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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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I was mis-sold a product in September 2006. So were many other

Resolved Question:

I was mis-sold a product in September 2006. So were many other people with the same product from the same company. The Insurance Company who are required to pay compensation consider that they should only pay out from the Insurance year in which they found out about the problem, not the year in which the product was sold to me. This would leave an enormous shortfall for myself.

What is the rule about timing regarding compensation, date of purchase or date of knowledge? Incidentally, the Insurance company found out in 2007 and I did not until 2009.
Submitted: 3 years ago.
Category: Law
Expert:  Ash replied 3 years ago.

Alex Watts : Hello my name is XXXXX XXXXX I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply, but rest assured I will be giving your question my immediate attention upon return You do not need to wait here as you will get an email when I reply.
Alex Watts : How much are we talking please?
Customer:

I already have a solicitor but I wanted just a plain and simple answer to the question raised regarding the date, or indeed if any date is relevant. I stand to lose over £300,000 if the Insurance Company can only consider the year in which they knew of the problem.

Alex Watts : The issue of contract is that under the limitation act 1980 you can go back 6 years.
Customer:

Is it for them to select which year and then only to pay out on that year of their choice? Or, am I able to benefit from a year where the total "pot" has not been used up?

Alex Watts : If you are still paying it off the you can go back from when you started paying.
Alex Watts : Otherwise if you stopped you have 6 years from the date you last paid.
Alex Watts : so if you stopped paying in 2011 you can only go back to 2008
Alex Watts : If you are still paying now, then you can go back to when you were sold it.
Alex Watts : Can I clarify anything else for you?
Customer:

I am still paying off the bank loan that I took out to purchase this product originally. The loan is £500,000 the offer (because of the date situation) is only £200,000. Does this answer the point you made? Thanks

Alex Watts : Not really. What was mis sold the bank loan?
Alex Watts : Or a product included in it?
Customer:

It was a product called GTEP, geared traded endowment policies. Extremely complicated. The original bank loan was matched by another bank loan, without our knowledge. I have now redeemed the policies which have paid for the second loan, leaving me with the black hole of £500k.

Customer:

While we are having this Chat, do you consider that the Bank of Scotland have acted properly in this matter, never having contacted me either before or for 3 years after the second loan was taken out? I think that they were happy that I had already put money into the scheme and they took a charge against the policies, so they were covered.

Alex Watts :

But was the product taken out as part of the loan?

Alex Watts :

For example like PPI - its included in the loan bundle.

Customer:

The product was paid for by both loans. The first loan by myself against personal security, the second "unknown" one against the value of the TEPS.

Customer:

If I am not explaining this enough for you to make an informed opinion, I am more than happy to speak to you on XXXXXXXXXXX Thanks

Alex Watts :

I see, in that case it is 6 years from the date of today backdated.

Alex Watts :

That is when you can claim losses for.

Alex Watts :

Does that help?

Alex Watts :

If there is some fraud then a Judge can remove that time limitation period.

Customer:

To completely clarify, please, are you saying that this "can only be considered for compensation in any one year" scenario, is false? Sorry to be dense but perhaps they have been stringing this out for such a long time, just to dissipate that owing from 2006. Are you saying that the total volume of claim can be spread across all 6 years. Thanks again.

Alex Watts :

Yes if you have stopping pay for the product (not the loan, forget that) you can only claim for losses from today until 6 years ago, no further

Alex Watts :

They may well have been dragging it out, but the key date according to the Limitation Act is 6 years or 12 years if a contract by deeed.

Alex Watts :

deed

Alex Watts :

Does that clarify?

Customer:

So the compensation can only be sought against the product itself, not the money that bought it in the first place, and not against the shortfall when the product was crystallised?

Alex Watts :

My understanding that is correct.

Alex Watts :

I can't see how you have a claim against the bank loan myself, but then I haven't seen all the evidence dont forget

Alex Watts :

If I take out a loan to buy a car and the car is faulty, I can't sue the loan lender.

Alex Watts :

I can only sue the loan lender if I was taking the car out on finance and for example Ford Finance lent me the money for a Ford Fiesta.

Customer:

The first loan was taken out specifically to purchase this product with the bank's full knowledge. The second "geared" loan was taken out without our knowledge, specifically to purchase more of the product. So in a way, your Fiesta analogy applies, doesn't it??!

Alex Watts :

Was the product purchased directly or did the £ come to you first?

Customer:

Purchased directly, bank to bank.

Alex Watts : Ok then you probably still have a claim going back to the inception.
Alex Watts : Does that help?
Customer:

I am not sure if it helps. The problem seems to arise between the Insurance company and their Insured, which leaves me out of their restrictive circle. This is why I contacted the Insurance Ombudsman in the first place. Do any of your answers help me in the way in which they choose to conduct their business?

Alex Watts :

Sadly not. If it a matter between them then the dispute is between the inter-parties

Alex Watts :

Can I clarify anything else?

Customer:

Thanks. It isn't really a dispute between themselves, the IFAs who sold me the TEPS are more than happy to sit back and leave it to the Insurance company to tell me that, they do not have enough money in the pot to pay me properly. The IFAs are men of straw so there is no secondary relief there, now it appears that I have no claim for the full amount because of under insurance in the first place.

Customer:

I just pressed the wrong key by mistake!

Customer:

I am back to my original point, can an Insurance Company restrict any payment to a certain calendar year, regardless of when a product was bought? This is the nub of it all for you. Thanks.

Alex Watts :

The answer is no.

Alex Watts :

Does that help?

Customer:

Sorry to have taken so long to get back to you, I am really busy (like you I expect) at the moment.

Customer:

The issue is that Matrix’s policy of insurance has an aggregation clause. Had Matrix not made the notification when they did, their Insurer could have refused to indemnify any claim made later. Then the issue arises as to whether they are entitled to claim that the notification by Matrix means that they can aggregate all claims so that (as in this case) the Insurers liability is limited.



The question is can they do this. There can be arguments on the construction of the insurance policy that the “claim” should not be treated as one claim but separate claims. I imagine that this allows me to stand in the shoes of Matrix and claim on their policy. But I presume that I can only claim to the extent Matrix could do so, if the policy is legally acceptable. So even if they are saying that the claim relates to aggregation clauses in a policy of indemnity insurance, you said in your last answer that they cannot restrict payment. Please advise.

Alex Watts :

Please remember that this site if for general advice and not specialist subjects, that should be directed to your own Solicitor who will have more time to research this.

Alex Watts :

What you are saying is a matter of legal argument regarding construction and indemnity.

Alex Watts :

I have not seen the policy so do not know of the exact wording and and that is the case, it would be unfair without sight to give you a view.

Alex Watts :

Does that clarify matters?

Customer:

I haven't seen the policy either, and so far it has not been provided. I think that we are at an end of discussion here, I had hoped that there would be an overarching law that prevented the compartmentalisation that is being carried out here. Anyway, thanks for your answers, it is a really tricky case and you have done well, blind as you have been and my ropey explanations. Shame about the outcome. Regards.

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