You can write to say that, as you cancelled within the appropriate cooling off period, you are entitled to a full refund under the distance selling regulations (avoid using phrases like you "believe you should be"). The letter can mention dates and content of phone calls, the date the policy was taken out, payment details, details of the misleading aspects of the policy, etc..

If they write back to say that they are entitled to the charge or the distance selling regulations do not apply or other reasons why you don't get the full refund, you can either accept what they say or you can contact your bank to dispute the transaction through their process. As part of this process, the bank may wish to see copies of correspondence. If the bank agrees with you, they can reverse the payment (or, at least, the difference between the payment and the refund).

If they don't write back within a month, you can reasonably go straight to the bank.

Thanks Max,

What's the best way to dispute the charge? Simply by writing a letter to them saying it's wrong?

When you say 'contact your bank' what do you say to them?

Sorry, I'm a novice at these things, but willing to fight.

I got done in the same way. I decided I'd be better just with the phone number of a local garage as, provided it's not the middle of the night, most mechanics would be delighted to get £40 for a call out. It seemed a pretty useless policy. I replaced it with a proper breakdown policy which cost less than £40 for the year.

I had planned to dispute the charge then, if they didn't put things right after a letter or two, I'd contact my bank. To be honest, I've been too busy.

Asking "is it legal" is the wrong question because they had the authority to charge and refund and, as long as you don't dispute it, they can keep the difference.

I took out a cheap policy with rescuemycar.com - it was only £18.90 pa! Alas it was too good to be true, amongst the limited information about the account - it's easy to miss the £40 excess they charge for EVERY call out.

I called them a day later to cancel once I'd realised, only to find they wanted £15 to cancel the policy.

The policy was marked to begin one week later, so it wasn't even active? Is this legal to charge a penalty within the 14 day cooling off period? Are there not also guidelines for making policy details clear beforehand?

The picture link below illustrates how the process evolved. Check out how they use the lightest of greys to tell you about the excess £40. Then in bold, even underlined, when the actually send you the policy details. Is this legal?

http://i.imgur.com/Zuhu8.png (copy and paste into browser address bar)

1&2 Before you pay

3&4 After you pay