Hello.

A friend of mine has asked me to look in to the insurance policies that she has just realised were sold to her when she took her mortgage out back in 1998.

From looking at the paperwork I can see that there were various forms of insurance but what strikes me straight away is the phrase 'Premiums are recovered from your monthly mortgage repayments. Separate payment is not, therefore required. Please amend your payment when advised'.

Does this mean that the insurance was added to the mortgage, and by doing that, my friend was charged interest on both?

Apologies for the naive question.

Should be a separate item on mortgage statement, so no interest is charged on Insurance premium.

Going back a very long time ago to probably the early/mid 90's, some mortgage companies were adding insurance premiums to mortgage and charging interest. The OFT ruled at the time that this should not be happening and mortgage providers affected stopped this practice, with many stopping adding any Insurances to mortgage statements. Those that could prevent interest being added to Insurance premiums, continued to include Insurance within the statements, if the mortgage holders wanted the Insurance included.

That is the history on this issue. If mortgage interest was added to Insurance premiums and you can prove it with statements, then go through the normal complaints process. Should not be affected by limitations act, if interest was added in error, then a refund should be calculated.

Thank you for that. I will get my friend to check her statements.

Please can I ask how she can go about querying that the insurance was mis-sold? Is it purely a letter to the bank in question?

Yes it would be, but to avoid a simple refusal, your friend should state why the Insurance was not suitable to meet their requirements

It is a bit different to PPI, because mortgage insurance to cover payments in the event of say redundancy, might have been a condition of the mortgage at the time. With PPI it was added on very easily, but with mortgage repayment insurance, I suspect that your friend will have had to sign up to it and it was seen as covering a risk that needed covering.

Does this help anything, please?

1.pdf

2A.pdf

That is just Home Insurance. Your friend made an application to get this, as it is not something automatically arranged.

Oh okay. But it does say that it’ll be recovered from the mortgage repayments?

Yep that is the way Woolwich did it at the time.

My Sister had a Woolwich mortgage with Home Insurance premiums collected in that way. Not the most competitive premiums, but a very good claims service. Great when they covered a large water damage claim, when the house could not be lived in for over 6 months and needed a lot of work.

If you are fishing trying to recover any money from Banks, suggest sending a Data Protection Subject Access Request to see what you can find out. You won't recover anything regarding Home Insurance or mortgage protection cover.

Thank you for that. However, am I correct in thinking that they did effectively charge interest on that policy (being as it was combined with the mortgage repayments) and shouldn’t have?

No not mortgage interest or any interest. At that time, most Insurers did not charge interest for monthly instalments.

Hi again.

I see that the Woolwich was taken over by Barclays. I will send them a SAR but do you think they will still have the records of The Woolwich?

Hi Craig,

Yes they should have the data you need but please start a new thread to discuss your case. Probs best in the Barclays Forum as it'll get seen more there than in the Woolwich !