Nemo Personal Finance PPI/Norwich Union

[gazzoouk]

Hi,

having only found this excellent site today i now find myself making a second posting requesting advice.

OK here goes,

We took out a secured lone from Nemo in December 2006.
The original loan was for £25,595 over 25 years.

we opted for PPI mainly because we thought without it they may decline the loan. PPI was £6,334.76 (provided by Norwich Union) and this was added to the loan.

Making a grand total of £31,929.76

Three months into the term we decided that we needed to cut back on our outgoings as the interest rates had risen. We looked at the PPI for the secured loan and thought that by cancelling it we would reduce the monthly loan payment by a fair amount.

What a shock to find that the monthly payments had hardly changed after cancelling the policy.

The refund they credited our account for was £1150 (approx 18% of the original premium).

So for three months PPI on our loan it has cost us £5184.

I wrote a letter of complaint (using a template from another site) to Nemo setting out how i thought we were mis-sold the policy.

I eventually got a response were they have investigated the complaint and feel there was no mis-selling of the policy. They go on to detail telephone conversations between my wife and myself with Nemo employees where they draw our attention to

"i have to advise you if you cancel the policy within the five year period you are entitled to a rebate on it, it's not directly proportional to the term on the policy so you may end up paying for something you don't actually use"
TELL ME ABOUT !

The letter goes on referencing the various aspects of the policy and how we had agreed to it etc etc.

Lastly came a statement from Norwich Union that reads as follow;

"As terms and conditions of the policy represent our legitimate commercial judgement as to the risk involved, we (Norwich Union) would ask the FOS to consider dismissing any complaint about this issue under their rule: 3.3.1(11) whic reads,
"The ombudsman may dismiss a complaint without consideration of its merits if he: is satisfied that it is a complaint about the legitimate exercise of a firms commercial judgement"

I agree that they have to consider the risk but we cancelled the insurance after 3 months so the risk was no longer there.
I just can't beleive they can charge us £5184 pounds for what was effectively only three months cover.

Can someone please advise us if it is worth pursuing through the financial Ombudsman? How should the complaint be worded?

I just don't know what to do. We are still in financial difficulty and a refund of this premium to be credited to the loan would really help.

My wife and i would really appreciate some help on this.

thank you

Gary

[Mr lex]

Hi Gazzoouk and welcome to the Consumer Action Group

Thank you for posting such a detailed account of your problem with PPI.
I have passed your details on to someone with more experience than me with PPI, more help will be along soon !

Lex

[MARTIN3030]

Hi Welcome to the site.We have a specific forum where A Norwich Union representitive answers specific questions (Beccus) May be an idea to move your thread there for a response.

[LemonTwist]

"i have to advise you if you cancel the policy within the five year period you are entitled to a rebate on it, it's not directly proportional to the term on the policy so you may end up paying for something you don't actually use"

I just can't beleive they can charge us £5184 pounds for what was effectively only three months cover.

I can explain why the refund appears disproportionate to the amount of cover used.

I was studying PPI a few weeks ago, and I'm afraid this is normal practice. The reason the refund seems disproportionate is because the risk is not equal throughout the whole term of the policy. As a higher amount of the loan is outstanding during the first few months of the policy, the risk is higher during the first few months. If a claim occured within the first couple of months, the amount paid out would be higher than if a claim occured towards the end of the term, by which time most of the loan would have been paid off.

However, I agree with you that if the policy was mis-sold, you should be given a full refund.

[gazzoouk]

LemonTwist

thank you for your response. I understand that there is a decreasing level of risk over the term of the loan but should NU have had to pay out during the first three months of the policy then that would of amounted to £774 which is quite a bit less than the £5184 that we have been charged.

OK i appreciate that the claim could have gone on for a longer period but given that the secured lone was for £31,929.76 and our outstanding mortgage to Birmingham Midshires was for £145,000 (Nemo were aware of this before the loan was agreed) and should we default on repayments i would of had to get new employment/win the lottery or be at risk of losing our home.

We are not looking for a full refund, we appreciate that the lender has to consider the risk. All we want is a fair refund given that the risk was only covered for three months, £774 + admin costs (finger in the air) £50???>
So i would expect at least £4360 as a refund. Surely not unreasonable.

We are not trying to avoid our responsibilities but just trying to make a level and fare playing field.

regards

Gary+Deborah

[beccus]

gazzoouk

I'll need to look into this and get back to you.
If you want to send your NU policy number to me by email then please feel free too, in the meantime I will try and look into this for you.
My email is rebecca.sibley@norwich-union.co.uk

Becca

[gazzoouk]

Hi Becca

i have looked through all the Nemo paperwork that we have but none of it reffers to a NU policy number.

How else can i get this information?

regards

Gary