Admin charges (change address etc). Should we accept?

[YYY]

Caught the end of a piece on Watchdog, regarding charges that insurance companies levy if for instance, you change your address mid-term. I just contacted my insurance company to enquire, and was told the charge will be £40.50. This is made up of £32 for their charge, and £8.50 FSA auditing fee (im still trying to establish what this element actually is).

 

Been trying to engage with the company (cut n paste below) on a 'justification' level, which of course they wont, beause they cant.

 

Im wondering if plain ole fairness, is being abused here. Should we accept it?

 

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On 27 April 2012 16:37

Thank you for your e-mail.

We can confirm there is significant administration work involved in a change of address to justify this fee.

All mid term adjustments come with an administration fee of £40.50 as per the terms and conditions of your policy; this is broken up into an administration fee of £32.00 and an FSA charge of £8.50 please allow me to explain the process involved in a change of address:

The details on the policy are initially altered and then the details are entered into the quote system so we may obtain a quote from your current insurers, once this has been confirmed we are then advised of any additional / return premium due, once this has been actioned the changed details are then brought forward to the live insurance policy and all details retransmitted to your current insurers.

Once this has been completed payment is then taken and a full quality check of your policy is completed followed by a new set of documents issued.

Kind Regards,

 

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27 April 2012 18:02

Ben

 

Up to the point of issuing a new set of documents takes 5 minutes, while on the phone. You even confirm that all the "significant administration" has been completed by stating "Once this has been completed payment is then taken and a full quality check of your policy is completed".....which takes 5 minutes, and has all been actioned electronically.

 

Are you seriously equating a 5 minute button pressing exercise, as an activity that has the word 'significant' in it? Really?

Seriously Ben, who ever told you to write that stuff appears to be in real danger of believing that black, is indeed white.

 

So at £32, i make that £384 per hour. It is without doubt that the only 'significant' activity your industry will be carrying out, will be tending to increasing complaints about your ethics, from people like me, who wish our intelligence to not be insulted, and to be treated FAIRLY.

 

I'm actually a customer of yours, and about to move address. Whilst talking to a friend who is also insured with you, i was confused when he said there was a charge, as i remember last time i moved, MCE did not charge me for changing the address. So I'm wondering, what part of the 5 minute process has changed, where i have now caused so much work, i now have to pay £40.50, where before, i paid nothing?

 

Also, can you please explain or give information regarding the FSA element of the breakdown cost?

 

Thank You

 

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On 30 April 2012 11:37

Dear Sir,

Thank you for your e-mail.

We can confirm our administration charges are clearly displayed in our terms and conditions that are included in your policy documentation, a copy of this is attached to this email.

The £8.50 FSA charge is to cover the costs of any FSA auditing and fees.

Once the process is completed and documentation is issued further work is involved with updating the Motor Insurance Database to ensure your details are updated and listed correctly on the DVLA vehicle database.

.

Kind Regards,

[assisted blonde]

Dont actually think this is an excessive charge if you dont pay it and get the details changed then your insurance probably isnt valid, its up to you if you want to fight them over this but I would pay up and argue afterwards.

[YYY]

Dont actually think this is an excessive charge if you dont pay it and get the details changed then your insurance probably isnt valid, its up to you if you want to fight them over this but I would pay up and argue afterwards.

 

Anybody else think £384 per hour is acceptable?

[sillygirl1]

Yes, I wonder how much they are paying their staff - wouldn't it be easier to cancel existing policy and set up a new one for the new address?

 

Rip off or what!

[YYY]

Yes, I wonder how much they are paying their staff - wouldn't it be easier to cancel existing policy and set up a new one for the new address?

 

Rip off or what!

 

At the very least, a rip-off, but how obscene would it be if the staff being paid, were talking from call centres in other parts of the world. How much of the £384 per hour do they get for the 'significant' work? Just a thought.

[MARTIN3030]

I agree.

Ask them to give a genuine pre estimate/breakdown of the 32 quid.

[YYY]

I agree.

Ask them to give a genuine pre estimate/breakdown of the 32 quid.

 

I guess they have by stating the following.......

 

"The details on the policy are initially altered and then the details are entered into the quote system so we may obtain a quote from your current insurers, once this has been confirmed we are then advised of any additional / return premium due, once this has been actioned the changed details are then brought forward to the live insurance policy and all details retransmitted to your current insurers.

Once this has been completed payment is then taken and a full quality check of your policy is completed followed by a new set of documents issued."

 

The point here is, they cant break it down or justify, because this cost cannot ever be a FAIR reflection on the actual process. If i recall correctly, this 'fairness' and 'significant' angle, were two pertinent points regarding excessive bank charges a while ago. Any legal people out there, to explain what is fair or not?

[andydd]

As some of you may know, I have some experience in the field of leasehold law, now administration charges similar to the above can be charged to tenants of leaseholders of properties (if the lease allows), in the above it appears that the T&C's do allow (unspecified in amount) charges to be levied.

 

Now in a dispute involving leasehold administration charges, the Leasehold Valuation Tribunal has specific powers to look at these admin charges and to decide on a reasonable amount depending on how much work is actyually done (similar to the above point made by posters).

 

Alas though there appears to be no similar body, either judicial or otherwise that can decide whether these admin amounts are reasonable, as pointed out the actual cost incurred by the company is realistically perhaps 5 or 10 mins of an employees time who is prob paid in the region of £10 an hour.

 

Its not clear what route someone can take to dispute these charges ?

 

Andy

[YYY]

Andy

 

Have you any info/example on what method of judgement the LVT use, to decide what is 'reasonable'?

 

And to anyone else, are there other precedents within other sectors, which serve to demonstrate a reasonable charge?

[andydd]

YYY.

 

Well, yes..there is a panel of 3 members and they have knowledge of law, pro[perty, leasehjold issues, generally they are there to adjudicate on leasehold issues, for example the service charge has a gardening cost, a gardener visits an hour each week, but the charge is £5000, they decide it should be £500. Ability to decide on admin charges is a newer area, they just use common sense, for example in my case..a fee of £130 for writing a coupler of letters to me was reduced to £25.

 

As to what is meant be reasonable this is actually discussed in many lvt/lands tribunal/court hearings and is taken to mean the normal common sense approach, if it were me, I would for example decide that £10 is maximum fee that should be charged for changing an address.

 

I note that Watchdog also featured similar charges for making changes to airline tickets, etc.

 

Andy

[unclebulgaria67]

Just to put the industry side to this. I had some dealings with this, when companies started to add admin fees. I was appalled by it, as I was in the firing line, dealing with customer complaints and there were many. People cancelled policies, as they refused to pay the admin fees. Some came back, when other companies also started charging fees.

 

Why did Insurers start adding these fees ? Answer in my opinion. Comparison sites . When the comparison sites were launched, Insurers quickly realised, that they were going to have their premiums listed all over the internet for everyone to see. They were going to have to continually monitor the rates they were charging, as otherwise they were going to be too far down the list and they would not get any business. So what they did, was to cut their premiums and instead gain some income back, by adding various fees. They justified this, by saying that they were rewarding customers who stayed with them and did not make regular adjustments to their policies. For those customers who made changes to their policies or cancelled mid term, they would apply charges, to cover their costs and to gain income. I believe this opinion is backed up by the evidence that often the companies with the highest admin/cancellation fee charges, have the cheapest premiums and appear at the top of comparison site lists.

[YYY]

Just to put the industry side to this. I had some dealings with this, when companies started to add admin fees. I was appalled by it, as I was in the firing line, dealing with customer complaints and there were many. People cancelled policies, as they refused to pay the admin fees. Some came back, when other companies also started charging fees.

 

Why did Insurers start adding these fees ? Answer in my opinion. Comparison sites . When the comparison sites were launched, Insurers quickly realised, that they were going to have their premiums listed all over the internet for everyone to see. They were going to have to continually monitor the rates they were charging, as otherwise they were going to be too far down the list and they would not get any business. So what they did, was to cut their premiums and instead gain some income back, by adding various fees. They justified this, by saying that they were rewarding customers who stayed with them and did not make regular adjustments to their policies. For those customers who made changes to their policies or cancelled mid term, they would apply charges, to cover their costs and to gain income. I believe this opinion is backed up by the evidence that often the companies with the highest admin/cancellation fee charges, have the cheapest premiums and appear at the top of comparison site lists.

 

 

Very interesting, and consistent with a comment i heard on radio...... "the need for the insurance companies to change thier business models", meaning, their current business model is too competitive, and so they invent a new income stream. So it is of course a big fat lie to tell us what 'significant' work they do.

 

As a consumer, you are being lied to, ripped off, and having your intelligence insulted.

 

As savvy consumers, SHOULD WE ACCEPT?

Edited May 6, 2012 by YYY
poor grammer!