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More mis-sold policies…

Not so long ago, we covered the mis-sold Payment Protection Insurance (PPI) fiasco – huge numbers of people saddled with pointless policies which they ended up being compensated for.

These were policies that were created for no reason other than to make money. And it seems that the lessons of the PPI disaster have quickly been forgotten if ‘bankruptcy indemnity policies’ are anything to go by.

The Mail’s James Coney refers to the policy in highly critical terms, suggesting the policy documentation is ‘pure jargon and totally incomprehensible’. Coney also spoke to ‘some legal experts and mortgage brokers’ about the policy but ‘they didn’t understand what it was for either.’

The policy, in the case Coney refers to, was sold to a couple with healthy financial circumstances and a ‘likelihood of this policy ever needing to pay out at practically zero’. In other words, it wasn’t needed and was therefore mis-sold. Why would they pay for it if they didn’t need it?

Coney, looking at specific listed charges, mentions “an admin fee because (the buyer) had a gifted deposit, a £30 charge for ’sourcing a balance over £1,000’ — in more than a decade of writing about mortgages, I’ve never seen either one of these before — and a bankruptcy search fee.”

It’s incredible that such charges are being sneaked in, and first-time homebuyers are unlikely to challenge them. Not to mention the fact that banks and building societies are supposed to be rebuilding badly damaged trust with investors. Pointless and cynical charges such as the ‘bankruptcy indemnity policy’ are hardly going to help.

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