Halifax, Barclays and other major lenders have been accused of mis-selling critical illness cover by Channel Four following its investigation resulting in a programme entitled 30 minutes: How good is your insurance?
The programme, aired on June 5, reinforces recent claims by the Consumers' Association that only 5% of advisers recommended an insurance product, with a mortgage, that suited their clients' needs.
For the C4 exposé, a journalist posing as a first-time buyer went to a number of banks and building societies for a mortgage. Despite stating they had no dependants, no spare cash and not asking for insurance, advisers repeatedly urged them to take critical illness cover.
At Abbey, an adviser used a scare story of a 47 year old man who had suffered a heart attack and lost his home to encourage the customer to buy the insurance.
A Halifax adviser warned that “one in three people get cancer” as a means of getting them to take up the cover, despite the fact many cancers are not covered by critical illness insurance.
And one Barclays adviser pushed the cover despite being told that the customer was not sure they could afford it.
All the companies involved say they are shocked at the findings, with Halifax stating it will “not tolerate the mis-selling of any product”.
However, Roy McLoughlin, senior partner at Master Adviser, says: “A lot of people come to us having taken out a mortgage where critical illness has been included in the package without the customer really knowing what they've been sold. And there are different definitions – does it cover heart surgery or do you have to be hit by a lorry?”