XS Direct 3k Total Excess - Worried regarding Debt Collectors

[unclebulgaria67]

Just wonder how many Policyholders in this situation don't have £3k spare and end up with a cancelled policy.

 

I can see no mention of offering a repayment arrangement. This will be a £3k debt that would be chased by debt collectors threatening to issue a court claim.

 

To me the crux is that at point of sale Insure your motor really should have made sure the policy was suitable and that in the event of a fault accident the policyholder had £3k available to pay the underwriters. If the answer was that they did not have £3k available, then the policy was not suitable. Breach of icobs.

[unclebulgaria67]

Yep, i think the Insurers have a responsibility to make sure such a niche product is understood. They should ask the question " if you had a fault accident at any time during the policy, do you have £3k to repay the Insurers ? If the answer is no, the product is not suitable,

 

The call recording just evidences them asking that he understood the type of policy i.e all sections excess of £3k

[unclebulgaria67]

I think there is a chance the FOS will uphold the complaint, but it might have to go to an actual Ombudsman to properly consider whether the policy really is suitable.

 

If you don't have £3k spare to cover this liability, then the policy is clear that the Insurance will be cancelled and debt handed over to debt collectors. This should be an unfront warning, given the severe consequences. If you already struggle to obtain insurance having this cancellation on record might mean that you are no longer able to drive. Therefore you might lose employment if there is no transport alternative and this could lead to very bad consequences.

 

I personally don't think the health warnings on this insurance product are adequate. It might be suitable for people with enough savings or income, but the brokers Insure my motor should be required to make sure customers fully understand implications of buying the product.

[unclebulgaria67]

Re the other point made, here is the wording

 

Deduction for Your own damage from Your. Liability to pay Your Excess Amount

 

In instances where You have suffered damage to Your Car but have chosen not to claim on this insurance in respect of that damage You are still liable to pay the Excess amount in respect of any Third Party claim or any other payments made by the Underwriters arising from the same event. No reduction of the Excess amount in respect of these payments will apply because of Your choosing to make no claim under this insurance in respect of damage to Your Car unless the following requirements are met:

 

(a) the damage to Your Car is reported to us within 14 days of the event.

(b) We have agreed the value of such damage at the time prior to any repair proceeding.

© any value of such damage up to an amount of £500 must be supported by an estimate for the repair of such damage to be approved by Us and to be submitted to Us within 14 days of the event.

(d) any value of such damage in excess of £500 must be supported and approved by an assessment of one of Our appointed assessors to whom access to the vehicle has been provided within one month of the event.

Subject to compliance with the requirements of this clause the Underwriters will deduct the agreed value of any damage to Your Car from the Excess amount payable in respect of that third party claim.

 

I understand that argument totally. However, as this site is interested in Consumer rights, then if someone wants to pursue a complaint about what they have been sold, then any support that can be provided, is something we should support. If i thought that there was 100% no chance of success then i would have said so.

 

The whole point of the FOS is that they can look at the arguments by both sides and come to a conclusion. If at the end of the process the FOS do not uphold the complaint, then the OP has had time to save up the money and they have not had insurance cancelled while subject to an FOS complaint. I think the renewal is due in June and they can try to get Insurance elsewhere without a cancellation on their record.

[unclebulgaria67]

Seems good to me. Enough for FOS and Insure your motor to chew over.

[unclebulgaria67]

Don't be downhearted by the FOS complaint handler and insist that the complaint is escalated to the actual ombudsman. You can have 2 complaints running. 1 against insure your motor and 1 against xs direct.

 

Ask the complaint handler for copies of the information that Insure your motor supplied to them, to see whether you remember it and it is the same as any records you might still have.

[unclebulgaria67]

The FCA don't deal with individual complaints as such.

They will only log issues and if they get loads of these complaints, they might look at it in the future.

 

It really is up to the FOS to do their job on behalf of consumers and take a commonsense look at a £3k all sections excess policy and decide whether ICOBS rules were met when the policy was sold.

 

The policy is not really suited to people that do not have at least £3k instantly available if they have an accident.

Insure your motor the brokers did not question the OP enough about suitability to satisfy ICOB rules.

[unclebulgaria67]

Insurance is for protection against risk, not a gamble leaving you with a debt owed to Insurers, with no details in the policy about repayment of such a debt. If you don't pay the amount due when requested, the policy is cancelled and debt passed to debt collectors.

 

This is potentially ruinous and could lead to loss of employment, if they relied on driving to place of work.

 

My personal opinion is that the FOS should be looking at whether this is suitable to most people it is being sold to and does the sales process comply with ICOBS.

[unclebulgaria67]

I was thinking about your case this morning and you might want to think about the following.

 

IF it looks like the FOS believe that Insure your motor did advise you sufficiently about the £3k all section excess and xs direct are legally correct in offering such a policy, then you might want to concentrate on the debt repayment argument.

 

You might then be able to persuade the FOS to partially uphold your complaint on the basis that the policy does not include debt repayment terms that are fair to policyholders. If xs direct should seek debt repayment over a minimum of say 3 years and if this is accepted by the policyholder within say 21 days, the threat of cancellation is lifted, then that would be reasonable.

 

To simply create a £3k liability in the policy terms and threaten cancellation followed by debt collection is not adequate.

It does not offer any protection to consumers from getting into a potentially ruinous position.

[unclebulgaria67]

You miss the point Bazza. This xs direct policy is pretty unique to lower end of the market, with a third party excess. People are buying a debt policy.

[unclebulgaria67]

No they are not.

 

This situation has only arise because the OP caused an accident.

 

The OP was a young, high risk customer and the premium reflected this.

 

As it happens, the insurer was correct to consider the OP a higher risk.

 

A standard car insurance would not mean a debt would be incurred after an accident.

 

The unique feature of the xs direct policy with the £3k third party xs is that it includes a debt obligation of up to £3k after an accident.

 

The consequences could be very serious indeed and there should be a compulsory health warning advised at point of sale. From what i gather, no such warning was issued.

 

In addition to the health warning, xs direct should automatically offer repayment over a long period and if agreed to, the threat of cancellation should be withdrawn.

[unclebulgaria67]

They should have discussed the all sections excess more, as that was key to deciding if it was suitable.

If they had said to you, that you must have £3k available should you have a fault accident, then would you have bought the policy ?

They might have offered another choice, but you were comparing the £3k excess quote with quotes you had obtained elsewhere.

[unclebulgaria67]

Don't know. I suppose they just wanted to know you could afford the monthly amount due, as part of discussing payment.

The bit about the excess was earlier in the conversation and seems insufficient to make an informed choice.

[unclebulgaria67]

Does that really need explanation?

 

What did the OP think would happen?!

 

Yes, under ICOBS Insurers are required to explain any unusual policy terms and ensure they are understood. From what the OP transcribed from the call earlier in the thread, the brokers simply said, the policy has a £3k all sections excess, do you understand that.

 

The argument is whether the call scripting is adequate to meet with ICOBS. If i had written the call script, it would have said, the policy has an unusual feature of a £3k excess applying to all sections including third party claims. This means that if you had a fault accident, the Insurers would settle the claim and you would be asked to refund the Insurers up to £3k. If you failed to pay the Insurers, the policy would be cancelled and the amount would be subject to debt collection. Please confirm you understand this before you continue further.

[unclebulgaria67]

If you read page 30 of the xd direct poliicy wording the cancellation terms are fully detailed.

If you cancel mid term, you don't get a pro rata refund.

E.g Cancel 3 months into the policy and you have to pay 50% of the annual premium.

 

So you may have been given correct information.

 

As you have come to realise, you really have to read Insurance contracts before buying and certainly within the 14 day cooling off period.

If you don't then you might get into a situation that is very difficult.

 

There is a limit as to how much Insurers/brokers can tell you on the phone when buying insurance, as otherwise each call would last an hour.

You will always be sent insurance contract documents and have time to phone up to question the terms.

 

As for your complaints you might be waiting until the Autumn before any final outcome.

[unclebulgaria67]

Images not very clear to read properly.

 

Suggest you reject ombudsman decision in regard to Insure you motor, given complaint with xs direct still active and they have pointed to sales process. If you accept FOS decision, in theory you accept sales process.

 

The main point with xs direct is the debt, threatened cancellation and no repayment terms. That is not something insure your motor could have explained within sales process.

[unclebulgaria67]

Yep, respond saying you believe the sales process was not adequate, even if anyone accepted the type of sale was non advised, leaving the consumer to read and understand the terms of the policy sent out.

 

That xs direct do have joint responsibility with insure your motor as their agent to treat policyholders fairly.

 

To expect policyholders to have £3k available to pay after an accident and if not available to further damage a consumers financial life by cancelling a policy.

 

This is grossly unfair.

 

No attempt was ever made to offer repayment terms over a reasonable period, even if this was not contained in the policy wording.

 

Have a look through everything to see what xs direct have said previously and quote it to the FOS.

 

Even if your complaints are rejected totally, there are positives.

 

You have not had a policy cancelled and have obtained insurance elsewhere.

 

You can negotiate repayment with xs direct over a long period, even if they have not offered this yet.

[unclebulgaria67]

Yes your complaint with the FOS in regard to insure your motor is finished, but you are entitled to reject it.

It was always going to be difficult.

 

Read back on the thread to see what Ganymede and others said.

 

The issue is that things like Private car insurance and home insurance are non advised sales.

 

They are supposed to be easy to understand products, where the insurers/brokers are not having to offer advice, but simply providing information.

 

The consumer is expected to read insurance documents and have 14 days cooling off period to reject the insurance contract.

 

I can see what FOS are saying, but Insure your motor can improve their sales process easily.

[unclebulgaria67]

Yes you need to escalate the FOS complaint. I don't think xs direct will wait around 6 months before debt collection activity starts, if you are not continuing with the FOS complaint.

 

At the end of the FOS process, if they don't fully uphold your complaint and you have to pay xs direct, then it is up to you how you deal with it.

 

I would suggest you offer long term repayment over say 3 years or however long you need.

 

If xs direct ever go to court all you would be expected to make are affordable repayments.

 

Any offers you make in advance would see you in a good light.

 

But you are not at this stage yet.

[unclebulgaria67]

That is up to you. But you will have the FOS and xs direct writing to you asking what you are up to.

[unclebulgaria67]

Pass.

 

Suspect FOS might just decide your complaint is closed and then xs direct will employ debt collectors.

 

Within 6 months, if there was no final decision on the complaint you could re-open submitting any further submissions to the FOS and debt collection would then be on hold.

 

Personally,

i think you should respond to what xs direct have said and go for a final decision from the actual ombudsman.

 

If your complaint is not upheld, then negotiate repayment over as long a period as you need.

[unclebulgaria67]

No

[unclebulgaria67]

Read back through the thread. You knew you would get to this point, where you would have the debt chased and you can just ask the FOS to elevate the complaint to an Ombudsman. From memory they are purely replying on you being informed of the excess when you bought the policy. Read through your complaint to the Ombudsman, as you gave a good explanation of other issues e.g threatened cancellation, no terms stated in policy about repayment of the excess.

 

Once you continue the FOS complaint, they should back off and let the FOS come to a decision. If your complaint is not upheld, then negotiate repayment over a long period.

[unclebulgaria67]

Debt collectors have no powers.

 

XS direct would have to issue a county court claim first and if you ended up with a CCJ, you could be subject to enforcement.

 

But you would not let it get that far and would apply to pay by instalments based on what you could afford.

 

If you lose your FOS complaint, then offer £20 a month to XS direct as an amount you can afford.

 

Then it us up to them.

 

If they reject your offer, it is up to them whether they take you to court and still end up with £20 a month.

 

Seems a bit pointless, apart from getting the debt officially registered.

 

They might not bother.

[unclebulgaria67]

Not every debt is subject to a court claim.

 

Companies will make a decision as to whether it is worth it or not.

 

They will hassle you with debt collection letters and phone calls first.

 

Insurance companies don't generally have staff that deal with long term debt payments of £20 a month.

 

If they accept it, then mostly likely to be farmed out to a debt collection agency ( DCA) to do the admin.

 

You will the get hassled every 6 months to increase the amount.

 

If you can't afford an increase, you just tell them and ignore.

 

A DCA is more likely to go to court than an Insurance company.