AI Legalese Decoder: Uncovering the Scale of Common Misselling in PPI by Mortgage Advisors
- September 15, 2023
- Posted by: legaleseblogger
- Category: Related News
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Heading: Miscommunication Regarding Mandatory Insurance Requirement and Potential Threat from the Bank
Our Experience with Insurance Requirement Miscommunication and Potential Loan Repayment Consequence
Our mortgage advisor informed us that it was mandatory to have income protection, life, and sickness cover as part of our agreement with the bank. This surprising news led us to pay two monthly premiums amounting to an astonishing £141 per month. However, upon further investigation, we contacted the bank directly, only to find out that the only required insurance was for the building itself.
Considering our circumstances as first-time homeowners trying not to overextend ourselves financially, we made a conscious decision to rely on the support of our families in case any unfortunate event occurred. Hence, we were reluctant to maintain the additional insurance coverage and canceled it promptly. Little did we know, a week later, our advisor contacted us, alerting us that the bank had informed him about the cancellation. He stressed that this breach of agreement could potentially lead to the bank demanding immediate repayment of our loan. To rectify the situation, he insisted on reinstating the insurance through direct debit and emphasized that we were fortunate it had not been too long since canceling.
Feeling threatened and alarmed by the potential consequences, we sought advice from the bank, independent advisors, as well as friends and family. Surprisingly, all of them shared the same opinion – the additional insurance was not a mandatory requirement for our mortgage agreement. Seeking clarification, we emailed our advisor, demanding evidence of this supposed requirement. In response, he admitted the miscommunication and apologized. As a gesture of apology, he offered us a ┬ú50 Amazon voucher for the inconvenience caused.
Subsequently, we filed a formal complaint with the firm and are currently awaiting their response. Additionally, it’s worth noting that during our initial conversation with the advisor, we asked for documentation regarding this requirement. However, he failed to produce any, citing the conditions from the so-called “underwriter” as the basis for this necessity. We suspect they intentionally used complex jargon to deceive unsuspecting individuals.
We find ourselves not only frustrated by this incident but also slightly embarrassed for falling victim to such a deception. Therefore, we feel it is essential to share our story as a public service announcement. Has anyone else experienced something similar or been misled in a similar manner?
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The AI Legalese Decoder could have potentially assisted us in this situation by quickly analyzing the mortgage agreement and deciphering complex legal jargon. It could have highlighted the lack of any explicit requirement for the additional insurance and provided us with a clear understanding of our obligations. This AI-powered tool would have saved us time, frustration, and unnecessary expenses, ultimately preventing the miscommunication that occurred.
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****** just grabbed a
Report to the FCA
Ex-mortgage adviser here.
Report this guy to the FCA and provide them with evidence of him saying that it is mandatory for the loan.
Guys like this are pure crooks and the whole reason the industry has a stigma around it, the sooner they leave the industry the better!
That’s really shady! We’re in the process of buying our first property at the moment. Our mortgage advisor spent a while talking us through what each of these various covers do and got us quotes to look over and decide if we wanted cover or not.
He highly recommended it but was very clear that it’s not required.
So couple of thoughts as a current mortgage broker:
1. You werenÔÇÖt sold PPI. You were sold life and critical illness cover and an income protection policy. None of these elements are PPI which was/is a separate product often added to personal loan and other unsecured finance. PPI was predatory, where the products you were sold (unethically) are not. The products arenÔÇÖt the issue the seller is, as has been pointed out in other comments in this thread.
2. The mortgage broker messed up big time. Whether through ignorance or deliberate it doesnt matter (In my mind this is deliberate miss selling but I dont have all the context); what they did was wrong and inexcusable. There is no legal requirement, nor lender requirement for any person to take anything other than building insurance. It is in most peoples best interest to look at other insurance, as they can be incredibly valuable if you need them. This though should always be client choice after a suitable review and a open discussion of prices and client budget. You can always cancel policies like these without charge and will receive a refund if you cancel in the first 30 days of the policy going live.
3. If the mortgage broker works over the phone then the calls are likely recorded. However they have already admitted guilt and confirmed they acted this way apparently. Please do not accept ┬ú50, as this needs to be thoroughly investigated and appropriate sanctions provided. As you have paid ┬ú282 them providing ┬ú50 I would see as derisory, and frankly they are fobbing you off, I donÔÇÖt suspect they have actually raised this as a complaint.
If the broker is part of a network you should officially complain to them. The initial documents they gave you will tell you how to make a formal complaint, please make sure that this is followed. I suspect that the broker is trying to cover his ass and make this go away make sure a formal complaint is raised, and I personally wouldnÔÇÖt take anything less than the premiums are worth and the time itÔÇÖs taken to deal with the complaint.
4. To give my personal opinion the broker deliberately miss sold the policy, tried to strong arm you into keeping the policy, and now hasnÔÇÖt taken the complain forward and is trying to cover their own back. People like this need drilling out of the industry (and sales in general) as there is no place for this behaviour.
I’m not wishing to be pernickety here but there is a lot of advice saying to report he broker to the FCA.
Just to clarify that you are doing the correct thing in complaining to the firm he represents or their network, they should issue you a formal response within 8 weeks which you may or may not be happy with.
If you are unhappy with the response then you can forward the complaint to the Financial Ombudsman (It would need to be within 6 months I think) who will adjudicate.
There are appeals after the above as well but you won’t be dealing with the FCA per se and its worth understanding that.
The firm he works for has to report their complaint data to the FCA on a regular basis but you have to give the firm an opportunity to put things right for you.
To give an insight and maybe manage your expectations it does seem like you have been mis sold to and as a result should expect to be reimbursed in my opinion for all fees paid and also premiums that you have paid with a gesture for inconvenience and upset to be added. Its in their interest to resolve it as they could get costs applied by the FOS of roughly £600 just to get the case looked at.
If you have the emails where the claims are specified by the broker it will be an open and shut case.
The firm will not be pleased about having an upheld complaint and this will massively effect the broker in terms of their personal standing too. The firm and maybe adviser will have to pay PI cover which will get a heck of a load more expensive with upheld complaints. I would venture also that if its a tactic theyve used in you then its one that they have employed for a number of years with a number of clients so I would ensure that if its not a one off that part of your complaint specifices that they should investigate the brokers back book of business because there will be cases that this has worked for them.
The last thing to point out is to specify that they have failed in their Consumer duty.
Ex broker. Regardless of outcome with the lender this needs reported to FCA. Although their calls should be recorded, written communications would be invaluable here.
Hope they told you about other insurances too like life, critical illness, unemployment etc. If they are part of their initial disclosure of services, they must provide quotes unless you specifically decline.
Please report this. This person should not be working in the industry. If you report it hopefully they will look at ALL the policies he has mis-sold
What they sold you was not PPI – its very important to note this.
honestly sounds like your broker is an arse – but people who ask to report to the FCA do not know the process- complain to the company to get a refund – then to FOS then to the FCA
Just a chancer trying to keep his commission by getting you to reinstate the policy. Your bank told them nothing, the insurance company would have notified him of the cancellation and possibly offered further commission if they could convince you to reinstate cover. Unfortunately this is pretty standard practice for Mortgage advisors.
To answer your question in the title: a lot less common than it used to be. It’s heavily regulated and fairly easy to catch people out these days. What he’s done is a hard-sell tactic and bundled products, which is massively against his status as a qualified mortgage advisor.
I would also be wary of using the term “PPI” as you’re misusing it and on any complaint if the advisor is asked if they missold it the answer is ‘no’ since they never sold you that particular product (pedantic, I know, but welcome to finance).
On a more practical note, it sounds like he signed you up regardless of what hat you both felt like you needed. Since it seems from your description you did not receive proper advice, in your shoes I would reassess what you need and want. Income protection, critical illness, life insurance etc are all about protecting you and your family from the worst case scenarios that we done expect (except life assurance — we’re all guarantee to die eventually). There’s plenty of online resources that talk about the benefits of each type of policy. If cost is an issue, then do consider that he may have signed you up for more expensive plans and seek independant advice afterwards for a variety of quotes. Advisors should be working in your interests, not their own, but unfortunately bad experiences do happen before ones like this are caught out (and luckily you were switched on to it — many may not have yet realised what happened).
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My wife and I have pretty substantial death in service benefits with our public sector pensions and a very comprehensive life cover through our staff association- our mortgage advisor did look at us like we had three heads when we told her we were only getting building and contents insurance and not life cover.
But once it was explained she understood.
However she NEVER pushed us towards any product except building insurance as it was a requirement for the bank.
This dude is a shady commission grabbing so and so and should be reported.
It’s not mandatory, but it is good idea to have life, income and critical illness insurance. What you were paying seems very high. I pay about ┬ú4 a month for my life insurance and it’s ┬ú28 a month for my crit illness and income protection.
Just think, if you were in a serious accident and could not work for months…how would you pay your mortgage? I work with people who have suffered sudden, serious brain and spinal injuries and they can sometimes spend up to 18 months in hospital rehabbing. The critical illness and income protection cover makes such a huge difference for families who experience sudden, serious ill health.
I think your complaint and the ┬ú50 voucher is about as much as you can expect. He’s admitted the mistake, you’ve not incurred a cost, and received a small compensatory payment.
Look
Getting decreasing life insurance cover from a reputable company is not a bad idea when you get a mortgage.
If you can afford it, getting income protection and critical illness insurance isn’t a bad idea either.
I’m sure you see people driving really nice cars with really bald tyres sometimes: they spent all the money on the car itself and now can’t afford to pay to maintain it.
Buying a house without protection products is kind of the same thing. Sure, you’ve got the house, but if you have a hiccup in your personal or working life you can get in trouble quickly.
Also, these protection products are not “PPI”. Payment Protection Insurance was mostly useless. Decreasing life, income replacement, and critical illness insurance aren’t PPI.
Now, the broker should have not misrepresented those as bank requirements, because they were not and are not. He put himself into hot water over a relatively tiny commission. That was really dumb and shortsighted, and if I were you I’d actually look at the rest of the deal and make sure he didn’t screw you another way.
This isn’t really the mortgage advisor’s job. When you buy a house, you pay a conveyancer – it’s the conveyancer’s job to review the mortgage terms. They’re the ones who tell you take out building insurance etc.
There do seem to be a worrying number of people who expect impartial legal advice from someone who is essentially a salesman.
Also with PPI (I was mis-sold years ago and got compensation because of it), generally its something like they will cover the first 6 months ONLY. My contract of employment and I filled this out on the ppi form covered me with full salary for 6 months anyway, so PPI would never have paid anything out. I’d be seriously pushing for compensation of all premiums returned with interest. I’d also be wanting to report them to the financial services ombundsman as they 100% will be trying this on with every customer.