Questions of Cash: May 2014

Q. I purchased a credit card protection insurance from CPP about 20 years ago, but I cannot remember the details including whether the insurance was sold directly by CPP or Natwest, my credit card issuer. I initially purchased the insurance because it provided cover for unauthorised transactions on my card and did not realise the bank provided this cover anyway. Each year this insurance has been renewed automatically by CPP. I have now been notified by CPP that I may be entitled to compensation for mis-selling. I have been sent a claim form and told that if I qualify, premiums since 2005 will be refunded. I do not understand why premiums before this are not taken into account. If I sign the claim form it states that I will have no further claim on CPP. ST, Essex.

A. We first contacted RBS, to establish whether NatWest sold you insurance cover. Its spokeswoman responded: “We’ve checked our records and can’t locate any policy number against the details provided.” We then contacted CPP, which explained that under the Scheme of Arrangement agreed with the regulator, the Financial Conduct Authority, the Scheme only covers mis-selling since the 14 January 2005 – the date at which the previous regulator, the Financial Services Authority, began regulating insurance products. You are still able to claim for mis-selling prior to this date, but you must go directly to the seller of the product.  CPP confirmed that you had not been sold its insurance by NatWest and it requested you contact them direct to establish who had sold the product prior to 2005.  You subsequently contacted us to advise that it had been sold by the former Abbey National Building Society, which became Abbey National Bank and which has since been acquired by Santander.  We then contacted Santander on your behalf, which has sent you a claim form.  A spokeswoman for Santander says: “[The reader] should complete and return the claim form she has received for her post-2005 CPP complaint and we will investigate her pre-2005 claim. Signing the [CPP] claim form will not affect her claim with us.”

Q. I am in the process of changing my car. I am insured through the Post Office with an annual premium of £155.44.  My policy expires in October.  I telephoned the Post Office to change the details of my car insurance to my new car which is in a lower insurance group.  I was quoted £122.52 to pay extra, including a £20 administration fee.  I asked if I cancelled the policy how much I would be reimbursed – the answer was a £23.36 refund, due to the £20 administration fee and £55 cancellation fee.  How can they charge two fees?  I asked for an annual quote for my new car with the same cover, but in a lower insurance group.  The quote was £284.00, which is a lot higher than the £155.44 for my old car.  I obtained a quote from the Post Office website – changing my name as the site would not quote me first time.  It came up with £184 – £100 cheaper than the Post Office’s offer to me.  RA, Lincolnshire.

A. You have come up against what might be termed the ‘insurer’s disloyalty charge’ – in other words existing customers are charged more than new customers. A spokeswoman for the Post Office puts it in different words. “An online quote will attract an introductory discount for new customers, which is common practice amongst insurers,” she explains.  She also says: “There are a number of factors that are taken into consideration which effect the premium following a change of car, including make, model, value, engine size, etc.  We would like to retrieve [the reader’s] quote and discuss it with her, but as she has entered a different name, we are unable to do an accurate comparison.  We have listened to the calls with [the reader] and at no point did we advise that she would incur two administration fees. We informed her that the cancellation fee would be offset against a pro rata refund, representing the unused term of her previous policy and that we would not add any additional fees or charges.”  Your experience illustrates the importance of conducting price comparison checks of car insurance on an annual basis – preferably comparing your existing insurance with an online comparison site, a local insurance broker and a direct insurer.  That should provide a reasonably thorough comparison of premiums.

Q. I had a car insurance policy with One Call, which was due for renewal in February. I used an online price comparison site to check premium costs. The cheapest on offer was also from One Call at £141.99, which was approximately £30 cheaper that the renewal quote given by them. So I paid with a credit card. I received my certificate of insurance through the post a day or two later.  Another day later I received a letter telling me I had not paid a £25 renewal fee, but at no time was this mentioned when I took the insurance out online.  I queried this with One Call’s customer enquiries, pointing out this was not mentioned when I took out the insurance policy, but I had a reply that didn’t really answer the question.  I was told definitively that I owed the £25, which I reluctantly paid. I then received another letter a couple of days later to say that my insurance had been cancelled and that my details would be entered onto the police register as having no insurance.  I contacted One Call again, which then confirmed that my insurance was in place.  RN, Devon.

A. Unfortunately One Call has not provided a response to our enquiries, other than to say it was resolving the matter directly with you. It has now contacted you and refunded the £25. Your experience underlines what can be a disadvantage of renewing an insurance policy with your existing insurer – even if you try to do so via an online price comparison site.

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