A client contacted me recently stating that the Life Insurance Company Aviva (formerly Norwich Union) were refusing to payout on his 25 year Endowment Policy which had reached its maturity date with all premiums paid. He had sent off the required forms to Aviva about 3 weeks before the maturity. A week later he called the Insurance company to confirm all was in order. They advised him that they could not pay the policy benefit to him as their records showed that the Staffordshire Building Society had been assigned the benefits instead. This was a complete shock to my client who contacted us for assistance. So what was the problem here and how was it resolved?….
Now some years ago my client had taken a mortgage with the Staffordshire Building Society who had required the Endowment Life Policy to be “Assigned” to them.
My client had subsequently repaid the mortgage to the Staffordshire Building Society about 9 years ago, when he had remortgaged with Cheltenham & Gloucester who had since been taken over by Lloyds TSB, who hold the current mortgage on his property. At the time of the remortgage Cheltenham & Gloucester had not required the policy to be “assigned” to them.
During this period of time the Staffordshire Building Society had been taken over by Portman Building Society who in turn were taken over by Nationwide.
Getting confused by all the take overs? So was my poor client – but there’s more to come!!
My client was obviously in a bit of a state as the policy was intended to repay his existing mortgage to Lloyds.
My client had tried calling the Nationwide and after holding for a lengthy period of time; being passed from one customer service operator to another (all of whom had no idea what to do with him as there was nothing on the system – “computer says no”) he decided that a visit to the local branch of Nationwide was in order. This was slightly more successful in that at least he could speak to someone, who in turn could speak to Head Office who confirmed that they had no record of any interest in any policy or of any mortgage on his property – however this did not produce the required letter!
I asked my client to find every piece of information he possibly could regarding the remortgage from the Staffordshire to Cheltenham & Gloucester. Much of the paperwork my client had recently turned out thinking that it was so old it was no longer relevant. However, he did eventually find me a letter from the firm of “volume” conveyancing solicitors who had dealt with the remortgage on a “fees free” deal, on behalf of Cheltenham & Gloucester along with a copy of the schedule of title deeds and documents which had originally been held by the Staffordshire Building Society, but which had been returned to my client following the remortgage. The schedule included three original life/endowment policies, including the one due to mature with Norwich Union (now Aviva).
I then tried to locate the firm of solicitors – have you guessed – yep, they’d been taken over!!
The good news is that when I got in touch with the successor law firm they actually found the old file in their archives. I pointed out that my client had been advised by Norwich Union that they were not going to pay out on the policy due to what appeared an oversight by the Law firm at the time of the remortgage in not dealing with the appropriate “Notice of Re-assignment of Life Policy”. On checking the file they agreed that this appeared to have been overlooked, not only in respect of the Norwich Union policy, but also with regard to the other two policies and by early afternoon I had an emailed copy of the Notices of Re-assignment which were being sent to all three insurance companies – well better late than never!
Moral – well if you previously had your life assurance policy/ies assigned to a mortgage lender under the terms of your mortgage, check that the solicitor dealing with the remortgage sent the appropriate “Notice of Re-Assignment” to the insurer when the mortgage was repaid. This is particularly important if you remortgaged under a “fees free” deal where the solicitors were appointed by the lender – you need to keep in mind that solicitors appointed by a lender are predominately acting for the lender to protect the lenders interest and are not acting for you. In this case my client had the stress that he was about to lose £25,000 (possibly more if the other two Endownment Life Assurance companies took the same stance) due from his Endowment Life policy for a saving of maybe £150 in legal fees some 9 years ago….
With a potential move by lenders to take on the conveyancing market, once Alternative Business Structures (ABS) (a system to allow non-lawyers to own and operate law firms due October 2011) is operational, such instances could become more prevalent.
If you have found yourself in a similar situation then we may be able to assist you.
For more information contact Newnham & Jordan Solicitors
(This article is written and published with the full consent and approval of the client).
This article is intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.