I recently cancelled my direct debit for the car insurance as the vehicle has been sold and the policy is no longer required.

Just received a letter stating that if dd not put back in place then the policy would be cancelled, fine I thought. Called M&S to tell them that the policy was no longer required.

The person on the phone then said this was not a problem and that the policy was cancelled immediately, they then went through a number of figures and stated that I now owe them a large sum of money.

I questioned this, to which the person said we will atttempt to take it by direct debit which I said you will not, I was then told you must pay by credit or debit card again I said no, and stated that I would like to see an invoice to ascertain what these costs were.

My question is what are they trying to charge me for and secondly is this allowed?

ska

Right, firstly what does it say in your policy regarding cancellations?

Secondly, just because you were paying monthly doesn't mean that you were receiving cover on a monthly basis. It was just a way of spreading the cost of a year's policy (with added interest of course). You can't get out of a policy these days without some kind of fee being charged. Of course if it is outrageously big then I would certainly recommend kicking up a fuss.

I am just digging out the policy docs at the moment, secondly the fee seems overly high to me.

Can they just take a direct debit despite it being cancelled and my telling them that I do not give them permission?

Also when I took the policy I knew that it potentially would not be for the year and I questioned them on this and was told not a problem and that there would not be any significant charges applied.

ska

No they can't take it once the dd has been cancelled. Let's start with the t&c and take from theres.

If you cancel your policy:

1 month 20%

2 months 30%

3 months 40 %

4 months 50%

5 months 60%

6 months 70%

7 months 80%

8 months 90%

9 months onwards 100%

No claims have been made on the policy and no mention of additional charges.

I am assuming those figures are based on having bought the policy in full and represents how much of the total policy cost you are liable for. So if you cancelled a £200 policy for argument's sake within one month you would pay £40 so got a refund of £160.

It becomes more complicated when you spread the costs by DD. Going to need some figures here.

What was the cost of the policy (including any interest charges for paying by DD) and how many months into the policy have you cancelled?

Policy total £397.02 with monthly payment charge £436.85 and 8 months into policy.

advance payment £33.07

1st payment £36.78

further monthly £36.70

ska

Right, I'm guessing their argument is that you would have paid them £436.85. With it being 8 months into the policy you are liable for 90% of the total cost.

Therefore 436.85 x 0.9 = £393.17

Then if I understand your payments correctly it would be:

33.07+36.78 and seven months @ £36.70 means you have paid off £326.75.

The difference between those two figures would be £66.42.

How much are they asking for?

about £90?

ska

Was I correct on the number of payments you have made?

They might also be putting on an admin charge.

Yes correct on the number of payments made, no mention of admin charges except for the following

OTHER CHARGES: ADMINISTRATION FEE - If you make an underwriting change to your policy after the first 14 days, we may charge an administration fee of £25.

ska

It's possible that they are putting an extra 25 quid on and that takes us up to 91 pounds-ish which matches the figure they are quoting you. With it all being written in the T&C it looks like they have got you there I'm afraid...

It is galling to have 67% of the cover (8 months out of 12) and pay 90% of the cost...

As they may charge an admin fee then I believe that I may choose not to acknowledge it

ska

You can certainly querry it, however in my experience, if it's written in the T&C they won't be interested in any complaints you make. Insurers are like any large financial institution, pretty vile

It's because of things like this that I rarely cancel insurance and just let it run even if I no longer need it as it often pays dividends in the form of NCB for example.

My advice is to pay up, as otherwise you will come to regret it. The Insurers will count non payment as a debt like any other. After writing to you, if you did not pay, they would pass this to a debt collection agency, who would attempt to collect, adding their own fees, making the amount owed a lot higher. If you did not pay, they would add this debt to your credit record as a default. It is also possible that they could take you to court and obtain a CCJ.

For £91, I don't think it is worth the hassle.

You are of course entitled under FSA rules to ask for a full breakdown of the cancellation charges in writing, before you make payment.

I have already asked for an invoice with a full breakdown of where these costs are coming from. I no doubt expect that this will not be what they send but I will then request in writing and until such time as they produce the breakdown I will consider the account to be in dispute.

A disputed account can not be passed legally to a debt collection agency and the DA will drop it like hot potato when they know the account is in dispute.

ska

true enough in the short term, but your file will be marked and really it isn't worth the hassle.