PPI self-employment and bankruptsy

[circles11]

Hello All,

I have been reading these threads with great interest.

I am self employed and have complained to my bank and to the FO over policies sold to me. The FO has not found in my favour, which is very disappointing. They say that self-employment is covered in the terms and conditions so i could claim if i had too.

After reading the terms, i see this is correct. However, for unemployment, they will only pay out if i cease to trade involuntarily. So I would effectively be made bankrupt.

My issue is that if i am made bankrupt, my debts are written off. I have no need for insurance for a loan that will be written off if I am made bankrupt. I have explained this to the FO but they wont budge. They say i would need to complain to the FSA about the inherent error in the terms.

From what I've read, the FSA won't do much other than note the complaint so it looks like legal action will be my next step.

I am building up the courage to do this. All your hard work and successes gives me hope!

[old_andrew2007]

hi

I notice your thread has no replies yet, it would seem to be a policy which you could say was miss-sold, I have no experience in this field so I reply to BUMP your Thread.

Regards


Andy

[banker_rhymes_with]

Hello circles11!

I'm investigating the same PPI/Self-Employed issue, in my case, with regard to PPI on 2-3 MBNA Personal Loans over the last 8 or so Years.

Please check my own PPI Thread and also another Thread relating to MBNA Credit Card. These two Threads sort of overlap, so checking both may be useful. The Threads are below:

MBNA PPI Unsecured Loans Eyes Wide Shut

Getting MBNA before they get Me!

I too feel that whilst some of the PPI Terms and Conditions appear to mention and in turn suggest that Self-Employed are covered for Unemployment, the reality is that the PPI cover only seems to cover you if you lose absolutely everything.

As you say, by then, who will need PPI Cover! Most Debts would be in Default in any case, quite possibly well ahead of actual Business Collapse.

There are so many ways that someone Self-Employed can become Unemployed, that limiting it to just Total Business Failure is simply unfair.

One of my Posts relating to this is copied below, which may be of interest:

Hello All!

Looking at the MBNA PPI Terms, the issue of Self-Employment could be well worth investigating in some detail. Their Terms for Unemployment Cover when Self-Employed are very draconian:

"If You are Self-Employed and making an Unemployment claim, You must also give evidence that:
You stopped work because You could not find enough work to meet all Your reasonable business and living expenses and declared this to the Inland Revenue; and the Unemployment is not a normal occurrence of Your line of work."

There are so many ways that someone who is Self-Employed may end up Unemployed, that the above is just unfair and exceptionally limited.

Many Self-Employed are totally tied to their Business. Their Home, their Wealth, their Health, their family's Health, their Business and their Life are very closely aligned.

It is quite possible that to protect most of these areas, someone Self-Employed may need to cease to be Self-Employed to protect Home, Health, Life and Wealth if they can see that their Business will risk everything if it continues. Closing the Business may be the only sensible option for many, as it could preserve the other key "assets".

In such a scenario, the PPI would not cover such Unemployment, although anyone reasonable would understand that the Unemployment scenario outlined above was inevitable. But the Business would not have closed in ruin, and so the PPI Clause:

"You stopped work because You could not find enough work to meet all Your reasonable business and living expenses and declared this to the Inland Revenue"

...could not therefore be met. The PPI would not cover this, at a time when it would be most needed. This is a very serious failing, and demonstrates how useless the MBNA PPI Unemployment Cover is for the Self-Employed. You will only get Paid if your Business (and thus Life for most) have totally collapsed in a flaming ruin.

All of the Self-Employed I know would fight to avoid such a complete business failure like Tigers and, in so doing, would deny themselves any chance of Unemployment Cover from this useless MBNA PPI. The fact that the elusive Maximum Cover available is for 12 Months only, just adds insult to injury.

It's like being offered a fancy new Gravestone and Coffin but only if you Die first...oh yes, and you must also tell the Inland Revenue about it before your last gasp (or you don't get the Gravestone, and you can just forget the Coffin too)! Peniless and in the gutter is the minimum requirement for MBNA Self-Employed Unemployment Cover...so long as you told the Inland Revenue first.

Someone Self-Employed who became Unemployed in a controlled manner through events wholly beyond their control (Recession, sudden change in Market Factors or their Health), would receive absolutely no Unemployment benefit from the MBNA PPI. By avoiding a complete disaster, you are effectively denied any chance of MBNA PPI Unemployment Cover.

Health is another issue, as things like a Bad Back may not be covered. For example, a Self-Employed Mobile Car Mechanic with a sudden Bad Back that stopped him from working effectively, may not be covered on both Health Terms and Unemployment Benefit. Can't claim for the Bad Back, and can't get Unemployment Benefit either, as he/she closed the Business when it could still Pay the Bills.

To all intents and purposes, the PPI Cover offered by MBNA was, and probably remains, absolutely useless to anyone Self-Employed.

This Self-Employed issue could well be a cornerstone in my attack, as the MBNA PPI is clearly not "Fit for Purpose" for anyone Self-Employed. I feel the MBNA should not have offered it to anyone they knew to be Self-Employed, and they certainly knew I was Self-Employed.

Thanks in advance for any help and/or advice here.

I'm quite sure the PPI Self-Employed Cover in my case is more or less useless, as it can only ever be Claimed in one case only, and even then, I suspect they will wriggle and worm around to avoid Paying, as they can, if they want to, argue that a Business did not actually fail if the owner took any steps to close it down themselves. Many would do just that to avoid total losses.

I hope this helps.

Cheers,
BRW

[lizzy40]

I like that letter what a great response.

I managed to get my PPI back from Barclays. I'm also self employed and claimed being mis sold under those terms.

The letter I got back form Barclays admitting they had mis sold me states

I quote " As your payment protection insurance policy we sold you covers loan repayments in the event you become unemployed involuntarily. As you are self employed I do not believe you would be eligible to cliam under this element of the policy"

Why don't all this financial organisations follow the same rules????

[banker_rhymes_with]

Hello lizzy40!

Many thanks for adding this, as we all need to hear about such events. It does help a great deal.

Barclays are way down on my Target List but, when I get around to them, I will remember this, especially if I find they have added PPI to any loans or Cards I have had with them.

I'm trying to build a strong case to show that PPI Cover when Sold to the Self-Employed, is of almost zero use even when the PPI Terms mention that the Self-Employed are covered.

From what I have seen from my MBNA PPI Terms, although they mention Self-Employed are covered, it's clear the PPI Cover is exceptionally weak, open to many opportunities to be denied, and only seems to cover someone if the very worst happens. Even then, they can almost certainly find a way to deny the claim. After all, when 100% broke, who has any strength left to fight a battle over PPI?

You may not be aware, but the PPI Industry as a whole, pays out very little. Something like 18% against, say, the Motor and General Insurance Industry average of around 85%.

PPI is a mahoooosive profit earner for the bankers, so it's not at all surprising that they have tried to ram this option at every opportunity.

I'm quite sure a mid 1990s Loan was only turned down because I specifically said that I did not want PPI. Then later Loans were accepted because I then elected to go for it. There was no doubt in my mind then, and now, that PPI was required if I was to stand any chance of being accepted.

After all, how easy is it to get a Loan when Self-Employed?

Not easy, is it.

Most get turned down.

...unless, that is, you tick that nasty little PPI Box! The bankers will then be more likely to accept, as it turns a 25k Loan over 5 Years from one where they earn just 8% interest, to one where they can add 8k of PPI, and charge interest on that and the Loan itself.

Easy Money, big profits and far better for them than just charging 8% on a Loan without PPI.

Over the last 10 Years, how many Self-Employed have been turned down for Loans without PPI, against those who have been accepted for Loans with PPI? I bet most were accepted who opted for PPI, but I have yet to find any figures to support this very reasonable assumption.

Hope this helps.

Cheers,
BRW

[lizzy40]

I would think most lenders and people involved with finance wouldn't touch one of these self employed policies.


Circles11,

I have managed to get my PPI back on one of my policies, I didn't need to use the FOS, however the bank concerned wouldn't pay any interest so the FOS are sorting this part out for me so I can only advise on my own experience's on how I managed to get mine back.

Is this self employed eliment the only reason you made your mis selling claim on which has been turned down by the bank and the FOS?

I have had a few dealings with the FOS and you have to keep things simple. As in your case the policy probably states that it covers for self employed so as far as the FOS are concerned it does what it says on the tin. Whether you have to make yourself involuntarily bankrupt is niether here or there, as the FOS what say they don't make the rules they are just there to help with the disbrute.

The involuntarily unemployment eliment needs changing like banker_rhymes_with says as nobody would want to make themself bankrupt.

There are other aspects to mis selling PPI perhaps you should consider the other options. These can be found on the FOS website.

I would probably challenage the FOS and write back to them and ask for a second opinion thats if the FOS have given you their final responce. Say something along these lines.

You wasn't made aware at the time of the sale of the policy whether by intention or omission that as a self employed person I could only claim if my business failed and I went bankrupt and not if I made myself involuntarily bankrupt. This is far more drastic than simply being out of work. This isn't treating me fairly. This eliment doesn't treat employed and self employed the same, the policy gives better benefit to employed people which is unfair, why should I pay the same amount of premiuns when I cant use all the eliments of the policy. This aspect of the policy is no good to me and it should have been explained when I took the policy out. If this was explained to me at the time I wouldn't have taken it out. I should have been advised that a decreasing term assurance with critical illness or a PHI policy and a monthly redundancy plan would have suited me better, but I wasn't given any options other then this PPI to cover my loan this is unfair.

That worked for me anyway and the word unfair seems to be the FOS's buss word at the moment. I also listed some of the other options to mis selling. I wasn't told I could take the policy out with another company and that I could have chosen a monthly payment option but was given a single premium option which again the bank earnt more money.

Hope this has been helpful.

Lizzy

[circles11]

Thanks for all your help. I am glad other people have won on the same basis as my complaint.

The FO have basically told me to bugger off. i quote: "our Rules set out that we can dismiss a complaint without considering its merits if we are satisfied that it is a complaint about the legitimate exercise of a firm's commercial judgment."

This was the reply i got when i said that i could only claim under the policy if i went bankrupt and if this were to happen my debts would get written off anyway. basically, the FO have said that i am still eligible under the terms! Clearly I am not! i have just explained that to them! they just can't be bothered.

the say i need to go back to the bank (like that will do anything) or go to the FSA but i don't think they award compensation, which is what i want.

Since I am complaining about the terms and conditions themselves, rather than the selling, Im not sure how to back up my legal argument with evidence. I have my reasoning and argument sorted, but no case law to cite. I am doing more digging though.

thanks for your help so far.

[banker_rhymes_with]

Hello Circles11!

Another issue to investigate, is to try and establish if the PPI was Sold to you on an Advised or a non-Advised basis.

It may be worth sending them a Subject Access Request plus £10 fee, as it may reveal some of the original Application Documentation that could prove this one way or the other.

If an Advised Sale, albeit an unintentional one on their part, then they could've had extra Responsibilities. Such as being required to ask you many more questions: was it suitable for you? Did you need it? Did you have other Cover? Did you know you could go elsewhere for it?

If key questions were not asked, that may help you to prove that the useless Policy was mis-Sold.

The sad fact is they would probably have turned you down had you elected not to have PPI, but proving that is not very easy. Whereas finding out what they should've done, and didn't, could bear more fruit perhaps.

One of my Loans has been Paid Off, so that's the one where I will go for the throat and seek a straight PPI Refund. The other Loans are falling apart at the moment on the Agreement side of things, so I am trying to pin them down on that first. No point asking for PPI back if the whole Agreement sucks...PPI Reclaims can come later when I seek to tie off the loose ends with Full and Final Offers and/or any Counter-Claim for mis-Sold PPI should they fight me on the Agreement side of things.

Both current Loans have serious flaws with Signature Dates and Cancellation Rights. Indeed, have a look at that too, did they sign and Date your Loan Document before you?

If it was a Cancellable Agreement then, once you signed, they then had just 7 Days to send you a Copy plus a Notice that you can Cancel. If they failed to do that, the Agreement cannot be Enforced I understand. The Court's discretion to Enforce is removed. I can post additional details if this is something that may help.

Hope this helps.

Cheers,
BRW

[alanalana]

Hello circles11, and BRW,

Just another reminder mainly to keep your received mail envelopes ( I just had to make it stand out BRW) they may be able to prove delays in the statutory timescales for responding to CCA requests S.A.R - (Subject Access Request) requests etc!!

No doubt BRW will respond to this reminder (Just as if I was a Tax man! or a banker!!!!!)

Good luck with your reclaims

aa

[lizzy40]

I have just managed to get confirmation that the bank will pay the interest on my mis sold ppi. I have already been awarded the ppi refund but they failed to pay the interest. I had to get the FOS involved as the bank didn't want to know. I was happy getting the refund for my PPI and it may have been a bit ambiguous to try for the interest but they had my money for 4 years and they earn't interest on it.

Anyway it has taken a long time to get this far don't get disalutioned when they turn you down. I first wrote my complaint March 2007 which was turned done repetitivly each time I challenged their argument. It wasn't till October 2007 that they finanlly agreed I had been mis sold on the self employed involuntarily element part of the policy. However they had more then one aspect of my complaint to consider why I was mis sold.

This is the list of reasons:

I wasn't told that I was entiled to arrange PPI with another provider if I so wished?

I wasn't asked if I already had ppi in place?

I wasn't told about any exclusions?

I wasn't sent comparions between ppi and no ppi cover?

Self employed are not coverd or entiltled to the same benefits as employed?

The PPI was added to my loan as a single premium payment. Why did I have to pay for it up front?

Why wasn't I told I could have taken a monthly option?

Why was my first loan cancelled and ppi automatically added to the second loan?

I would say all the above they failed in but choose the self employed element of the policy which was the base of my complaint to confirm I was mis sold however it took them 7 months of denying it.

So if I was you don't take no for an answer keep writing even to the FOS, I have used them a couple of times and they are not always obliging to start off with they disagreed with me once but I got them to look at my complaint again and they changed their minds. I would just like to add when dealing with the FOS write to them in basic terms don't make it to complicated because they cant do complicated. The FOS are only their as a middle man looking at the evidence you provide.

I wouldn't say it was easy getting PPI refunded?

Hope this has been helpful..

[banker_rhymes_with]

Hello Lizzy40!

Thanks for the summary, it is very useful to read things like this.

Much appreciated.

Cheers,
BRW

[circles11]

Lizzy40,
Did they give specific reasons as to what it was about being self-employed that made it mis-sold?

thanks for your help!

[lizzy40]

All they said I quote:

" As you know the payment protection policy we sold you covers loan repayments in the event you become unemployed involuntarily. As you are self employed I do not believe you would be eligible to claim under this eliment of the policy. I therefore believe the insurance should have not be sold "

So my understanding from the above if employed the policy covers you if you become involuntarily umemployed but not if self employed and become involuntarily umemployed. This makes the policy unfair!

How have you been getting on any up dates?