The banks were supposed to repay what is called the “participation aux bénéfices” if no claim was made on the policy but never did so.
Now a pressure group, Action Civile, is coordinating complaints following a Conseil d’État ruling that banks should repay money for policies taken out between 1996 and 2012.
Mortgage insurance is not compulsory but many banks insisted borrowers took the banks’ own insurance as part of the conditions of the loan to cover risks of non-payment through death or invalidity.
Consumer group UFC-Que Choisir complained to the conseil in 2012 and the country’s highest administrative tribunal, said: “In law, at the end of the contract insurers should repay any premiums which were not used to cover the risks.”
Banks had set premiums high because it was difficult to estimate the risk involved and had then invested the money – and the law says the insured person should share in this benefit.
The sums involved can be 40% of the value of a mortgage policy or 70% of an ordinary loan. For a 15-year policy on a €300,000 mortgage the repayment would amount to €2,843 or €1,895 for a €200,000 loan.
Action Civile has signed up more than 135,000 people and sent letters to their banks asking to start mediation, in which it would participate.
If the banks refuse, Action Civile will sue for repayment at the tribunal d’instance and will supply the documents needed.
In effect, anyone who took out a mortgage or large loan between 1996 and 2012 can make a claim on their own behalf or through Action Civile. The later will take a 15% share of any proceeds.
UFC-Que Choisir has been fighting for more than 10 years to get repayments made as it said banks had a 50% profit margin on the policies – worth €3billion a year – and they were riddled with exceptions.
Action Civile will take com- plaints from borrowers until December 31 on its website www.actioncivile.com – and the total sum claimed as we went to press was €370m. Let us know if you have made a claim via email@example.com
- Since 2010 the Loi Lagarde has given borrowers free choice of which insurer to use and the Loi Hamon this year extended this so policies can be cancelled at any time within the first year.