Mortgages - Mis-sold critical illness insurance
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Critical illness insurance cover protects you when you take out a mortgage by paying out a lump sum if you're diagnosed with one of a range of severe conditions.
A lender can make it a condition of providing you with a mortgage that you must take out critical illness insurance. However, it cannot force you to take out one of its own products, and nor should it sell you cover if that's inappropriate for you (for example if you already had some form of critical illness cover elsewhere from another provider).
In cases like these, you may well have been mis-sold and should raise the issue with your mortgage provider via Resolver.You should know
- Any financial organisation is obliged to treat you reasonably. If you feel that any action has been unreasonable, you have the right to make a complaint.
- Ensure that any complaint is marked at the top with ‘Official Complaint’. After eight weeks you can take your complaint to the Financial Ombudsman – resolver will remind you when you can do this.
- Your bank or building society might not respond back via resolver; however, any case submitted by resolver is recognised as an official complaint by the Financial Ombudsman, and your case will be accepted if you are unsatisfied after eight weeks have passed.
- You have the right to claim for your time and the inconvenience caused if your case goes to the Financial Ombudsman Service; it can also award interest at 8%, but this will not be compound interest.
If you have a complaint with your bank, building society or mortgage provider, you can use resolver to raise and manage the complaint. While not all financial organisations will respond to resolver, they are obliged to take and handle your complaint when it is submitted via resolver. To ensure that your issue is taken seriously, the email template you can use includes the text ‘this is an official complaint’. This means that, if you are not satisfied after eight weeks, resolver will remind you that you can escalate your complaint to the Financial Ombudsman Service.
Reasonable & fair
All financial organisations in the UK are required to treat you fairly, and to ensure that their actions are reasonable. These are the key principles for any financial product, so ask your friends or family member for their opinion on whether you have been treated fairly – this is a good way to determine if you have a reasonable complaint.
Discrimination is unacceptable as part of the reasonable and fair approach; if you have experienced discrimination, you have the right to make a complaint.
What you cannot complain about
Issues such as an investment losing money are not covered by the Financial Ombudsman Service, unless you were not made aware of the risk.
Should I use a Complaints Management Company?
Claims Management Companies (CMC) will handle a complaint for you in certain areas, such as Payment Protection Insurance (PPI). A CMC will charge you a fee, which is often between 30% and 40%. However, following the complaints process is something that can be done yourself, and it is unlikely that you will get a better result from using a CMC than by going directly to the company yourself.
Raising a complaint
If you have a complaint, first ensure that it is reasonable; if you believe that it is, you can use resolver to submit your issue. Any complaint from resolver is an official complaint, and the bank is therefore obliged to act upon it; if it’s not resolved, you can take your case to the Financial Ombudsman Service.
In your complaint, ensure that you state your issue clearly and concisely, give information about when the problem happened or began, and say how you would like it to be resolved. The bank or building society may or may not respond back via resolver, but it does have to respond, as your case will be recognised by the Financial Ombudsman Service.
Managing your case
During your complaint you can use resolver to manage your issue: you’ll be able to upload documents, store emails, set reminders and make notes about your case so that you have a complete file to send to the ombudsman.
If your issue is not resolved
If you feel that your issue has not been addressed, resolver will remind you when you can escalate your case to the ombudsman: this is possible after eight weeks.
From which date can I make a claim?
The statute of limitation in England and Wales is six years; in Scotland it is five years. In theory you can make a claim that dates before this, but the probability of winning is considerably reduced.
You must also contact the Financial Ombudsman Service within six months of your last communication with the financial organisation.
Financial Ombudsman Service
The Financial Ombudsman Service will independently assess your case. There is no charge to the consumer for the assessment, but you must wait eight weeks before you can take your case to the ombudsman. An exception to this is if the issue relates to a payday loan, in which case the ombudsman will accept your case immediately, to ensure that you do not experience hardship.
Can I claim for time and hassle?
There is an award in a quarter of cases that are assessed by the Financial Ombudsman Service. The compensation guidelines state an allowance of £50 to £100 per day, and no more than £10 per hour. Be sure to keep records of the time that you have spent handling your case.
Financial Ombudsman Service decision
The ombudsman will make a decision on your case and provide an outcome that is binding on the company. You can choose whether to accept the decision.
If the decision is held in your favour, and you are awarded financial compensation that relates to miss-selling, you will be awarded interest at 8%. This is not compound interest, so you will not receive interest on the interest.
If you are still not happy
If you are dissatisfied with the outcome, you could consider switching bank or provider. The final option would be to take the bank to court; you should get expert legal advice before taking this route.
Bank goes bust
If your bank or another financial firm goes bust, you might be able to claim compensation via the Financial Services Compensation Scheme. You are limited in the amount that you can claim - these limits are:
- Deposits: £85,000 per person per firm
- Investments: £50,000 per person per firm
- Home finance (mortgage advice and arranging): £50,000.
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