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Nationwide Refused to pay Decreasing Term Mortgage Insurance due to age of joint homeowner at death

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Hello Everyone,


This is a piece of advise for my mother who is currently going through lots of old paperwork.


Back in 1990, she and my grandfather bought a house between them, both named on the mortgage with the Nationwide. Both her income and his pensions (he was 70 at the time) were used to get the mortgage.


Both had to have Decreasing Term Mortgage insurance linked to the property in the event of either of them dying as it would clear the mortgage.


In 1992 my grandfather died and whilst dealing with his affairs, my mother (and I as a teenager) visited our local NW branch where we were told that the mortgage would be cleared in full due to his death. The amount at the time was circa £20000.


This was a Friday afternoon and I clearly remember how relieved my mother was as this was a huge pressure lifted off her mind. Our home was secure.


We had been asked to return on the Monday morning following which we did. On arrival my mother was taken aside and apologised to by a senior member of staff. There had been a mistake.


Due to my Grandfathers age (72) the insurance would not pay out as he was not covered. The premiums were up to date and like I said the policy was sold less than 2 years previously.


Apparently he should never have been sold the insurance policy due to his age at the time of taking out the mortgage.


My mother was very upset and the member of staff apologised again stating that due to the mistake, the NW would refund the policy payments made. It was a few hundred pounds and no where near the £20000 she was expecting to be getting paid out that day.


And that was that. Back then with no internet and my mum was a lay person, she took what the NW said at face value. She was a long standing customer 15+ years at the time and trusted the staff to know what they were saying - even though they had messed things up big style when selling the policy alongside the mortgage less than two years previous.


Ive tried looking online but to little avail as this seems quite a rare instance nowadays.


Can anyone advise as to the best way to try and gain some redress with this issue please? I think it was handled appallingly and NW should have swallowed the mistake back then.



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This is a dreadful story and I quite agree with you, there should be some kind of redress. However, the passage of time is very much against you.


In my view it is very good case of treating you unfairly but the FCA ICOBS rules were only introduced around 2004 maybe 2009 and so I don't think you could rely on them now.


I would have said that this is a good example of a breach of contract by the nationwide but unfortunately the limitation period for contractual breach is six years and although there is discretion in the courts to waive the limitation period, not sure what arguments you would have in your favour and also you can be certain that the nationwide would resist vigourously and if you lost the case it would cost you a lot of money.


If you did have a case then you would be suing for the £20,000 plus all of the interest since 1992. This would be a very large amount of money indeed and would take you to a litigation level where if you lost, you would have to pay not only your own litigation costs but the costs of the nationwide.


I'm really not sure what to advise. It shows how disgusting these people are and how they won't meet up to their responsibilities. We think that the banks have behaved badly in the years leading up to 2009, but you can see that they were always at it. I suppose that the staff you are dealing with only wanted to save their own backsides because I expect that they knew that they would be in big trouble if you had asserted your rights at the time – which you could have done.


The only thing I can suggest is to try and raise the issue again with nationwide and eventually make a complaint to the FOS. However, the FOS is worse than useless in most cases and in your case I don't expect you to get any joy at all. However, you might feel like ruffling a few feathers – and you never know your luck. You never know, the nationwide might make you some small offer as a gesture of goodwill.

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Thanks BF, your words are helpful and as much as I expected tbh.


I think we will send a letter off to NW to start the ball rolling so to speak - we have nothing to loose at this stage and everything to gain!


Who would you suggest as being the best department/address to direct this letter to?



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I think it has been going on so long so that obviously there is no hurry, I would consider raising it with my member of Parliament first of all. See if you can go visit your MP and have a chat with him/her. If they are sympathetic, they might be prepared to write a letter of support on your behalf. I think that that might be very helpful in helping the nationwide to focus a little on what they have done to you. I think it's worth getting the ICOBS regulations and pointing out that you have been treated unfairly and it is just a matter of bad luck that this kind of treatment was only enshrined in legislation a few years later.


As for who to contact, I'm afraid I have no idea. I suppose that if you raise it as a formal complaint which you want to take the ombudsman then you could simply beginning at your branch. Make sure you do everything in writing, of course

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Sorry to say that there is a limit to taking civil remedy over this matter and that is 6 years after the date you knew about the wrong.. There are exceptions to this but they are rare. Also there was the opportunity to go to the insurance ombudsman at the time. If you have the paperwork and it is their final response and doesnt mention this arbitration then there may be an exception to the 6 year ruls as it can be argued that you didnt know about ther wrong.

Chances of getting anywhere? very slim

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