Tesco Motor insurance cancellation policy.

[vixsta14]

Hi,

I'm wondering if anyone can help me?

I have been with Tesco Motor insurance for the last three years. My policy renews every April and I have never had to claim. In June I managed to find a much cheaper policy elsewhere and phoned up to cancel my policy.

I was told at the point of cancellation that I would have to pay a further months payment and also a cancellation charge. I disputed this as I was fully up to date with payments and did not see why I shold have to pay an administration charge either. I asked for the total amount and the advisor told me she didn't have the information to hand but that Tesco would write to me.

Tesco indeed did write to me asking for the sum of £89.48. This is an admin cost of £45 and a months payment of £44.48. I have chosen not to make this payment as firstly, I cannot see why I should have to make a further months payment when I will not be using the cover and secondly I cannot see how Tesco can justify £45 as a cancellation charge?

I understand Tesco incur administration costs but I do not believe £45 would reflect those. I am now being threatened with Debt collection agencies and the letter I have recieved today states that this could impact my credit rating. (Is this possible when I have not and am not in arrears with actual payments?)

Any help or advice on this matter would be greatly appreciated.

Thanks

[ScarletPimpernel]

I was in the same position as you with a Tesco cancellation penalty charge and additional month's instalment.

Tesco wrote once, but they were very confused and they fialed to respond to my letters, and very quickly passed it to Moorcroft, who I CCA'd. Tesco sent a copy of an agreement, but it had clearly been printed for the purpose - the date was the date they'd sent it, the address was wrong (I'd moved and they used the new one), and of course it wasn't signed. Moorcroft backed down quite quickly and passed it back to Tesco.

A couple of months later I had a demand from Robinson Way. I advised them that as Tesco had failed to produce a true copy of the agreement the matter was in dispute, so their involvement was in breach of the OFT guidance. I never heard from them again.

Should this one reappear, I still have Tesco's breaches of the OFT guidance (failure to inform me when they involved a second DCA, continuing to try to collect when in dispute), the lack of a copy agreement and of course the unlawful penalty charge.

[vixsta14]

Thanks for your reply.

I have spoken to Tesco since and their response seems to be quite contradictory to that I recieved when cancelling my policy. (I hope they record all the calls!)

I have asked for the full costs to be broken down and for me to recieve them in writing so I guess I'll have to see what happens.

[Darkangelsdelite]

I'm gona try and play devils advocate here, as i work for tesco insurance but I'm not a big fan of cancellation or amendment charges

The cancellation charge is clearly laid out in your policy documents. It says something along the lines of " our current cancellation charge is one months premium".

The way we work it out is 'pro rata plus one month'.

i'll give you an example to make it clearer.

If you paid £30 a month on the first of the month, then cancelled the policy on the 15th, we would refund you the proportion of the cover you haven't used (in this case 15 days at £1 a day would be a £15 refund) then add 1 months payment on top as a cancellation charge (£30) so in the above case we would owe you £15, you would owe us £30 therefore the balance payable to us is £15 (£30-£15).
The same formula is used for all customers cancelling within their 12 month contract, so in your case we would have done the exact same thing.

I would also just like to point out that it is a part of your policy terms and conditions when you renewed the policy in April, and you would have been given a standard 14 day cooling off period in which to cancel with no penalty should you not agree with the terms (including the cancellation charge). As you haven't exercised this right, you therefore automatically agreed to the terms. In theory, our admin team should just send you a letter explaining what I've just said above.
Now I've made myself unpopular, i'm off for a bit.

Anything else i can do, feel free to ask.


DA

[ScarletPimpernel]

Originally Posted by Darkangelsdelite

I
If you paid £30 a month on the first of the month, then cancelled the policy on the 15th, we would refund you the proportion of the cover you haven't used (in this case 15 days at £1 a day would be a £15 refund) then add 1 months payment on top as a cancellation charge (£30) so in the above case we would owe you £15, you would owe us £30 therefore the balance payable to us is £15 (£30-£15).
The same formula is used for all customers cancelling within their 12 month contract, so in your case we would have done the exact same thing.

Unless these are genuine pre-estimates of loss, they are still penalty charges, and unlawful. Tesco Insurance don't seem very keen to explain them, just like the banks. Again just like the banks, unfair contract terms can't be enforced.

Anything else i can do, feel free to ask.

Well, you could explain to whoever deals with these things that failing to comply with a CCA request properly is a criminal offence, and you might also get them to have a read of the OFT guidance, too, since they appear entirely ignorant of it.

[vixsta14]

Thanks for your response. I appreciate what your saying and had the administration charge been what I would deem as reasonable I would have paid it there and then. Just because it says a cancellation charge will be applied in the T&C's doesn't make it right.

I can fully understand Tesco making a cancellation charge but I think £45 and an additional months premium is extortionate. I do think this is a penalty charge as I cannot see how they can justify £45 as administration costs.

When checking the Citizens Advice website I came across this:

"Your insurer is allowed to make a small charge for the administration costs of cancellation, but they are not allowed to make a profit from this charge."

When I called Tesco to dispute the charges (Tuesday 14th August) I was told I would receive a call from the Customer Relations department the following day. Good job I didn't hold my breath as it never materialised!

I really do hope someone records and listens to the calls!

[vixsta14]

I was also told on Tuesday that car insurance payments are taken in arrears i.e so Im covered a month in advance of taking payments... which I may add was contradictory to what I was told when I originally cancelled the policy. Since when have car insurance companies worked on trust??

[Darkangelsdelite]

I'm not gona get into the whole "is it or isn't it lawful" debate, I'm simply here to just give general advice and help out where i can.
Its not really tesco that have the '1 months payment' cancellation charge, its all of the brands RBS own (Lloyd's, Pru, Pearl, Churchill, direct line etc etc) so taking action against tesco really isn't gona solve anything, you really need to look at the bigger picture.

In regards to your payments, it depends when your preffered payment date is. Ideally, your policy start date and you preffered payment date would be the same so you would pay a month in advance (policy starts 16th aug, 1st payment on 16th aug then 11 payments on 16th of month until 16th july following year). Obviously people choose a date for their payments the suits them, so if you chose the 14th of the month for example, you would effectively pay a month in arrears as your 1st payment wouldn't be until the 14th sept and your last one due 2 days before your renewal in aug the following year.

If you've not had a call back from customer relations then i would suggest you call back in and complain again, each time you complain it is logged on our system (we have to under FSA rules), so once someone at customer relations looks at your case, they can see how many times you have had to call in which can only really work in your favour.

All the calls are recorded, and every time a consultant accesses your file, a "footprint" is left on our system with their name, sign on ID and the date/time they accessed your file so you can easily prove who you spoke to and when so we know which calls you want us to listen to.

Also, it may be worth sending a letter of complaint in, if you address it to our customer relations team (The Wharf, Neville Street, Leeds, LS1, 3AZ), it may also help speed things up a bit.


DA

[vixsta14]

Again thanks for your advice and thank you for including the address in your response.
I no longer have the patience to listen to another piece of ill informed contradictory information over the telephone so have opted to write a letter instead. I have spoken to the financial ombudsman as well as Citizens advice who both agree I have a viable complaint so I will be CC'ing a copy of my letter to them.

To reiterate I do not have an issue with Tesco imposing a cancellation charge, I do however have a problem with the amount they charge to carry out very simple administrative task. A task which would not cost £45 to execute.

I'm from a serivces background myself and do not feel that I am acting unreasonably. Having worked previously for a customer relations department for three years I am fully aware of the complaint process.

Following my telephone call on 14th August I did not recieve a phonecall the following day as promised, instead I recieved a letter with condescending tone and an:

"apology for not being able to speak to you today"

Clearly a fallacy as I had not received any missed calls or voicemail messages!

Despite my request and being promised by a customer service manager I did not recieve a copy of the breakdown of the administrative costs of cancelling a contract or a copy of all payments made to Tesco for the last three years.

I know I mentioned this earlier but I really hope someone has the initiative to actually listen to the telephone to the telephone conversations I have had and documents each piece of contradictory information I recieve... I have a feeling they may uncover some vital training needs!

[ScarletPimpernel]

Originally Posted by Darkangelsdelite

I'm not gona get into the whole "is it or isn't it lawful" debate, I'm simply here to just give general advice and help out where i can.
Its not really tesco that have the '1 months payment' cancellation charge, its all of the brands RBS own (Lloyd's, Pru, Pearl, Churchill, direct line etc etc) so taking action against tesco really isn't gona solve anything, you really need to look at the bigger picture.

Noted with regard to who imposes the cancellation charge, but it is Tesco who, in my case, failed to reply to correspondence, passed the case to Moorcroft, failed to comply with a CCA request, and then, having committed a criminal offence in relation to same, passed it to another DCA in breach of OFT guidance.

[Rtech]

Have you any further news pls ???
I am in the process of disputing cancellation charges with my Insurance company.They refuse to give me a written breakdown of the charge,and have referred it to a DCA,who have demanded a DIFFERENT amount(even though this is lower than the original).Sent recorded delivery letter today,and suspect they will have to eventually throw in the towel.I would agree that a'small'admin charge would be justifiable,however accepting it would take approx 5 mins to auto print a letter,and update a computer,based on the charge they want,would equate to a admin charge of approx £250 per hour...sorry no way Jose!!

[vixsta14]

I do indeed...

It would seem that Tesco are unable to process a simple consumer request by sending me the breakdown of costs and details of my previous payments as my request has gone ignored.

After not bothering with my request (despite being assured by a manager) I recieved a letter last week asking for the sum total to be paid.

Unfortunately for Tesco I have chosen to ignore the letter. I figured two can play at that game!

Should that send it to DCA I have all the proof I need!

[Rtech]

You are in the same boat as me then,they rec'd my recorded delivery letter yesterday,so will sit back and wait,confident that I am in the right,as I am sure you are.

[Darkangelsdelite]

Hi vixta14,

Just thought i'd check in and see how you were getting on.
I see you've still had no luck with our customer relations dept.
The last 3 years payments should be easy to sort out, one of our payments consultants should be able to do that for you over the phone, if not then our credit control team should be able to.
As far as the breakdown of the charges goes, our system unfortunately doesn't show this information. Its all pre-set by our IT dept when they built the system, so all the staff would be able to tell you is how the charges are calculated (as I've done already) and that's about it. Seeing as your argument is about the legality of the penalty charge itself, you may be better off going straight to the ombudsmen with this one as i very much doubt we'll send you a breakdown of the charges as you've requested.


DA

[nickmcmechan]

i'm going through something similar with direct line

i've sent them the cca letter, they are still contacting me to pay

(however they're a bit better behaved than a dca as they have complied with not contacting me by telephone, but not that well behave as they want me to phone to pay - no way jose)

their 12 days has passed and the 30 are due up in about 3 weeks, just waiting them to default and i'll send them a firm letter telling them they are breaking the law, therefore goodbye

advise you do the same

[Darkangelsdelite]

Direct Line are also part of RBS so the info I've given above applies just the same (its the same computer system and underwriting criteria etc).
If you want to start your own thread then I'll see if there's anything i can help you with.


DA