MCOL For cancelling Life Insurance Policy

[Basejumper]

Thanks mike_hawk. I found these links which triggered my questions

http://www.sra.org.uk/sra/news/sra-update/issue-6-consumer-credit-group-licence.page In particular point E now this policy / agreement does not fall under CCA or Consumer Hire Agreements

http://www.oft.gov.uk/shared_oft/consultations/oft664con.pdf The fitness section 25 test. and Category F

 

Welcome your thoughts

Edited September 14, 2012 by Basejumper
MORE INFO

[Mike_hawk]

Tbh, I believe you may be overthinking the issue. The law societys current licence doesn't really leave any gaps.

 

Did you send the disclosure requests?

[Basejumper]

Yes I have sent it I will post it up here tomorrow. but it has gone

[Basejumper]

Morning all

 

I have compiled a CPR 31.14 and inter woven the PART 18 along with the suggestion that I am still hopefull to an amicable resolution. I would be grateful if someone could take a look and give me their thoughts, in preparation of compiling a suitable defence should the need arise.

Thanks

 

[ATTACH]38256[/ATTACH]

[Mike_hawk]

Basejumper

 

You can't combine the 2 parts, they are 2 different animals and can be rejected if they are not compliant.

 

Your part 31 request should be for any documents mentioned in their particulars only..... TOB agreement, Insurance policy........ I think that's all they mention so at the mo that's all you can request.

 

Separate Part 18 request should be for any other information....... ie;

 

1. Where not contained within the TOB agreement and Insurance policy, the document title detailing the exact value of consideration.

2. If such a document exists, please confirm the pre contract date and method this was brought to the defendants notice.

3. If consideration value not contained within any documentation or agreement the method or media this [consideration value] was brought to the Defendants notice.

 

I'm sure you can think of a few more questions you'd like to ask

Edited September 16, 2012 by Mike_hawk

[Mike_hawk]

Basejumper

 

Part 31 request, you can use the template in the link I posted earlier. Remember to strip out any reference to the consumer credit act and adjust to suit.

 

The reason for the request is only really apparent if there are documents linked to the policy or the TOB agreement which you have not previously been party to. For the agreement, I can't see any reference to any other document stating the breakdown of fee or consideration value although this may be contained in the policy wording itself. I would think it difficult for them to satisfy the court that the Defendant would be aware of the value of 'up to' as a consideration if there is no documentation defining same. Perhaps the term stated as 'not less than' would have been fairer and more apparent to you of its implication. This does appear to be the FSA's view on the matter with regard to the fairness of the term.

 

My take on it would be to test as I would any other 'agreement', if something is implied, how does that implied term form a contract. Is the term enforceable, if so how is the court to place a value on it? Could it constitute an unfair term?

 

Part 18....... really just needs to be a list of questions:

 

 

IN THE ................ county court

 

BETWEEN

 

........................ CLAIMANT

 

AND

 

...................... DEFENDANT

 

 

_________________________ ___________________

 

PART 18 REQUEST FOR FURTHER INFORMATION

_________________________ ___________________

 

TO;...................... .......... (CLAIMANT)

 

 

PLEASE ANSWER THE FOLLOWING QUESTIONS:

 

1...........

2..........

3..........

.

.

.

.

.

 

TAKE NOTICE THAT YOU ARE REQUIRED TO ANSWER THE ABOVE REQUEST WITHIN 14 DAYS OF SERVICE OF SAME UPON YOU

[Basejumper]

Mike_hawk Thank you very much for input and I would not be in a calmer manner if you had not got involved. I have a small issue then, as, due to my timetable in submitting a defence to get the 28 days I had to send the request letter as posted in 54. Do you think I have wasted an opportunity by doing this or could I reconstruct another and title it PART 18 and use the template above.

I suppose a little knowledge can be dangerous and not fruitful.

[Mike_hawk]

Basejumper.......... send a further [compliant] part 18......... duty to disclose persists throughout the case. Barring putting yourself slightly on the back foot with the delay there's no real harm done.

[unclebulgaria67]

Send the letters again, with the 31.14 and 18 as separate documents.

 

You may or may not get the response by the time you have to submit the defence, but that is not a problem. All you would do is submit a defence that you have not had a response to CPR letters, so cannot submit a full defence, but you contend X,Y, Z to be the case. Perhaps cross that bridge when you come to it. If you get the information from the claimant after the defence submission date, if there is a hearing date arranged, then I believe there are ways of introducing new defence information before the hearing. Mike will no doubt advise on this in due course.

[Basejumper]

unclebulgaria67, Mike_hawk.

I will get onto them now, just to confirm, they can both go in the same recorded envelope. Should I out of courtesy apologise to the solicitors in the opening line also or just say 'please ignore last'......

[Mike_hawk]

Both can go in the same envelope [rec del]. Yes, draft a short cover note to explain the reason for additional service.

[Basejumper]

Hi All

 

I have compiled my PART 18 request. would be grateful if someone could have a look prior to sending

 

Thanks

 

[ATTACH]38280[/ATTACH]

[Mike_hawk]

Just need to frame each line as a question, my examples weren't perhaps clear in that respect:

 

1. Where not contained within the TOB agreement and Insurance policy, the document title detailing the exact value of consideration.

 

Becomes

 

1. Absent any Consideration or Remuneration values contained within the TOB agreement or Insurance Policy. Please confirm the title/name of the document detailing the exact value of consideration or Remuneration?

Edited September 17, 2012 by Mike_hawk

[Mike_hawk]

I suppose you could throw a question in that would counter any possible application of Quantum Meruit......... Not sure of the best way to frame it tbh, I guess you could try something along the lines of -

 

Absent any contractual agreement to remuneration or value of consideration, please confirm the following expressing time spent in minutes and its remuneration value in £ sterling;

[a] Total time spent in supply of suitable policy, remuneration costs of same

Total postage costs if any

[c] Total stationery costs if any

[d] Total telephony costs if any

[e] Any other costs not within a, b, c or d.

Edited September 17, 2012 by Mike_hawk

[Basejumper]

Mmmm that's a good thought (not a specific total in £sp). I also know, if this has some bearing on that, that the Agent has had to pay back their commission too. So should that amount be taken off this total. I believe that I need the actual accounting to have proof of this.

[Mike_hawk]

I would imagine, absent the value in any agreement, the court would require some evidence of the loss....... they could state that it's privileged information but I would think they'll need to show the court something tangible.

[Basejumper]

Not only the proof of loss to the Court but being able to satisfy to them the redress of the companies TOB agreement inline with the requirements of the FSA as it alludes to in the links you sent in a previous post. Lets no forget that at the top of the TOB agreement they state they do not charge a fee. What Quantum Meruit would there be surely the agent gets paid off the commission earned. If a customer cancels then they (the agent) give this payment back. Also should it be taken off their(the companies) loss in total and not get paid twice by the agent and again by me?

In addition to your it the overall amount. I calculated and got 'told off' by another poster that 'it isnt that simple' 48 payments of what I was paying (£52+p) is approx £2500. I paid £1652 when you minus these figures its less than what they are claiming by £150.

I think I am getting distracted and must concentrate on my paperwork

Edited September 17, 2012 by Basejumper

[Mike_hawk]

Yep, don't let yourself get sidetracked......... stick with the evidence in front of you and question anything that doesn't appear either justifiable or an accurate statement of fact. Absent any agreed values or contract, would a reasonable person [or the court] believe that the consideration value of their service in brokering a life policy was circa 2.5k?

[Basejumper]

It works out though that 2.5k is 10% of the of the cover taken out.... how strange

 

I think I have my questions now and a good train of thought so off to the post office

 

I can not thank you enough Mike_hawk for your time thus far

[rennuz]

Having looked at this again and specifically the commission amounts, you are likely to find the amount of commission for a £52 a month policy is nearer £1148. Just done a realtime quote, although Friends Provident are now Friends Life having joined with Bupa. You would never get anywhere near £2.5k for a £50 per month policy. It may be slightly more than that amount as Friends life now only work on a 2 year clawback not 4 yrs as before.

 

I can understand you will then be concerned that you have paid over that amount in premiums but obviously the premiums are not all commission and some of it is there to actually insure you for the £250k you wanted at the time.

 

Your Part 18 letter to them asking for all the info, again if they have done the case correctly should be simple for them to provide and it will show you all the information you require. There is nothing I cant see them being unable to show as it will all be in the Quote, the reason why letter and the Initial Disclosure Document, which any adviser has to create when doing such a case as its part of compliance for a case such as this one. This really is where I see it you can possibly have a bargaining tool, as these letters have to be squeaky clean and any slight discrepancy in it will give you a lifeline as it were, so go through these with a fine tooth comb when they arrive. Obviously if they are squeaky clean then you will find that it may go against you.

[Basejumper]

rennuz - thanks for joining the thread again. The 2.5k came about when I multiplied 48 x £52 pcm I was paying. I am led to believe that the commission was around £1400 for the first 48 then £1.31 pcm thereafter. I am also led to believe that the advisor has given their commission back on this circa £250.

I appreciate your assistance and you mention the letters being 'squeaky clean' is there a strict guideline? if so would you point me in the right direction to help speed up my process? So I may understand a little more is the commission front loaded to encourage the customer to continue payments? and finally why do you believe they have switched to a 2 yr clawback instead of 4 and when did this happen?

Thanks

[rennuz]

In terms of squeaky clean, basically I feel that is where you could possibly say that perhaps this was either mis-sold or wrongly advised. A life insurance that you cancel after 2 yrs when it was supposed to be a 20+ yr term isnt good advice from the start. But really what I mean is you will have to read the reason why letter and pick the bones out of it yourself to see if it was right for you, anything that is in anyway incorrect will give you a chance to complain, you will find anything if it is there. Also you should have had all of these documents the day you signed up, do you remember that?

 

Yes commission in this instance will have been "front loaded", its not so much front loaded in that it only looks like this if you cancel early, so basically out of everybody the insurance company is the one that does not lose out if someone decides to cancel early.

 

In terms of the 2 yr clawback, industry standard is that some companies have a 2yr clawback and some have a 4yr clawback. I have known advisors to steer clear of companies that have a 4 yr clawback for this very reason.... Friends Provident always had a 4yr clawback, BUPA always had a 2yr clawback the new company Friends Life now have 2 yr clawback, that all changed around a year ago but it would not effect existing plans like yours unfortunately.

[Basejumper]

I have had a look at the reason why basic format on Google which is advised to be followed but I do not recall seeing that or anything similar. Its a strange quote you make, "if someone decides to cancel early". It appears, as in my case that if you do you pay the consequence. May I ask, when you do or did sell Life Insurances does the TOB agreement give an amount in £sp for early redemption or cancellation? or is that what is covered in the IDD?

[Mike_hawk]

Perhaps compare the content and linked terms [suitability letter in its case] within Beacons undertaking at post #42 with your copy TOB.

[rennuz]

If you haven't had a suitability letter, it's hard to prove and likelihood is that they will supply one. A suitability letter will always show commission in it, whether it then goes on to talk about fees and clawback, I doubt it so there may be some mileage in the FSA guidelines mentioned. My thoughts are though that the FSA info is suggesting that it was written in a way that was unfair., essentially the firm itself was not trying to mislead it was just trying to cover losses from clawback. Well I can't speak for this form but I know firms I have worked for have had the TOB for that reason only.

 

When I say "cancel early" I am talking about within the clawback period, no adviser wants to have clients cancelling then or early. In these cases advisers want to make sure they don't incur losses so this is where the terms of business comes in. Imagine the losses for an adviser if all his/her clients cancelled their policies at once after they had spent the time setting up and advising on them in the first place. Nobody can work for free.

 

The TOB we had in place, or do with the current firm gives an outline of costs, previous ones did not but as you can imagine all clawbacks will likely be different so I know previous ones did not have exact amounts, the one now has a specific amount which encourages the client not to cancel but its based on time and costs. Although peoples circumstances change so I know colleagues will negotiate with clients to sort something out. If there is no communication from the client then they do peruse it. I don't get TOBs signed as I am not a fan of them and I used to use 2yr clawback so these issues were less frequent.

 

I do know the TOB is spelled out for clients at the moment they sign up so they understand it when they sign it, our guys will enforce them as they are clean and they are just there to ensure time is not wasted. Not heard of them not working due to this clarity from the outset, they record calls.