Hi

Back in 2006 we took out an interest only mortgage and were sold an insurance policy to run along side it, should anything happen to myself or my partner. The mortgage and insurance were sold to us by an Independent Financial Advisor.

A few months ago, we found out that the we had been sold a mortgage decreasing policy instead of a level term policy. After speaking to Legal and General, they confirmed that the decreasing policy was no good for our mortgage, we should have been sold the Level Term Policy. They also stated to put a complaint it, but they could not deal with it because it was not them who sold it.

We wrote to the IFA stating we were not happy about being sold the incorrect policy and wanted to know WHY we were sold it and what they were going to do to correct this mistake. A week or so later we received a letter from Legal and General saying they were dealing with the complaint and would be in contact soon. I rang L&G to see why they were dealing with it when I was told they could not deal with it, and was told it had been passed to them and if the IFA contacted us, we were not to speak to them incase they tried to get us to drop the complaint.

Around 4 weeks later, we received a letter from L&G saying they admit we were mis sold the policy and to correct this mistake, they could arrange to change the policy to the correct one for almost £20 a month more each month, but they would not get us to pay the shortfall which occurred over the last 8 years!!

Gobsmacked is not the word!!! No explanation as to why this happened, no proper apology for this mistake, no apology for the distress and upset we have had for the past few months!!

We told L&G we did not accept this and we have now sent this to the Financial Ombudsmen to look into.

Have today received a call from the FOS stating they are awaiting further information from L&G and they are not there to punish the company but the possible solution to this would be to swap to the correct policy, at more money each month......... I commented that I didn't feel this was fair as we have been paying a policy for 8 years which is not worth the paper it is written on and basically they said "well if you're only doing this complaint for the money, I wouldn't hold your breath"

Its not just the money.... its the principle, the upset, the stress, the thought of paying out dead money for the past 8 years.....

Any advise would be appreciated

But normally in this situation, you would get the benefit of the policy you asked for at the time of buying it and not the wrong one. The FOS would have made sure that you did not lose from the mistake made by the insurers agent. So in theory you have had 8 years of paying a cheaper premium and going forward will have to pay the relevant premium for the correct policy.

Depending on the type of product, you could simply arrange the insurance elsewhere.

The FOS don't always award compensation in this type of situation. They will simply accept that the Insurers had put right their error. You can continue with the complaint, but I am not sure whether it will get you anywhere, unless you got the media involved. Sometimes a bit of adverse media coverage can loosen the purse strings of an Insurers.

I understand what you are saying, but hypothetically, if something had happened to myself or my partner, there would not have been enough to cover the mortgage as they sold us a decreasing policy and should have sold us a level term policy.

I also feel an apology wouldn't go amiss for the upset and distress this has caused and they betrayal we feel after trusting the IFA!

I understand what you are saying, but hypothetically, if something had happened to myself or my partner, there would not have been enough to cover the mortgage as they sold us a decreasing policy and should have sold us a level term policy.

 

I also feel an apology wouldn't go amiss for the upset and distress this has caused and they betrayal we feel after trusting the IFA!

They would have dealt with any claim, as if you had been given the correct level term policy. Of course you are not going to believe this, but it is my experience of dealing with hundreds if not thousands of complaints for Insurers. Mistakes are made and in this situation, the Insurers have lost out on 8 years of receiving the correct premium, when they were at risk for more than the decreasing policy you were given.

They should apologise and offer a token of compensation, plus the correct policy. Then hopefully you will be happier. It is not in the interest of L&G to allow you to continue to feel unhappy, as no doubt you will go tell dozens of people of your experience and they will tell other people, therefore L&G lose out on potential business.

They should apologise and offer a token of compensation, plus the correct policy. Then hopefully you will be happier. It is not in the interest of L&G to allow you to continue to feel unhappy, as no doubt you will go tell dozens of people of your experience and they will tell other people, therefore L&G lose out on potential business.

I understand people make mistakes and i accept that. From what the FOS said they wont offer any compensation.... However i feel something should be offered as a gesture of good will.... But im not holdingy breath

Generally FOS 'token compensation' will be around £50-100 (if they award any - beyond that you essentially need to have suffered financial detriment) - I also understand what you are saying but essentially, you've had 8 years of cover at a much reduced price, so their error has benefited you.

As unclebulgaria says, it's difficult because you haven't had to claim so the instinct is to think they wouldn't have been paid out, but they would have treated it exactly the same as they have now, and would have had to deal with the claim.

I would suggest that the insurance company should give you the cover at the price it would have been when you took it out (the price increases with age). There is no way LTA is £20 higher than DTA. I would also check the new policy still covers you for terminal illness and any waiver of premium.

As in regards to compensation it is hard for FOS to decide what is fair, somethings upset people in different ways. Your main complaint is the advice you were given not the actual product. It may be worthwhile writing to the IFA's network (who do their compliance) to raise a concern.

Cheers

Colin