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Can my insurance company insist that payments can only be made via direct debit?
To be specific, I have had a policy in force for six years during which time payment has been accepted via a number of different means. However, when I phoned to make my December payment via Debit Card I was advised that this was unacceptable. I endeavoured to resolve but as we neared the festive break this became increasingly difficult. Knowing that the policy only permitted a 30 day period of grace, I hand delivered a cheque to them to cover both the December (now in arrears) plus January (offered in advance of the due date) payments. This cheque has since been cashed. A member of their staff has recently phoned me in response to my complaint made when the debit card method of payment was rejected and she tells me that my policy has now lapsed because I failed to effect payment via Direct Debit.
Paperwork to reinstate the policy with up to date medical declaration has been returned, but a further copy of the same came back and upon further investigation I was advised that the reason was the absence of a Direct Debit.
On the policy terms it does state that payment must be made in a manner acceptable to the company, and they say that such policy is either annually by Cheque or monthly by Direct Debit. but surely insisting that Direct Debit is the only acceptable means of monthly is an unfair term.
I have argued that by accepting payments via Debit Card, Cheque and other Electronic Funds Transfer methods that a president has been established for payment method, but they merely responded stating that this is an obligement which they no longer wish to offer.
I have further insisted that granting anyone open access to your account as is the case with a Direct Debit is unwise and highlighted that because my income is erratic that I may not have funds in my account on the due date and that is why I prefer to make manual payment, sometimes early, sometimes late, but never beyond the grace period afforded in the policy. Whereas having a Direct Debit in place allowing someone to attempt to draw funds that might not be available will result in the types of penalty charges that much of this site discusses.
I have suggested to the insurer that such an attitude may well be deemed unfair contractual terms under the European Communities (Unfair Terms in Consumer Contracts) Regulations, 1995 but they do not consider this to be the case.
The bottom line is that although all premiums are paid up to date I effectively have no cover because they have merely accepted my premiums and placed into suspense pending my acceptance of their Direct Debit policy.
I tried asking this question of the Financial Ombudsman Service and they referred me to Association of British Insurers who in turn suggested the Financial Ombudsman or the FSA, so, off I go to the FSA site where I fail to see any section under which I can record my complaint. Not very helpful are they?
I discussed this matter with a friend recently and he had a vague recollection of a case involving a petrol company and a garage. Where the garage cancelled the direct debit and the supplier sued. He recalls that the case was whether cancelling a direct debit was no different to defaulting on payment and as such the garage was in breach of contract.
The argument was that goods (petrol) had been supplied and that the mechanism for payment was via direct debit. However, there was something about the fact the a direct debit was paramount to a blank cheque and that fluctuating petrol prices rendered it impossible for the garage to know what would be charged. He thinks the garage won the first round then lost on appeal. Does anyone know this case?
In the case of my insurance policy the payment is a set sum and payable monthly in advance. I’m sure that in such a case, and ignoring my cash flow problems, a Standing Order would suffice, but should I consent to granting a direct debit and default due to insufficient funds, have I therefore defaulted the contract?
The policy grants 30 days leeway for payment and I have never gone beyond this time frame, so surely the insurer demanding payment in advance and by only one method has introduced unfair terms?
Insurance Policy Payment Method Issue
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