I live in Hampstead, the banker's dormitory (Bankers told: join the real world on pay, 4 December). Here, all is well with the world, as they breathlessly anticipate their bonuses. The restaurants, bars and designer shops hum with international accents. The Filipino nannies walk the dogs, while the yummy mummies clog the streets with their 4x4s taking designer-togged toddlers to private prep schools. Little sign here of the devastation some of them have helped bring about in the lives of others; no sign at all of any remorse at having done so. How wonderful it would be to call their bluff and wave them off to France or Germany. It's time to lance the boil. Any political party which doesn't promise to wield the knife has no right to seek to represent the mass of the people of this country.

Alan Clark

London

• "Executives say losses in other parts of the bank ... are separate to profits made by the investment bank." Doesn't this explode the myth that banks can't be split up into "boring" retail banks and "casino" investment banks?

Alan Ball

Danbury, Essex

• A few weeks ago, a representative of the Association of British Insurers protested in a letter (28 August) about his industry being branded "socially useless", as though it were a bank. You report now, though (Viewpoint, 4 December), that the ABI has come out in support of the RBS bonus plans. So perhaps there isn't quite as much distance between the "socially useless" banks and the insurance industry.

Phil Back

Wetherby, West Yorkshire

• Very few people know what bankers do. Perhaps their publicity machine could put together "A Day in the Life...". Then we, as part owners, might warm to them as they let us into what their long working days entail. Thank heavens teachers, nurses, police and other professions don't hold the country to ransom for six-figure sums when they go about their normal duties of saving lives, educating the next generation, maintaining law and order etc.

Ken Wilbraham

Guildford, Surrey

• So there are no brilliant financiers who are happy to stay where they are, rather than go after even more obscene sums that they don't really need. How sad is that?

Geoffrey Brace

Exeter

• I just hope none of these bankers who feel they are entitled to a huge bonus this Christmas will be calling for public spending cuts or pay freezes.

Janet Mansfield

Wigton, Cumbria

]]>

I live in Hampstead, the banker’s dormitory (Bankers told: join the real world on pay, 4 December). Here, all is well with the world, as they breathlessly anticipate their bonuses. The restaurants, bars and designer shops hum with international accents. The Filipino nannies walk the dogs, while the yummy mummies clog the streets with their 4×4s taking designer-togged toddlers to private prep schools. Little sign here of the devastation some of them have helped bring about in the lives of others; no sign at all of any remorse at having done so. How wonderful it would be to call their bluff and wave them off to France or Germany. It’s time to lance the boil. Any political party which doesn’t promise to wield the knife has no right to seek to represent the mass of the people of this country.

Alan Clark

London

• “Executives say losses in other parts of the bank … are separate to profits made by the investment bank.” Doesn’t this explode the myth that banks can’t be split up into “boring” retail banks and “casino” investment banks?

Alan Ball

Danbury, Essex

• A few weeks ago, a representative of the Association of British Insurers protested in a letter (28 August) about his industry being branded “socially useless”, as though it were a bank. You report now, though (Viewpoint, 4 December), that the ABI has come out in support of the RBS bonus plans. So perhaps there isn’t quite as much distance between the “socially useless” banks and the insurance industry.

Phil Back

Wetherby, West Yorkshire

• Very few people know what bankers do. Perhaps their publicity machine could put together “A Day in the Life…”. Then we, as part owners, might warm to them as they let us into what their long working days entail. Thank heavens teachers, nurses, police and other professions don’t hold the country to ransom for six-figure sums when they go about their normal duties of saving lives, educating the next generation, maintaining law and order etc.

Ken Wilbraham

Guildford, Surrey

• So there are no brilliant financiers who are happy to stay where they are, rather than go after even more obscene sums that they don’t really need. How sad is that?

Geoffrey Brace

Exeter

• I just hope none of these bankers who feel they are entitled to a huge bonus this Christmas will be calling for public spending cuts or pay freezes.

Janet Mansfield

Wigton, Cumbria

]]> http://www.writeot.com/letters-all-is-well-with-the-hampstead-bankers.html/feed 0 http://www.writeot.com/unfair-insurance-law-may-be-overturned.html http://www.writeot.com/unfair-insurance-law-may-be-overturned.html#comments Mon, 30 Nov 2009 11:48:30 +0000 iwellbc http://www.guardian.co.uk/business/2009/nov/29/insurance-law-parliamentary-bill-disclosure

The publication of a parliamentary bill could do away with a law that punishes insurance claimants for honest mistakes

An archaic law that means thousands of insurance claims each year are unfairly rejected by insurers could be overturned following the imminent publication of a parliamentary bill.

Claims made on motor, travel, household and health policies are routinely turned down by some insurance companies under an anomaly in the law, which dates back to 1906 and puts a "duty of disclosure" on the policyholder.

This means policyholders are expected to disclose not only things they have been asked for, such as known medical conditions, but also things that they haven't which could later turn out to be significant. So, someone who is diagnosed with throat cancer, for example, could see their health insurance claim rejected if they had failed to mention a past visit to the doctor for a sore throat when they applied for the policy – even when the doctor prescribed nothing more than a few days' rest, and the question was not asked by the insurer.

Claims are also turned down when householders accidentally get information wrong. A common example is when applying for household insurance, where the question "Are the locks British 'safety-standard', a five-lever mortice lock conforming to BS3621, or a cylinder rim deadlock?" is commonly asked. Not surprisingly – especially since a householder would often need to take the lock out of the door to find out – it is often answered wrongly. Yet, if a householder claims on their policy, even for something unrelated to locks, such as a fire, they could find their claim rejected.

Consumer groups, health charities and many insurance companies have long called for a change to the law, saying that it is unclear and unfair.

"At the moment, the obligation is on you, the consumer, to disclose all the facts that might have an effect – decisive or not – on the mind of a prudent underwriter in assessing the risk," says Peter Tyldesley, a lecturer at the University of Manchester and insurance law specialist. "This is setting consumers up to fail."

After years of consultation on the issue, on 15 December the Law Commission will present a draft bill to parliament that should spell the beginning of the end to these often disastrous discrepancies in the law.

The Observer understands that the bill will propose the law is changed to abolish the duty of disclosure – volunteering information without being asked – to providing only the information asked for by insurers. It will also propose changes to the way insurance companies deal with policyholders when they get something wrong. So, for example, if a policyholder makes an innocent mistake, they will have their claim paid in full and if they are "careless", rather than reckless, they should get a proportionate payout. If, for example, they have only paid half the premium which would have been charged had the underwriter known the true facts, they may receive a payout of only half the amount of their loss.

"The issues of non-disclosure and misrepresentation have been running for many years," says Tamara Goriely of the Law Commission. "We think the law needs to be changed so that it is clear, accessible and easy to understand."

At the moment, around 1,000 insurance cases a year involving non-disclosure end up with the Financial Ombudsman Service, which often then rules in a policyholder's favour. The vast majority of these claims are for large amounts of money, says the Law Commission, often involving people going through a particularly vulnerable time such as dealing with a cancer or MS diagnosis.

"We've always had a broader view of disclosure than the courts," says an FOS spokesman. "If the insurer hasn't been specific enough in its questions, for example, we might rule in the consumer's favour."

Marketing consultant Inga McVicar had to turn to the FOS in 2007 when she was diagnosed with ovarian cancer but found herself unable to claim on her critical illness insurance policy. Her insurance company turned down her claim over a discrepancy in her answers on the initial form, which was due to an error by her financial adviser.

As soon as she realised the error, says McVicar, 33, she told her insurer but it treated the policy as if it had never existed. "What shocked me more was the horrific way my insurance company dealt with me over it," she says. "They branded me a liar, failed to return my calls and, to add insult to injury, in a letter to me referred to my diagnosis as breast cancer not ovarian cancer."

By February 2008, McVicar had to return to work as she is self-employed, despite the fact she was undergoing chemotherapy. "To add to this, the anomaly in my policy the insurer was referring to didn't remotely relate to my diagnosis and it turns out even if I had answered that one question correctly I would have been covered, albeit with increased premiums," she says.

Macmillan Cancer Support provided Inga with a grant to help with her basic needs while she took her case to the Financial Ombudsman Service. The ombudsman ruled in her favour, agreeing that it was a genuine mistake. She got a payout of £46,000 and is now in remission from the cancer.

Many insurers do not apply the letter of the law, taking a more reasonable approach to claims. However, a minority do apply it rigorously.

A spokesman for the Association of British Insurers, said: "We don't believe there is any need for intervention as far as non-disclosure is concerned. Where there are areas of concern, we believe these have been addressed. We have introduced a code of practice for critical illness insurance and the number of complaints has reduced significantly."

However, progress has not been made in other areas, says Goriely. "In household, motor and travel, particularly where the claim relates to a medical condition, there is no evidence that [disputes over non-disclosure] have dropped off."

"We think it's ridiculous that consumer insurance is based on an archaic law from 1906," says Phil Jones, public affairs officer at Which?

"The Law Commission report is an excellent opportunity to address this issue so we urge all political parties to support the bill."

■ Have you had a claim refused for non-disclosure, and did you resolve the issue? Would you support a change in the law? Email us at cash@observer.co.uk or write to us at Cash, The Observer, Kings Place, 90 York Way, London, N1 9GU.

]]>

The publication of a parliamentary bill could do away with a law that punishes insurance claimants for honest mistakes

An archaic law that means thousands of insurance claims each year are unfairly rejected by insurers could be overturned following the imminent publication of a parliamentary bill.

Claims made on motor, travel, household and health policies are routinely turned down by some insurance companies under an anomaly in the law, which dates back to 1906 and puts a “duty of disclosure” on the policyholder.

This means policyholders are expected to disclose not only things they have been asked for, such as known medical conditions, but also things that they haven’t which could later turn out to be significant. So, someone who is diagnosed with throat cancer, for example, could see their health insurance claim rejected if they had failed to mention a past visit to the doctor for a sore throat when they applied for the policy – even when the doctor prescribed nothing more than a few days’ rest, and the question was not asked by the insurer.

Claims are also turned down when householders accidentally get information wrong. A common example is when applying for household insurance, where the question “Are the locks British ’safety-standard’, a five-lever mortice lock conforming to BS3621, or a cylinder rim deadlock?” is commonly asked. Not surprisingly – especially since a householder would often need to take the lock out of the door to find out – it is often answered wrongly. Yet, if a householder claims on their policy, even for something unrelated to locks, such as a fire, they could find their claim rejected.

Consumer groups, health charities and many insurance companies have long called for a change to the law, saying that it is unclear and unfair.

“At the moment, the obligation is on you, the consumer, to disclose all the facts that might have an effect – decisive or not – on the mind of a prudent underwriter in assessing the risk,” says Peter Tyldesley, a lecturer at the University of Manchester and insurance law specialist. “This is setting consumers up to fail.”

After years of consultation on the issue, on 15 December the Law Commission will present a draft bill to parliament that should spell the beginning of the end to these often disastrous discrepancies in the law.

The Observer understands that the bill will propose the law is changed to abolish the duty of disclosure – volunteering information without being asked – to providing only the information asked for by insurers. It will also propose changes to the way insurance companies deal with policyholders when they get something wrong. So, for example, if a policyholder makes an innocent mistake, they will have their claim paid in full and if they are “careless”, rather than reckless, they should get a proportionate payout. If, for example, they have only paid half the premium which would have been charged had the underwriter known the true facts, they may receive a payout of only half the amount of their loss.

“The issues of non-disclosure and misrepresentation have been running for many years,” says Tamara Goriely of the Law Commission. “We think the law needs to be changed so that it is clear, accessible and easy to understand.”

At the moment, around 1,000 insurance cases a year involving non-disclosure end up with the Financial Ombudsman Service, which often then rules in a policyholder’s favour. The vast majority of these claims are for large amounts of money, says the Law Commission, often involving people going through a particularly vulnerable time such as dealing with a cancer or MS diagnosis.

“We’ve always had a broader view of disclosure than the courts,” says an FOS spokesman. “If the insurer hasn’t been specific enough in its questions, for example, we might rule in the consumer’s favour.”

Marketing consultant Inga McVicar had to turn to the FOS in 2007 when she was diagnosed with ovarian cancer but found herself unable to claim on her critical illness insurance policy. Her insurance company turned down her claim over a discrepancy in her answers on the initial form, which was due to an error by her financial adviser.

As soon as she realised the error, says McVicar, 33, she told her insurer but it treated the policy as if it had never existed. “What shocked me more was the horrific way my insurance company dealt with me over it,” she says. “They branded me a liar, failed to return my calls and, to add insult to injury, in a letter to me referred to my diagnosis as breast cancer not ovarian cancer.”

By February 2008, McVicar had to return to work as she is self-employed, despite the fact she was undergoing chemotherapy. “To add to this, the anomaly in my policy the insurer was referring to didn’t remotely relate to my diagnosis and it turns out even if I had answered that one question correctly I would have been covered, albeit with increased premiums,” she says.

Macmillan Cancer Support provided Inga with a grant to help with her basic needs while she took her case to the Financial Ombudsman Service. The ombudsman ruled in her favour, agreeing that it was a genuine mistake. She got a payout of £46,000 and is now in remission from the cancer.

Many insurers do not apply the letter of the law, taking a more reasonable approach to claims. However, a minority do apply it rigorously.

A spokesman for the Association of British Insurers, said: “We don’t believe there is any need for intervention as far as non-disclosure is concerned. Where there are areas of concern, we believe these have been addressed. We have introduced a code of practice for critical illness insurance and the number of complaints has reduced significantly.”

However, progress has not been made in other areas, says Goriely. “In household, motor and travel, particularly where the claim relates to a medical condition, there is no evidence that [disputes over non-disclosure] have dropped off.”

“We think it’s ridiculous that consumer insurance is based on an archaic law from 1906,” says Phil Jones, public affairs officer at Which?

“The Law Commission report is an excellent opportunity to address this issue so we urge all political parties to support the bill.”

■ Have you had a claim refused for non-disclosure, and did you resolve the issue? Would you support a change in the law? Email us at cash@observer.co.uk or write to us at Cash, The Observer, Kings Place, 90 York Way, London, N1 9GU.

]]> http://www.writeot.com/unfair-insurance-law-may-be-overturned.html/feed 0 http://www.writeot.com/repossess-our-home-but-weve-got-ppi.html http://www.writeot.com/repossess-our-home-but-weve-got-ppi.html#comments Sun, 22 Nov 2009 00:05:38 +0000 iwellbc http://www.guardian.co.uk/money/2009/nov/22/payment-protection-insurance-policy-problems

Don't assume payment protection insurance will cover the whole of your mortgage, says Jill Insley. Check how the policy works, or, like the couple here, you might still risk losing your home

When Julie Moss and Barry Goodison took out a mortgage to buy their council home, they thought they had done everything right: they could afford the mortgage and had taken out payment protection insurance (PPI) to cover the monthly payments should one of them lose their job.

But this spring Barry lost his job as a groundsman, and, despite having a PPI policy with Payment Shield in place, the couple still ended up facing repossession. Their problems were partly caused by mistakes made by their lender and insurer, but also because the couple did not understand how their policy worked and what they needed to do.

Their experience could help other homeowners who are made redundant.

After buying their home in Hilton, near Derby, the couple remortgaged from their old lender to a bigger loan with a cheaper interest rate with GE Money, but decided to keep the existing PPI policy in place.

Julie and Barry had no problems with keeping up with their mortgage payments until Barry's job was cut in February. Having never been made redundant before, Barry concentrated on trying to find more work, and didn't realise that he needed to sign on immediately, not only so he would start receiving jobseeker's allowance (JSA) but also to trigger the claim on the PPI policy.

"Once he signed on, it took from March until July for Payment Shield to pay out," says Julie.

The couple, who have three children, struggled to keep their household going: Julie works part-time as a waitress, and the JSA took six weeks to come through.

In the meantime, although Julie had told GE Money that they had claimed on their PPI and should be getting £653 a month, the lender started repossession proceedings in June against the couple.

Julie protested, and this time the lender acknowledged the PPI policy and stopped its legal action to repossess. But the couple had already clocked up £326 in charges.

Although the policy pays out £112 less than the mortgage payment each month, the couple have managed to pay the full amount due. But despite this they were still incurring late payment charges at the rate of £40 a month because the PPI policy paid out a few days after the mortgage payment was due.

Again Julie protested to GE Money, which agreed to allow its payments to be timed to coincide with the policy payout until the end of December. But the couple faced incurring the £40 charge each month from January, and still had the outstanding legal charges to pay.

After intervention by the Observer, GE Money agreed to waive the outstanding charges, rearrange the payment dates on a permanent basis so there would be no more late payment charges, and to ask the credit rating agencies Experian and Equifax to clear any poor references added to the couple's records.

But this does not compensate them for the stress they suffered while under the threat of repossession, or for the aggravation of incurring charges through no apparent fault of their own.

"We tried to keep it away from the children but they were aware we were worried," says Julie.

So what can other homeowners do to avoid ending up in this situation?

First, says Mark Maguire, a spokesman for GE Money, if you are remortgaging, it is worth reviewing your PPI policy. If you are increasing the size of your loan, you may want to increase the cover provided by the policy. Julie and Barry have ended up having to foot £112 of the mortgage bill themselves each month because they didn't increase the policy at the same time as their mortgage.

Even if you haven't applied for a bigger mortgage, you may be able to find a cheaper policy.

Second, says David Hollingworth of mortgage broker London & Country, mortgage holders should not rely on the PPI policy paying out straight away, and should build up a contingency fund to pay the essential bills until the policy kicks in.

He says: "Most policies don't pay out for at least 30 days, and some don't pay out for a few months to keep the premium costs down. This doesn't even allow for problems in claiming, such as Julie and Barry encountered."

Third, read your policy to make sure you understand the terms. If you have taken out a policy through your lender, it will probably pay direct into your mortgage account on the day the mortgage payment is due. But if you have a freestanding policy or one arranged to go with a previous mortgage, the dates may not tally. Check when it will pay out, and whether you can ask for that payment date to be altered if necessary.

If you cannot alter the policy payment date, ask your lender if you can alter the payment date on your mortgage. This may involve paying extra interest for one month (interest on the portion of capital that is not paid off for however long the delay is) plus an arrangement fee, but this should prove cheaper than incurring late payment fees every month.

Finally, if you do lose your job, make sure you go to your local jobcentre as soon as possible to inquire about eligibility for JSA or income support. You cannot trigger a PPI claim until you sign on, even if you are not eligible. You may be entitled to other benefits such as discounts on your council tax and help with your mortgage interest.

■ Names of the policyholders have been changed.

]]>

Don’t assume payment protection insurance will cover the whole of your mortgage, says Jill Insley. Check how the policy works, or, like the couple here, you might still risk losing your home

When Julie Moss and Barry Goodison took out a mortgage to buy their council home, they thought they had done everything right: they could afford the mortgage and had taken out payment protection insurance (PPI) to cover the monthly payments should one of them lose their job.

But this spring Barry lost his job as a groundsman, and, despite having a PPI policy with Payment Shield in place, the couple still ended up facing repossession. Their problems were partly caused by mistakes made by their lender and insurer, but also because the couple did not understand how their policy worked and what they needed to do.

Their experience could help other homeowners who are made redundant.

After buying their home in Hilton, near Derby, the couple remortgaged from their old lender to a bigger loan with a cheaper interest rate with GE Money, but decided to keep the existing PPI policy in place.

Julie and Barry had no problems with keeping up with their mortgage payments until Barry’s job was cut in February. Having never been made redundant before, Barry concentrated on trying to find more work, and didn’t realise that he needed to sign on immediately, not only so he would start receiving jobseeker’s allowance (JSA) but also to trigger the claim on the PPI policy.

“Once he signed on, it took from March until July for Payment Shield to pay out,” says Julie.

The couple, who have three children, struggled to keep their household going: Julie works part-time as a waitress, and the JSA took six weeks to come through.

In the meantime, although Julie had told GE Money that they had claimed on their PPI and should be getting £653 a month, the lender started repossession proceedings in June against the couple.

Julie protested, and this time the lender acknowledged the PPI policy and stopped its legal action to repossess. But the couple had already clocked up £326 in charges.

Although the policy pays out £112 less than the mortgage payment each month, the couple have managed to pay the full amount due. But despite this they were still incurring late payment charges at the rate of £40 a month because the PPI policy paid out a few days after the mortgage payment was due.

Again Julie protested to GE Money, which agreed to allow its payments to be timed to coincide with the policy payout until the end of December. But the couple faced incurring the £40 charge each month from January, and still had the outstanding legal charges to pay.

After intervention by the Observer, GE Money agreed to waive the outstanding charges, rearrange the payment dates on a permanent basis so there would be no more late payment charges, and to ask the credit rating agencies Experian and Equifax to clear any poor references added to the couple’s records.

But this does not compensate them for the stress they suffered while under the threat of repossession, or for the aggravation of incurring charges through no apparent fault of their own.

“We tried to keep it away from the children but they were aware we were worried,” says Julie.

So what can other homeowners do to avoid ending up in this situation?

First, says Mark Maguire, a spokesman for GE Money, if you are remortgaging, it is worth reviewing your PPI policy. If you are increasing the size of your loan, you may want to increase the cover provided by the policy. Julie and Barry have ended up having to foot £112 of the mortgage bill themselves each month because they didn’t increase the policy at the same time as their mortgage.

Even if you haven’t applied for a bigger mortgage, you may be able to find a cheaper policy.

Second, says David Hollingworth of mortgage broker London & Country, mortgage holders should not rely on the PPI policy paying out straight away, and should build up a contingency fund to pay the essential bills until the policy kicks in.

He says: “Most policies don’t pay out for at least 30 days, and some don’t pay out for a few months to keep the premium costs down. This doesn’t even allow for problems in claiming, such as Julie and Barry encountered.”

Third, read your policy to make sure you understand the terms. If you have taken out a policy through your lender, it will probably pay direct into your mortgage account on the day the mortgage payment is due. But if you have a freestanding policy or one arranged to go with a previous mortgage, the dates may not tally. Check when it will pay out, and whether you can ask for that payment date to be altered if necessary.

If you cannot alter the policy payment date, ask your lender if you can alter the payment date on your mortgage. This may involve paying extra interest for one month (interest on the portion of capital that is not paid off for however long the delay is) plus an arrangement fee, but this should prove cheaper than incurring late payment fees every month.

Finally, if you do lose your job, make sure you go to your local jobcentre as soon as possible to inquire about eligibility for JSA or income support. You cannot trigger a PPI claim until you sign on, even if you are not eligible. You may be entitled to other benefits such as discounts on your council tax and help with your mortgage interest.

■ Names of the policyholders have been changed.

]]> http://www.writeot.com/repossess-our-home-but-weve-got-ppi.html/feed 0