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Mis-sold Insurance

Friday, 30 October 2009

Mis-sold Insurance

If you have taken out a personal loan, car loan, mortgage or credit card in the past number of years then you had better check and see if you were sold an insurance policy as part of it.

The reasons for doing this are:

1. You may recently have become redundant or you might have suffered an accident or illness that is preventing you from working and you may qualify under the insurance policy to have your monthly repayments paid for a period of time

2. As important you could be paying a fortune each month for a policy you think has you covered in the event of for example redundancy or illness but the reality is you are not covered at all!

3. If you have been mis-sold an insurance policy can you get a refund of your costs or are you entitled to your debts being wiped out.

Liam Croke: Money Expert
Liam has worked in the financial services industry for the past 21 years and seen by many as an expert in the field of personal finance. He is a qualified financial and mortgage advisor.

In the past he has held senior management positions with two well known financial institutions along with one of the "top 5" accountancy practices in Ireland.
Liam gives his advice and wisdom on a daily basis to those who are just starting out to high net worth individuals. He currently works for a financial services company based in Limerick.

He is frequently asked to contribute and comment in all areas relating to personal finance on both national and local radio stations. You will have heard him for example recently on RTE's "The Mooney Show" and on Newstalk's "The Right Hook."
Liam was invited to make a presentation to the Joint Oireachtas Committee on Social & Family Affairs on trends and levels of personal debt in Ireland. He made his presentation to the committee on the 24th June 2009.

Liam is author of 4 personal finance books:
. The best selling "The Mortgage Maze Explained" published by Currach Press in 2006.
The best selling book "Your Money Your Life - Managing your finances in today's Ireland" published in 2007.
"I'm Broke! A teenagers guide to Money" - Published by Crabtree and distributed in the UK & USA in 2009
"Stash or Splash" which is being released in Ireland and the UK in September of this year.

. Liam previously wrote a weekly personal finance column for The Sunday World entitled "Mr. Cash - How to Save it, Spend it, Earn it" and has also written articles for the Sunday Business Post, the Evening Echo, the Sunday Independent, the Irish Sun, Prudence Magazine to mention just a few.


Here are some questions that you need to ask yourself about your personal loan, car loan, mortgage or credit card.

How many people even know whether they are covered or not?

Have you checked your bank statement recently and wondered what that debit is actually for?

Do you read the small print on those protection policies when you do take them out?

Was the policy explained to you properly or even at all in the first place?

Example of a loan with and without payment protection:

Loan Protected?

Loan amount?


Monthly Repayment?

Total repaid back?

Total amount repaid



5 yrs






5 yrs






Liam received an email from a viewer recently with this question:

My son has recently been made unemployed. His last two jobs have been for short periods of time. He has a car loan with unemployment protection on the loan. They are refusing to cover his loan saying he did seasonal work but he did seasonal work when he took out the loan. He pays €40 extra per month for this and has been for the past 3 years. Can they do this?

This is a very good question and it is important to know the answer because there are many people as I have said at present taking out this form of cover and they are just wasting their money so lets be clear, redundancy cover will not be paid on a car loan, personal loan or mortgage for that matter if:

Why was he not entitled to a refund?

. You were aware at the policy start date that you would be made redundant or you had reason to believe this would occur within the first 60/120 days of the policy start date
. You were not in full time employment for at least 6 months immediately before your first claim for unemployment
. You resigned or accepted voluntary redundancy
. Your work was seasonal, casual or temporary or unemployment is a regular feature of your job
. It results from any act of misconduct, fraud or dishonesty

So given this viewers sons work was seasonal he does not qualify - there are many people paying for something that they think they are covered for but are not! Of course this should be pointed out to people from the get go but unfortunately in many cases it is not. It should really have been pointed out to this person from the outset that if he was in seasonal work when applying for the loan and the bank was aware he was when approving him the car loan in the first place that he would be excluded from making a claim if he was made redundant.

He has made insurance payments of €1,440 over the past 3 years and is not covered in the event of redundancy which is the reason he took out the policy in the first place!!!

How many more people are like him and have made applications and been turned down??

Advice from Liam Croke
When I speak with people who have problems about their insurance policy I find the key mis-selling categories are as follows and if you fit into one or more of these you probably have a case for getting your premiums refunded sold the wrong thing?

Sales Person has mis-lead you:
The unemployment element of PPI for example is only suitable for people who were 'working' at the time they took out the policy, therefore you should have been asked about this at the time of application.
Example question: Are you in permanent employment for more than 16 hours a week?
You should also of course be advised that your claim would not be accepted if you were in seasonal, contract or part time in nature

A bank cannot insist that you buy an insurance product from them, so although it could request that you have PPI from somewhere, it does not have to be from them.

Therefore if the salesperson:
. didn't make it clear the policy was optional,
. implied or stated the loan would be more expensive if you didn't take the insurance,
. implied or insisted you take out their policy to qualify for the loan or it would help with your application,
. was very pushy when selling the product so that you felt you could not say no,
. would not let you continue with the loan application if you did not sign the insurance agreement as well

Not knowing you had even purchased PPI:
If you were to take out a loan of €10,000 and you were to include payment protection and you make a claim because you were made redundant and your claim was successful and they pay your repayments for the maximum period i.e. 12 months then you could continue to make your monthly repayment for the next say 3 years paying for an insurance that you do not qualify for!! MADNESS.

Many people do not even know if they have such a policy because all that is coming out from their account each month is a debit to pay "car loan" or "personal loan" - it does not specify if the loan includes payment protection or not unless it is taken out separately to the loan.

When you take out a loan with a bank you will be asked to sign a credit agreement and on this agreement you will either sign a section that states YES I am taking out a payment protection or NO I am not taking out a payment protection policy.

It does spell out what you are covered for and what would exclude a payout but do people read this and is it really explained to them in the first place? How many people are told to "sign here, here and here" and have no idea what they are in fact signing, they are just happy they got the loan in the first place.

You were already covered through work or your partner.
o If you were already covered - for example you had a separate income protection policy or your employer provided an illness and redundancy package, and you informed the salesperson that you had this cover but they insisted you also had to take their insurance; or you weren't asked if you had any alternative cover then you have reasonable grounds to make a claim
If you have an inappropriate PPI product and weren't told it was inappropriate or you don't think you were given the full information on what the policy would and would not cover, send a letter to your lender asking for an explanation.e you self-employed, unemployed or retired?
If you were self-employed you need to check whether you were eligible for a payout if your business went bust (usually not) and if not, and it wasn't pointed out, you may have a case.

If it isn't suitable, it might have been mis-sold?

Assuming the policy isn't suitable, after you have established whether the salesperson bothered to check or not. Remember, it's the situation you were in at the time you got the cover that counts, so if you were an employee then, but are now self-employed, that's not their fault - unless you've subsequently asked if the cover was still suitable and been misinformed.

It's likely you were mis-sold if either:
A. You made the salesperson aware of your situation and they suggested you get it anyway.
B. You weren't asked about your employment status at all.

Remember payment protection is a very profitable source of income for the banks!


In the UK for example the financial regulator has been fining a number of companies for "not treating customers fairly" when it comes to payment protection insurance. Last year 89% of cases dealt with by the Ombudsman in the UK were decided in the consumer's favour!!

Only last month, a County Court judge ruled for the first time that a woman who'd been missold Payment Protection Insurance with her credit card, could have her entire £8,000 debt wiped out.


If you feel that you have been mis-sold a payment protection policy then you should:
Write a letter to the company that sold you the policy asking for a refund. There's no need to specify the amount as they'll calculate this for you, just explain that you think the insurance was mis-sold, that you are writing to complain and you want your money back.

If the seller was acting as an appointed representative of the insurance provider, it will probably tell you to contact the provider instead.

They are likely to say NO but don't give up remember the % of claims that are being accepted in favour of the consumer by the Ombudsman in the UK - its 89%!!
If they are saying NO then make a complaint to the financial services ombudsman here in Ireland.

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