insurance renewal

[pixxie]

hi, am just looking for some advice about a car insurance renewal. my partner insured his car with adrian flux last year and paid £1400 using his credit card. this year they automatically took another £1300 from his card when it was due for renewal. when we phoned them they said that they had sent a letter saying if they did not hear from him then they would automatically renew it. from what i've read in other threads he must have agreed to an automatic renewal at the beginning so we are going to check the documents. but we never received this letter they claim to have sent. we received other letters and a brochure from them but not the renewal. because this was taken from his credit card, this put him £200 over his limit so he had charges for that and a massive minimum payment this month. when he phoned them they said that they had sent this letter and that they couldn't advise on a cancellation fee unless he actually cancelled. is it legal for them to take the money from a credit card? and how can we prove we didn't receive the letter? any advice would be much appreciated, thanks.

[buzby]

The issue is simpler than you make out - I'm fighting a similar battle with the RAC, however irrespective of whether they told you they were going to take the money or not, my contention is I have to SPECIFICALLY agree to a repeat debit, not simply contact the firm to prevent them taking it.

 

Call your card company and advise them you did not agree to a continuous payment arrangement and ask for the money to be refunded.

[Darkangelsdelite]

This is something that's becoming a lot more common nowadays. Technically, if the insurer has sent you a letter advising you the policy will auto renew unless they hear from you, and you don't contact them, they are correct to auto renew as the renewals are generally sent out about 21 days before the renewal date so they have given you sufficient notice to stop the renewal if you're not happy with the quote. Even if you didn't receive the letter, the onus is still on you to know when your renewal date is and not the company to remind you.

That being said, this is really simple to sort out.

Firstly, dont bother with your card company. it'll take ages for them to sort out a refund and it causes un-necessary paperwork.

I presume your partner still has the car and has just insured elsewhere cos he got a cheaper quote? If thats the case, simply send a letter to Adrian Flux, advising them the renewal notice was not received, the cover was not required as alternate cover was in force with effect from xxxx date and enclose a copy of the motor insurance schedule from the new insurers to back this up.

Most insurers will backdate the cancellation to the renewal date and issue a full refund, along with your proof of NCD which your partner will need for the new company.

 

 

Cheers

 

 

DA

[buzby]

This is something that's becoming a lot more common nowadays. Technically, if the insurer has sent you a letter advising you the policy will auto renew unless they hear from you, and you don't contact them, they are correct to auto renew as the renewals are generally sent out about 21 days before the renewal date so they have given you sufficient notice to stop the renewal if you're not happy with the quote. Even if you didn't receive the letter, the onus is still on you to know when your renewal date is and not the company to remind you.

 

It is this issue that is proving interesting. What you are suggesting is that despite the card-holder not providing an authority to re-debit his account, a creditor can simply write and say "in 21 days we will take this amount unless you say no". There is no implied agreement - the purchaser could have moved in the intervening period and had no wish to continue with the policy. There is no god-given right for a breakdown firm or insurer to assert their rights to a speculative payment. If you can point me to the regulations that allow this, I'd really appreciate it. But in the absence of this, where no permission exists, the act of taking funds is against the wishes (and possible knowledge) of the consumer.

[GoldyR]

The regulations you refer to fall under the DMD (Distance Marketing Directive) issued by the FSA, stipulating that insurers must issue renewal terms within 21 days (on retail contracts) thus giving the insured enough time to cancel the policy. If they do not cancel, the policy will automatically renew/

[buzby]

Hang on! They must certainly issue the renewal within 21 days, this was to prevent the usual practice of leaving it until 4 days before expiry and giving the policyholder little or no time to seek alternative cover. What happened then, is that you were given a few days 'grace' in which to renew and your cover continued when the payment was received.

 

Nowadays, with the 21 day rule, firms change the way they work. They demand the policyholder renews BEFORE the expiry of the insurance, if it is not received the policy is considered 'lapsed'.

 

There is no consent from the policyholder that his original payment was to be a recurring one, and in the absence of opting out his insurer has the right to re-bill. Why do you think so many firms want to abuse this process by arranging for card transactions ONLY, and denying the possibility of paying by cash, cheque or Postal Order?

[madlandie]

Hi Pixxie

 

If Adrian Flux haven't refunded you by now - they really should have done.

 

1. They should have sent (under the FSA rules) the renewal invite 21 days before the renewal date - which you say you did not receive.

 

2. I would advise going to the card issuers and claiming the payment back as this was effectively an unauthoirised payment.

 

They cannot by law, just take a payment unless the AMOUNT was previously agreed, as the renewal premium would have not been known last year (which of course it wouldn't have been as Adrian Flux insurance cannot predict the future! ) then the payment is unauthorised .

 

3. Adrian Flux did this to my brother and I got his money back by asking for copy of the signature - I suggest you ask for copy of the original agreement - if they cannot supply it then point 2 is unnessecary - they will have to refund in full - oh and by the way if you can prove that this caused the extra charges - then Adrian Flux insurance should be liable for this too?? Doesn't anyone else agree???

 

MadLandie:-o

[Darkangelsdelite]

Hang on! They must certainly issue the renewal within 21 days, this was to prevent the usual practice of leaving it until 4 days before expiry and giving the policyholder little or no time to seek alternative cover. What happened then, is that you were given a few days 'grace' in which to renew and your cover continued when the payment was received.

 

Nowadays, with the 21 day rule, firms change the way they work. They demand the policyholder renews BEFORE the expiry of the insurance, if it is not received the policy is considered 'lapsed'.

 

There is no consent from the policyholder that his original payment was to be a recurring one, and in the absence of opting out his insurer has the right to re-bill. Why do you think so many firms want to abuse this process by arranging for card transactions ONLY, and denying the possibility of paying by cash, cheque or Postal Order?

 

 

Thats not strictly true, you do get a 14 day cooling off period under FSA regs which effectively extends your cover for 14 days after the renewal has lapsed so if you were on holiday or changed your mind about cancelling, you can call in and "late renew" providing no claim has been made.

 

In repose to your last point, the reason we don't accept cheques/postal orders etc is 2 fold. Firstly, hardly anyone uses them any more so they're just being phased out generally (check out your local supermarket, I'll bed they don't accept them any more) and secondly, its because of the cost to us to process them. Its cheaper for us to process a card rather than pay someone to receive, open, check, process, then cash a cheque.

[buzby]

Thats not strictly true, you do get a 14 day cooling off period under FSA regs which effectively extends your cover for 14 days after the renewal has lapsed so if you were on holiday or changed your mind about cancelling, you can call in and "late renew" providing no claim has been made.

 

In repose to your last point, the reason we don't accept cheques/postal orders etc is 2 fold. Firstly, hardly anyone uses them any more so they're just being phased out generally (check out your local supermarket, I'll bed they don't accept them any more) and secondly, its because of the cost to us to process them. Its cheaper for us to process a card rather than pay someone to receive, open, check, process, then cash a cheque.

 

I can discount both these scenarios you outline from personal experience. Esure and NU Direct do not allow the renewal once the policy anniversary is reached. They will recalculate and (usually) provide you with a higher cost option to stay with them. They have done this since 2002, and it works like clockwork so it's not a one off. As for the 'cooling off' period - you're coming at this back to front. if you haven't paid, there's NO 'cooling off'. You may have this if you paid for the renewal willingly or unwillingly, but that isn't the argument here.

 

Moving on to your second point -that's the chicken and egg argument. The reason why 'nobody uses them' is because firms are forcing the issue. Supermarkets are a bad example as cheques are invariably limited to £50 or £100 with a guarantee card and their processing takes additional time. HOWEVER the retailer does receive the full value of the payment, unlike cards where a percentage is creamed off by the card issuer. Firms are willing to forego this because they can abuse the system in other ways, either by retaining the card details and using them without direct authorisation of the card holder, or by offering cashback on debit cards, their cash handling drops as they don't have to bank the money they receive as it goes back out to the customer.

 

What you forget is that the insurer is there to offer a service and be competitive, not develop ways of unfairly restricting the way of transacting business or charging more simply because everyone else is trying to get away with non DD processing fees.

[Darkangelsdelite]

I'm sure your "personal experience" is very useful on these forums, unfortunately in this case it has just meant a waste of a post.

As i work in the industry, the scenario i gave was based on fact, and not on opinion. Most RBS brands (certainly the ones i deal with) give you 14 days to late renew on a policy providing no claim has been made and the letter we send to customers confirming their policy has lapsed, confirms this with something along the lines of

"we're sorry you have not decided to renew your policy this year, in case this is an oversight, we have held your cover for 14 days so you still have time to renew your policy, please call us on xxxxxx to discuss it with out consultants. If this is not an oversight, please ignore this letter and please come back to us for a quote at any time".

Thats not verbatim, that's just from memory, it might differ slightly.

 

As far as the cheque argument goes, again, i was speaking from a professional point of view. The point i was making is that cheques/postal orders etc are old fashioned and out dated and are generally being phased out across the board. The main people that still use cheques are the older generation that don't want to join the 21st century with electronic banking and direct debits etc. I take your point regarding the costs to companies to use cards but this still is far less than the man hours required to process cheque payments hence why many companies are now stopping using them.

 

I haven't forgotten at all that we're here to offer a service and be competitive, in fact that's the whole basis of the point i made. For us to be competitive, we have to reduce our costs and phasing out a dying payment method when there are other alternatives that serve the same purpose but cost us less, is a good way to save money which we can then pass on to the customer by lowering premiums.

 

 

DA

[cazzaswfc]

Thats not strictly true, you do get a 14 day cooling off period under FSA regs which effectively extends your cover for 14 days after the renewal has lapsed so if you were on holiday or changed your mind about cancelling, you can call in and "late renew" providing no claim has been made.

 

 

Actually this depends on the company, not all companys offer 14 days grace after the renewal,

 

It's easy when talking about FSA to think it's a clear set of rules, in truth FSA issue certain criteria of what THEY thought was fair to customers, all companys then agreed certain things with the FSA ( at least thats my understanding)

 

A lot of companys have reduced the grace period since the introduction of MID ( Motor insurance database)

[buzby]

As noted earlier, your experience is not an industry standard, simply one that your firm chooses to employ. I would assert that since my personal experience of 8 firms offering motor and house insurance is a far better test than your (rather restricted) sample of a RBS group companies. That said, their attitude is commendable, however we have all seen how these companies carelessly disrespect their existing customers, and if a firm like eSure are happy to treat their existing customers with the contempt I outlined, there will be many more that do likewise.

 

As for your assertion that cheques are 'old fashioned' and 'out-dated', I'm surprised you did not add that money (coin of the realm) was treated with similar disregard. "We don't want your money" is the cry - they REALLY want your plastic.

 

And why is this? Not for the reasons you outline, but for the very real reason is that consumers lose all rights to control their finances, since the CC companies and banks are far more willing to allow a debit to proceed simply because the merchant says so - they do not need any proof.** How on earth did we get into this situation? Perhaps because we're too lazy to write a cheque, but for the consumer all a merchant can do is bank it nothing more. With a card number, there is the holy grail of recurring debits, the possibility of tracking the purchaser and his trends, and the merchant is in control - the consumer is not.

 

As you mentioned in your earlier post, whilst my response wasn't a 'waste of a post', you thought it was - yours simply confirmed what I thought all along, customers are being treated with contempt and your attitude to payments shows this. Be grateful people want to pay you at all, don't try to dictate how they should or should not transact their business. The list of companies I no longer deal with gets longer by the year - whether your company appears on the list will depend on whether it tries to force my hand or impinge on my security.

 

**As for so-called industry 'guarantees' it is a no-brainer, which is better? Arguing to get your money back from someone who has taken it - or not give them the tools to take it from you in the first place? Why should I have to stand over my bank statements with a magnifying glass each month.

[indebtstudent]

"the man hours required to process cheque payments hence why many companies are now stopping using them."

 

What man hours? You take the cheque and somebody takes it to the bank. Big deal, there are costs associated with cards AND the customer loses a lot of security.

 

Anyway we're digressing here the point is can the customer give consent for a company to use a credit card (theoretically) for an indefinate amount of time? This may sound far fetched but what if a customer moved abroad but cleared a card with a large balance on. Given the situation above the company could renew this phantom insurace for years without the customer knowing. That can't be right.

 

I'm sure Ir ecall a thread here saying companies aren't supposed to retain the card data after the original purchase?

[buzby]

I'm sure Ir ecall a thread here saying companies aren't supposed to retain the card data after the original purchase?

 

I gather this is now revised to 'a year and a day' for plastic, and 12 months for Direct Debits. One of my cards has a 5-year lifespan, and providing the merchant takes a payment annually (whether with or without my explicit approval) they can continue to do so at any time they like until my card expires or it is 366 days since the last debit. Scary, huh?

[indebtstudent]

Very scary, how the devil do they sneak this rubbish through?

 

I've just queried a debit card payment from my account. Nationwide got onto VISA who will contact the merchant "this may take up to 120 days". Blinding stuff, I get the refund now BUT it can be swiped back at any time. Cool.

 

We're left with a similar problem I've pointed out on other insurance threads... If the company has your (paper thin) 'consent' for the renewal they could, provided you didn't notice, charge whatever premium they liked. In the unlikely scenario proposed above the onus would be on YOU to notice and sort it out.

 

Consumer law sucks! (well some of it anyway!)

[Darkangelsdelite]

This is why the FSA stepped in a few years ago and took over regulating the insurance industry. We now have to send you a renewal notice at least 21 days before the renewal date and we also have to give you a 14 day cooling off period in which to cancel the policy with no penalty should you not wish to accept the premium/terms etc.

I'm sure most people will agree that 35 days is plenty of time to read through a contract, ring around for other quotes and make an informed decision about whether i want to take my business elsewhere.

 

In regards to auto renewal, I'm still sitting on the fence. There's pro's and cons for both sides. Obviously you will get those that ring around every year for the cheapest quotes and who change companies every year just to save money. There are also those "if it aint broke dont fix it" types who will just stay loyal to the same company for years. I spoke to a guy today who had been insured with the Pru for over 60 years and told me he would never think of changing because he's always been happy with the service etc. These are who the auto renewals are aimed at, he knows he's going to renew so he just checks the docs each year to make sure nothing has changed, then just files it away til next year.

Of course i agree that anyone taking anything from another without consent is wrong, its effectively stealing.

However, seeing as most companies give you 3 weeks notice before it is debited, will give you the last 4 digits on the card, the expiry date and have a paragraph saying

"what to do next, renewing your policy is easy, we will auto renew using the card details below so you haven't got to do anything, if you dont want us to do this please call xxxx"

And then you get a further 14 days to claim it back if you forget to call in time or didn't receive the quote or (like most people) just didn't read the damned thing in the first place. So i really don't see what the issue is here, it was designed for convenience, nothing more and there is plenty of time for any errors to be rectified.

 

Sorry to go on about it but it just feels like there are some people that almost expect to be shafted and are just being cynical when there is a perfectly normal reason behind it.

 

DA

[buzby]

When it comes to my money - I'm afraid I become very unreasonable (by your definition). Imagine if it was the law that anyone you invited into your home had an automatic right of re-entry without appointment or whether you were there up to 365 days after their first visit? Incredible? Perhaps, but switch 'home' for your own bank account, and this is what happens.

 

It is nothing to do without being 'shafted' (although the cynic in me believes the two go close together) but the fact I have not given permission, it is simply 'assumed' consent, and for me THAT is the problem.

[Chesterexpress]

Sorry to go on about it but it just feels like there are some people that almost expect to be shafted and are just being cynical when there is a perfectly normal reason behind it.

 

DA

 

Well said darkangel........a couple of posters on this thread spring straight to mind.

[Bookworm]

I think you are forgetting a very simple point:

 

Non-action/silence can not be construed as acceptance in contract law.

 

 

See Felthouse v Bindley (1862). (link provided for a simple breakdown of case)

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.

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[buzby]

I think you are forgetting a very simple point:

Non-action/silence can not be construed as acceptance in contract law.

See Felthouse v Bindley (1862). (link provided for a simple breakdown of case)..

 

However they are relying upon the fact they have written to advise you that they will take a payment from your account from the previously provided card details unless you advise otherwise before the debit date.

 

Now, I'm of the opinion this is immaterial (I may have moved or not received it) yet the banks take this as fair notice and will only arrange a recall if you shout loudly enough. They have no interest in -outlawing- the practice.

[Bookworm]

They are relying on it, I agree. Doesn't make it lawful. And as for the banks, well, since when have they let something like contract law get in the way?

[buzby]

Absolutely, but I don't want to get sidetracked on the fees for non-DD campaign, as the misuse of plastic is a different issue.

 

Anyone want to take it on... and where best to concentrate the efforts, the card companies for allowing it, or the banks for condoning it?

[Michael Browne]

Nearly all the insurance companies operate this 'inertia' renewal. Every time I change companies (pretty well every year), when I send NCD proof to the new company, I also enclose a letter saying that come renewal date I do not wish to renew and do not authorise payment from my credit card.

 

It's worked well so far, but of course, you have to be aware of it in the first place and most people don't realise. Even being aware of it, you have to look long and hard to find it amongst all the bumpf they send you, which , of course is what they rely on.

[Bookworm]

Absolutely, but I don't want to get sidetracked on the fees for non-DD campaign, as the misuse of plastic is a different issue.

 

Anyone want to take it on... and where best to concentrate the efforts, the card companies for allowing it, or the banks for condoning it?

 

I would have said at source: The insurance companies (or other companies using this method) for creating a contract where there is none. Everything else derives from that.

[indebtstudent]

Originally Posted by Darkangelsdelite

"Sorry to go on about it but it just feels like there are some people that almost expect to be shafted and are just being cynical when there is a perfectly normal reason behind it.

 

DA

Well said darkangel........a couple of posters on this thread spring straight to mind."

 

The reason may be well intentioned but its the outcomes we're concerned with. Ok so most insurance companies wouldn't dare risk varying the policy significantly but I've no doubt some unscrupulous company would.

 

And anyway its no wonder some people expect to be shafted, its probably happened to them before. Remember you are posting on a website which has bags of evidence to support the assertion that banks have been blatently flouting the law and putting obstacles in the way of customers enforcing thier legal rights.

 

I've had several jobs which involved customer service but I have been a little shocked with the way financial services providers in general seem to view thier customers. Case in point current accounts - you reclaim your charges and bugger off but chances are you NEED a current account. You have a choice but it is curtailed somewhat.

 

I can understand the posts here may well come across as cynical but it only takes a couple of bad expereinces to cause a large change in your view of a certain organisation or industry.