The Great 'Car Insurance Cancellation & Administration Fee' Hunt

dunstonh

Spoke with someone at the Financial Ombudsman yesterday and his response was that the terms were 'Draconian'

Take that with a pinch of salt. The FOS telephone handlers are unqualified and dont review complaints. Almost without fail they will tell you what you want to hear.

If you told them that you were being charged £234 for cancelling that would be draconian. However, if you told them that you were being charged say £25 for cancelling plus £45 for premium outstanding and then the rest on non-refundable extras you bought then you cannot say it is draconian (figures guessed for example purposes)

pseudopensioner

dunstonh wrote: »

Take that with a pinch of salt. The FOS telephone handlers are unqualified and dont review complaints. Almost without fail they will tell you what you want to hear.

If you told them that you were being charged £234 for cancelling that would be draconian. However, if you told them that you were being charged say £25 for cancelling plus £45 for premium outstanding and then the rest on non-refundable extras you bought then you cannot say it is draconian (figures guessed for example purposes)

So, as an IFA do you think that amount is fair?
£35 cancellation fee
£76+
£123+

dunstonh

pseudopensioner wrote: »

So, as an IFA do you think that amount is fair?
£35 cancellation fee
£76+
£123+

The £36 cancellation fee is certainly fair. The FOS publications has a case with £50 being shown as fair and complaint rejected. So, on that baiss, you have say £36 is fine.

What is the £76 and £123 for?

I assume one is for premium due. The FOS have again provided guidance in their publications on this in that the premium should be relatively pro-rata. Not exactly pro-rata as they accept that the cost of setting up is at the front and early cancellation may require a a weighted refund that is not pro-rata.

So, it depends on how far out from being relatively pro-rata that premium is. You cancelled yours early so you would expect a weighting away from pro-rata.

The other payment I am going to assume, but you can confirm, is probably for non-refundable extras bought (e.g. breakdown cover, legal expenses etc). As they are for a year and non-refundable, then these need to be paid in full.

So, I cant say if yours is fair or not but hopefully the above explains it more to help you work out if it is likely to be seen as fair or not. It's a shame your phonecall to the FOS didnt yield that sort of discussion as I have only used what it says in the FOS publications.

freestyle_gus

I just wanted to share my experience of cancelling my car insurance with elephant.co.uk.

Upon informing them that I didn't need the policy anymore as I had scrapped my car, they wanted to charge me £47.50. As this was around 20% of the premium, I pointed I felt this was pretty high. Anyway no dice, they weren't going to waive it.

Using the info at the start of this forum, I decided to write a complaint letter and pointed out there are insurers who charge much less, usually half as much. I of course said I would take it up with the ombudsman.

Pleasingly this seems to have done the trick and they will be waiving the fee. They did make the point that they stand behind their costs so it doesn't look like they will be reducing these fees any time soon!

dunstonh

Using the info at the start of this forum, I decided to write a complaint letter and pointed out there are insurers who charge much less, usually half as much. I of course said I would take it up with the ombudsman.

Pleasingly this seems to have done the trick and they will be waiving the fee. They did make the point that they stand behind their costs so it doesn't look like they will be reducing these fees any time soon!

Effectively you blackmailed them into a refund. It worked for you and it will work for others. However, there is increasing pressure to stop that sort of blackmailing and if it increases to a level that is just silly, then it will impact on how the FOS can be used.

freestyle_gus

dunstonh wrote: »

Effectively you blackmailed them into a refund. It worked for you and it will work for others. However, there is increasing pressure to stop that sort of blackmailing and if it increases to a level that is just silly, then it will impact on how the FOS can be used.

Nice, you can call it blackmail if you want.

I see it as asking these companies to take a look at themselves and charge sensible fees for such things as a cancellation (when they have already made money out of me).

I have no problem in paying a fee that is proportionate to the premium and just told them that £50 is excessive on a £230 premium. I feel very strongly that it is.

But let's be honest these large insurers don't need any defence, they hold all the cards and will only change when there is a groundswell of opinion.

dunstonh

Nice, you can call it blackmail if you want.

Well it is. You effectively said "pay me £47.50 or I will go to the FOS which will cost you £500 even if they agree with you".

I see it as asking these companies to take a look at themselves and charge sensible fees for such things as a cancellation (when they have already made money out of me).

If you cancel, then chances are they are not making money out of you as you are not going the full policy term. £47.50 is not an unfair fee.

I have no problem in paying a fee that is proportionate to the premium

That would not be a fair fee. Two people cancelling. One pays £20 because it is a small premium and the other pays £200 as it is an expensive premium. Why should the second person pay £180 for the same level of work being done?

The FSA themselves prefer explicit charging.

Quentin

dunstonh wrote: »

Well it is. You effectively said "pay me £47.50 or I will go to the FOS which will cost you £500 even if they agree with you".....

Very unfair on a newbie.

How the FOS is funded is hardly anything to do with the policyholder, and where is your evidence he did "effectively" say this "blackmail" anyway?

And don't try and kid on that the insurer has to find £500 out of his own pocket, it is of course the policyholders who end up paying this, just as we pay all their other overheads too!

freestyle_gus

dunstonh wrote: »

Well it is. You effectively said "pay me £47.50 or I will go to the FOS which will cost you £500 even if they agree with you".



If you cancel, then chances are they are not making money out of you as you are not going the full policy term. £47.50 is not an unfair fee.



That would not be a fair fee. Two people cancelling. One pays £20 because it is a small premium and the other pays £200 as it is an expensive premium. Why should the second person pay £180 for the same level of work being done?

The FSA themselves prefer explicit charging.

We'll have to agree to disagree on this one dunstonh. I think the average Joe would agree with me.

I don't know what the answer is regarding fairer fees, but I thought I would make a suggestion.

And as Quentin (thanks) rightly says the funding of the FOS is !!!!!! all to do with me. And I think the 'poor old' insurer will be just fine whatever happens.

Anyway, I came here to share my experience, job done, despite a slightly Troll-ey response.

mikey72

dunstonh wrote: »

Effectively you blackmailed them into a refund. It worked for you and it will work for others. However, there is increasing pressure to stop that sort of blackmailing and if it increases to a level that is just silly, then it will impact on how the FOS can be used.

It's balanced by insurers continuously trying to increase fees to levels that are silly, so I think the FOS is safe for a while.