Our Carol Vorderman loan nightmare
Helen Loveless, Mail on Sunday
28 October 2007
This couple believed they could trust a finance company promoted by the star of Countdown. So why were they charged an astounding £18,250 for insurance that they did not need and could not use?
Robert and Mandy Townley took out a loan two years ago with Firstplus, the company whose daytime TV adverts feature Countdown star Carol Vorderman. They wish they hadn't. It has caused them nothing but financial misery, mainly because they were persuaded to buy expensive payment protection insurance, known as PPI, that they did not need.
The Townleys' financial nightmare began after the birth of their twins, Katie and Jake. Like many young families, parenthood plunged them into debt. The answer, they thought, would be to consolidate all their borrowings under one loan.
After being turned down by a string of High Street lenders, the Townleys approached Firstplus, which agreed to lend them £34,000 secured against their home.
They were encouraged to take out expensive payment protection insurance. This is sold alongside credit agreements, such as personal loans and credit cards, and is designed to help borrowers meet debt repayments if they suffer from long-term illness or unemployment.
Financial Mail has long highlighted failings in the £5.5bn-a-year payment protection insurance market. More than 20 million policies are in force and seven million new ones are taken out every year, but there is widespread evidence of mis-selling.
Mandy, 37, was not working at the time the couple took out the loan as she was looking after the twins. Robert, 42, who was working as a labourer at a local concrete plant, was covered by insurance through his employer.
But the couple claim that they were pushed by Firstplus into signing up for a single-premium PPI policy costing £8,000, pushing up the total cost of the loan package to £42,000. Six months later, the Townleys, from Street, Somerset, bought a larger car to cater for their growing family. They applied to borrow a further £10,000 from Firstplus and were told they would need to consolidate the old loan into a new one.
Shockingly, they only received a rebate of just over £2,000 of the £8,000 paid out for PPI on the first loan, even though it had been taken out only months earlier.
Firstplus then required the Townleys to take out new PPI costing £12,250, taking the amount borrowed to more than £60,000. In other words, they had paid almost £20,000 for insurance that Robert did not need and Mandy, because she was not working, could not use. The policy provided cover for only five years with a maximum payout period of one year, but the new loan was for 25 years.