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From The Sunday Times
October 4, 2009
Hall of shame: five gripes that make you most angry
Insurers and banks head your list of bad performers, says Elizabeth Colman
div#related-article-links p a, div#related-article-links p a:visited {color:#06c;} MONEY readers are battling institutions that are taking an increasingly hard line on car claims, credit card refunds and unemployment cover.
That is the result of a survey conducted by the Financial Ombudsman Service as Walter Merricks, the chief financial ombudsman, prepares to step down this month after 10 years in the role. David Thomas will take on the job until a replacement chief is appointed.
The FOS has analysed your complaints over the past year to find the biggest gripes.
1 CAR CLAIMS The ombudsman is seeing a rising number of disputes where insurers turned down claims because drivers installed sat-nav units or DVD players in their cars. This is an increasingly common practice as consumers look to save cash by improving their cars rather than buying new ones.
In some cases, though, insurers have labelled the changes “modifications” then rejected theft claims on the basis that policyholders should have disclosed such modifications when applying for cover. Complaints in this area have more than doubled in the past year.
However, the FOS generally views the changes as “simple additions”, in which case the insurer should pay out. It said: “[In one case] we accepted the insurer’s point that the changes could well have made [the] car more attractive to thieves. However, there was nothing on the proposal form to indicate that it considered changes of this type to be modifications.”
Sunday Times readers have also expressed disgust at the growing trend for insurers to send policyholders to a “preferred” repairer — this arrangement usually means the insurer receives commission.
Merricks said the FOS was increasingly ruling that insurers should give drivers a choice of repairers. He wants to see a motor ombudsman to deal with second-hand vehicles, which the FOS does not cover.
2 COVER FOR HOME IMPROVEMENT LOANS Sunday Times readers are increasingly being caught out by payment protection insurance taken out alongside loans to fund home improvements and also car loans. PPI is meant to cover repayments if the borrower cannot — either because of unemployment, an accident or sickness.
“In particular we have heard from Sunday Times readers who took out the loan to pay for improvements to their homes,” said the FOS. “This, of course, coincided with the property market downturn, when many were choosing to renovate their homes rather than sell.”
However, PPI is not a suitable product for the selfemployed, which many people discover only when they come to claim.
The FOS is also dealing with complaints where insurers have increased premiums during the “waiting period” that applies before insurers will pay a claim. One Sunday Times reader wrote to Money regarding cover he bought from iProtect when he took a car loan two years ago.
The reader, who asked not to be named, said: “Unfortunately I have now been made redundant for the first time in my life, and have had to claim on the policy. During my 60-day waiting period and before even getting any payment, I received a notification from the company that, due to a large number of claims, they were now raising the premiums by about 50%.”
The FSA said: “Contract terms need to be fair. We are looking at this issue with a view to ensuring that customers are treated fairly.”
If you think you were mis-sold PPI, complain first to the firm and then to the FOS.
3 CREDIT CARD REFUNDS Complaints about credit cards are a growing concern for Money readers — particularly when it comes to so-called “section 75” refunds. Section 75 of the Consumer Credit Act states that card firms must refund consumers for payments of £100 to £30,000 where there has been a “breach of contract” — for example, when a supplier or retailer goes bust.
However, in some cases, card firms are refusing to pay based on regulations that do not apply, in many cases treating the request for a refund as a “disputed transaction”.
Most card firms will not pay such transactions if they are not queried within their timescale (usually between 45 and 180 days). However, the FOS said these rules should not be applied to refunds made under the Consumer Credit Act.
4 MORTGAGES The ombudsman said it was dealing with an increasing number of complaints from borrowers who had been accepted for a mortgage and paid their booking or arrangement fee, only to find the offer had been withdrawn.
Sunday Times readers have also complained that lenders are withdrawing offers abruptly where a blemish was belatedly found on their credit record.
The FOS generally finds in the lender’s favour, unless the risk of withdrawing an offer was not made clear in the small print.
5 UNFAIR CHARGES Charges on unauthorised overdrafts are another bugbear for readers, where limits are breached by just a few pence and banks nonetheless levy huge fines.
One reader wrote to Money this month after her son was hit with more than £127 in overdraft charges despite breaching his limit by just £1.08. His bank, Abbey, only waived the fee after being contacted by Diana Wright, our A Question of Money columnist.
The FOS is not currently dealing with complaints relating to unauthorised overdrafts as the FSA has granted banks a waiver pending the outcome of a High Court decision over the legality of the charges.
Case study: motor madness
MONEY reader Lisa Day, 42, a residential care home worker from Bolton, contacted the Financial Ombudsman Service (FOS) after her insurer’s mistake left her with two cars — and £4,590 out of pocket.
When MMA Insurance informed Day that her Vauxhall Vectra was a write-off after an accident, she was told she would receive a full payout but would not be entitled to a courtesy car.
Day said: “I need a car for work, so I went out and bought myself a new Golf straight away, expecting a payout for my written-off Vectra. But then my insurer called back and said it could be repaired after all.
“They offered me £300 compensation but I said that wasn’t good enough.”
The FOS intervened and the company was ordered to pay £4,590 for the car, plus the £300 and interest.
Day said: “It took almost a year after my accident to resolve this. MMA Insurance only just took my old car away last week. I’m just relieved it has been sorted now.”
Diana Wright’s tips
- State your complaint clearly and calmly and in as much detail as you can.
- If you complain by phone, follow it up with a letter. Do not rely on e-mails. Keep copies of everything and notes of all conversations and always quote reference numbers.
- Do not be rude or pepper your complaint with questions such as “how is it possible that a huge organisation can act in such an appallingly stupid way?”
