to borrow.

At that time, we needed to borrow a couple of thousand pounds more than C&G said they would normally be willing to lend people (based on the multiple of earnings rule). We were told that C&G would lend us the amount we needed, on the condition that we took out related Lloyds TSB products - home insurance, life assurance and critical illness cover.

We felt that we had no option as we could not afford to pay the charges on settling the fixed rate mortgage to swap to another lender.

The buildings/contents insurance policy was set up for us and at the end of the 12 month policy, I shopped around and got a better rate with another insurance provider.

The life assurance and critical illness cover was also set up for us and we have paid that ever since. That is until I discovered MoneySavingExpert! I have now shopped around and found a Life/Critical Illness policy, offering better cover than the Lloyds TSB (now Scottish Widows) did, at a saving of £39 per month.

Because I have made this massive saving - almost £500 per year - I can't help but feel that I have been ripped off for the past two and a half years. I am really happy with the saving, and will gladly walk away from SW without any recompense, however I have just read Martin's article on reclaiming PPI and can't help but feel I was mis-sold the insurance policies. Would I have a case to reclaim anything from C&G/Scottish Widows/Lloyds TSB?

Any advice will be gratefully received.

Caroline

adr0ck

i'm not sure Caroline

i know when we got our C&G mortgage they tried to sell us their own products

we just had to make sure that the insurance cover we took out matched certain C&G requirements

dunstonh

It is a breach of FSA rules to be forced to purchase insurance products as a condition of the loan.

LTSB Life was never cheap but a difference of £39 suggets you were either paying around £110pm in the first place or you havent purchased like for like.

Whilst insisting on using their products is a breach of rules, you were not mis-sold the products themselves if you had a need for them. You can complain but dont expect to get a refund of premiums in full.

trulysaintly

As an ex-employee of C&G for over 6 years, perhaps I may shed some light on this.

Please note that this is purely my own opinion.

TBF I am not surprised.

It depends on whether your mortgage was agreed through a C&G branch or not. Back in 2005 C&G's offices had full control over many of their lending decisions - managers within those offices could authorise cases which came within their authority.

It was a system that worked well - before 'Computer Says No' became the norm....however....

Because this flexibility was in place, I came across many instances where, in order to strengthen the case for underwriting purposes, clients were encouraged to take out policies for payment, house and life cover.

Now, you could call this mis-selling, but that is a dangerous line to follow. The question that you need to have answered is whether your mortgage would have been approved had you NOT taken the cover offered to you.

Without suitable income protection in place, if one app loses their job without suitable income protection, the mortgage can fall into arrears very quickly.

I hope that you find a suitable solution.

All the best.

caroline999999

Thanks for your replies.

The life / critical illness we had was initially to cover £102,000 and was decreasing term for a period of 25 years. The amount they would pay out was on the first death / qualifying illness - basically if we both died, there would only be one payout.

I have since bought two separate policies from Tesco, one for each of us, that is the same - it is decreasing term - for a shorter period (23 years) on the current amount left to pay on the mortgage including settlement fees etc, but as it is two policies if we were to both die, there would be 2 payouts of the full amount, meaning the mortgage would be settled and there would be an additional payout which would be left to help look after the kids.

The mortgage application was handled by my local branch - Manchester city centre.

Payment protection was initially insisted upon and we took this, but cancelled this after about 14 months as we felt this wasn't required.

Do you have any idea how could I ever find out if the mortgage would have been approved if we had not taken out their products?

trulysaintly

TBH Caroline, if you are looking to protect your children's futures, have a chat with an IFA to see what other policies may work for you.

I don't specialise in that area - but go onto a search site for 'Unbiased' and contact a local IFA to review your options.

Leon_W

Caroline

Although a little naughty, it is a practice I have come against with various lenders. Even brokers get pressurised into adding the lenders insurances to get a case through. Unfair ? Probably, but once the mortgage is through then these things can be easily cancelled.

One point, Critical Illness policies can vary widely in definitions so just because you have "saved" money doesn't mean to say you have got better value.

UK007BullDog

Last year the critical illness definitions changed a lot, i.e. they removed quite a number of the illnesses covered. So whatever cover you had 2 to 3 years ago will not be the same to what you can get now.