Budget Car Insurance Cancellation

[jo5ephedward5]

My brother has a car insurance policy with Budget – he pays £128 per month and the October’s payment is due tomorrow.

Due to getting a new car which they won’t cover him for he has decided to cancel the policy and take out cover elsewhere.

They have told him he has to pay Octobers payment even thought the policy is void as of now, he asked why and was told that he just has to pay for a month and not receive the cover as its been cancelled (how that work paying for something they wont give you?) they have also said he’ll have to pay £55 cancellation charge – Ok we understand this but £55 to press a button and said cancel?

Finally and this bit really chafes me - £203 termination penalty – they calculate the figure remaining on the policy and take a percentage – what for they have had a month free and £55 to press cancel!

He asked if he could have it in writing and after a pause whilst the assistant asked her manager he was told no nothing can be put in writing.

Now I’m sure all this is in the terms and conditions but I’m 200 miles away and can’t check them – my brother is useless with these things!

He’s cancelled the Direct Debit with the bank but they can’t promise it won’t go tomorrow as they need 24hours (yet I’ve cancelled with less that 24hours before!)

Any help greatly received

payments ‘owed’ are as follows

4th £128 October monthly payment
6th £55 cancellation charge
9th £203 penalty for early cancellation

[cinderemma]

hi, i work for a well known insurance underwriters, and we deal with approx 30 different well know companies, now i cannot really comment on how other companys operate but as far as i am aware they can only charge a canx fee (ours is 1 months premium) and charge you for insurance cover that you have used, best bet is to take your complaint to F.S.A (financial services authority) or contact the financial ombudsman both have websites, hope this helps

[jo5ephedward5]

well theirs is £55 which althought is pretty high for what they have to do we accept this...the issue is that they are taking £128 tomorrow for the month ahead yet the policy has been canceled so my brother is paying for somthing he hasnt got - also the extra £203 is just wrong if you ask me - how can they charge him that much when he should have a right to cancel and will have already paid them their cancelation fee?

[cinderemma]

it sounds very excessive i agree, if the bank cannot stop the d.d in time the £128 should be refunded as he is paying for insurance that is no longer needed/canx. he needs to speak to a supervisor/manager and explain that he isnt happy with the charges and also threaten with going to the ombudsman, they will have the power to waive any charges. also tell him to ask what their complaints procedure is, chances are they will waive charges to stop the complaint going any further
Good Luck

[jo5ephedward5]

well the bank managed to hold back the Direct Debit for this month - Nationwide are good for something!

My brothers now going to wait untill they write then return them to write to him when they make contact and he will pay the £55 and argue the rest - i'll keep u posted

[chocolateteapot]

Hi everyone

I am having the same problem with Budget's cancellation charges. I have looked on the FSA website (the Handbook) and found this in the insurance rules:

"
Payments

Where a retail customer exercises a right to cancel under ICOB 6.2.1 R:
(1) the insurer must pay to the retail customer without delay, and no later than 30 days after the date on which the insurer received notice of cancellation from the retail customer, any sums which the retail customer has paid to, or for, the benefit of the insurer in connection with the contract (including sums paid by the retail customer to agents of the insurer) except for the amount referred to in (2);

(2) where the contract is a general insurance contract, subject to (3), the insurer is permitted to require the retail customer to pay for the services it has actually provided in connection with the contract. The amount payable, however, must not: (a) exceed an amount which is in proportion to the extent of the service already provided to the retail customer by the insurer in comparison with the full coverage of the contract; and
(b) be such that it could be construed as a penalty;


(3) sub-paragraph (2) applies only: (a) where performance of the contract has commenced before expiry of the cancellation period and this was requested by the retail customer; and
(b) where the insurer can demonstrate that the retail customer was provided with details of the amount which he may be required to pay if exercising his right to cancel in accordance with ICOB 6.2.1 R"

I think basically what it's saying is that an insurance co can't charge you for what you haven't used in insurance. Sub clause (3) I think just means that if an insurance company hasn't stipulated the amount you pay in the event of cancellation, they can't charge you anything (i.e., it's there for the consumer's benefit, not the insurance company's).

I don't know what everyone else thinks about this but I have written to them and they have just denied they are in breach of the rules. I'm now taking the complaint to the Ombudsman and I will let you know what happens.