PayPlan - Cover My Payments

[silverfox1961]

Following a recent success with the Financial Ombudsman, a case where PayPlan charged a CAGger over £22 per month to cover their payments in the event of sickness or loss of job was judged to be an insurance product and could be recovered if it was mis-sold.

 

This scheme was called, "Cover My Payments" This 'scheme' was withdrawn in 2014.

The thread in question is HERE

 

Please note that PayPlan is the trading name of Totemic Limited.

 

This was marketed as a membership scheme however, Payplan charged a variable amount per month based on the payments made. A membership scheme is where a fixed amount is charged.

 

Payplan did a similar scheme called 'Cover My Life' which was, in my opinion, a membership scheme as they charged £60 per year irrespective of how much was paid.

 

I was concerned that this scheme was being mis-sold so I emailed PayPlan:

I am a member of a respected consumer forum that often advises people to seek help via PayPlan or Stepchange however something has appeared on the forum that has left me feeling at odds with that advice.

Cover My Payments.

 

I am unsure as to whether this product has been withdrawn or not but in the literature you state that it is a membership scheme and not an insurance product. This is at odds to me and before I contact the Financial Ombudsman to get their input, I would like to offer you the opportunity to state why it is not an insurance product.

 

If it is not an insurance product, how can it pay out when a member loses his (or her) job or becomes ill? If it is not an insurance product, could you explain why Trent Services are being used?

 

Am I right in thinking that membership schemes usually have a fixed monthly fee whereas cover My Payment has a variable amount based on the outstanding debt. This does suggest to me that it is a PPI product dressed up in a fancy name.

Please prove me wrong.

Many thanks

This is the response I received:

Thanks for your mail. Cover my Payments is a product that we used to offer our clients.

It was established as a membership scheme rather than an insurance product and was designed to maintain dmp payments in situations where our client suffered an income loss resulting from job loss, sickness or similar.

We were careful to set Cover my Payments up as a membership scheme rather than an insurance product because we believed this would offer better value to our clients.

 

The differences between membership and insurance schemes tend to be quite technical but one difference that was particularly appealing to us was that in a membership scheme claims are paid out on a discretionary rather than contractual basis.

 

It is in the nature of a dmp that the odd payment is often missed (typically at Christmas, the start of a new school year etc) and we didn't want this to mean that these almost inevitable hiccups would result in claims being declined. Similarly we didn't want to further compound the disruption caused by a missed payment by collecting arrears of insurance premiums from subsequent payments.

The membership scheme allowed us to overlook these payment inconsistencies when decisioning claims and to avoid the need to ever collect arrears of payments.

In 2014 we decided to withdraw all non-debt related products from our offering and focus exclusively on debt advice and debt solutions (so, for example, we no longer offer to proactively help people find cheaper car/house insurance, utility providers etc).

 

Instead we give generic advice and encourage people to shop around themselves if they wish to change/buy other products. At the time we stopped offering our Cover my Payments scheme we wrote to all clients with the product to remind them of the features of the product and invited them to cancel if they felt the product was no longer suitable.

 

In these cases we also looked into whether the product was ever suitable or of value and, where it wasn't, made a retrospective refund of contributions too.

This was a voluntary exercise which we conducted with input and support from the FCA, for those clients who chose to maintain their membership we also recheck suitability and value at each annual review.

Do let me know if you would like to discuss further - this would probably be easiest by phone

Since the win listed above, I have checked the Financial Ombudsman website and found another 4 cases. These are the reference numbers:

 

DRN 7453238

DRN 5870785

DRN 5970606

DRN 3306582 ( this one is part of a different complaint)

 

So, on one hand we have PayPlan saying it is a membership scheme but the Financial Ombudsman are saying it is an insurance product.

 

If any of you have been a member of Cover My Payments via Payplan, my suggestion is that you query as to whether it was a suitable product for you and if not, reclaim it. It is likely PayPlan will turn you down stating that it is a membership scheme but as I hope I have proved, this is not the case.

[silverfox1961]

As many people are aware, some insurance companies are reluctant to pay out. This 'product' was run by Trent Services, an insurance company so it got me concerned that PayPlan could offer this as a membership scheme and pay out on a 'discretionary' decision, something that insurance companies never do.

 

My opinion is that this insurance should never have been offered to people in such serious debt that they had to go to PayPlan in the first place.

 

If anyone has had a cover My Payment policy with Payplan, it is worth doing a reclaim. The product is no longer available so there may be a few people out there who did not realise they had this insurance or made a claim and got turned down.

[Ladybette]

Hi,

 

I was with payplan til April 2016, for 6 years, and was paying this. I need to look out my information but I paid a set monthly amount that increased very slightly each year so I'm not sure if that counts as variable. What I do wonder though is if it was discontinued in 2014, why was I not told and was still paying for another two years!

 

Would someone mind pointing me in the direction of a step by step reclaim please? I'll email them with the polite request first but if this is something I shouldn't have paid then I want it back!

 

Thankyou

[dx100uk]

id start a thread in the PPI forum

1st port of call is get all the statements from payplan via an sar.

[Ladybette]

Thankyou, I'll do it asap. I reclaimed from lloyds successfully many moons ago but my brain seems to have gone to mush.

[silverfox1961]

As mentioned in the response from PP, the scheme was withdrawn in 2014 however those that were on it either cancelled or continued. They stated that they contacted all members of the scheme asking if the customer felt it was still for them.

You need to find out if it was 'Cover My Life' or 'Cover My Payments' I ought to mention that if anyone actually made a claim, did they pay out? If they did then getting a refund may be harder as the customer will have benefited from the scheme.

 

Once you have the SAR back, the amount of payments would be shown as well as any increases. I'm surprised the amounts went up each year as it is based on what you owed so if the payments went up, your debt would have done so too??

[Ladybette]

Sorry, I didn't see this as I started my own thread then was advised that as it was an IVA there was no point in trying.

 

 

Just to answer you though,

I can't remember ever being asked whether I wanted to continue or not,

I was given a list of amounts one for each year of the iva.

..the iva payments increased slightly each year too,

 

 

I think they did explain it at the time but grief really does addle the brain.

.theres alot I don't remember about the first few years!

 

 

To be honest,

I think it was impossible for my (our) debt to rise any more than it was so I feel very lucky to have paid as little as I did and am not going to complain about not being able to reclaim as I thought

 

Thankyou so much for being willing to help though, it's much appreciated.