I always thought it was illegal to take my money without my express approval or permission.

Budget seem to have perfected their technique to the point of legality by hiding important clauses in the small print of their Terms and Conditions.

After receiving my insurance and breakdown cover renewal quote, I phoned Budget to see if they could match the cheaper offer I had received from a very helpful Swinton branch in Sidcup. The Customer Services at Budget were a complete misnomer - there was very little service and much rudeness, so I hung up in frustration. Swinton had fairly and squarely won my business.

Imagine my surprise when I received policy schedules from Budget this morning, telling me that I had been insured with them for over a week and that nearly £400 had been taken from my credit card without my permission.This may not be recoverable in full.

Insurance contracts are legally required to be "of utmost good faith", so I am disgusted to find an insurance company behaving like a bandit, knowingly taking its ex-customer's money without permission.

Is it within the remit of the Financial Services Authority to take remedial action?

Note: This post has been moderated. Please read the moneysupermarket.com Community Standards and Terms of Service. Cheers.

This practice is allowed, provided the correct process is followed - technically, it's known as a 'tacit' renewal. Budget are required to give you fair notice of the procedure, and tell you what to do if you do not agree to it.

What normally happens is that when you first take out a policy they provide amongst other things their 'Terms of Business', which tells you various things e.g. their admin charges, their FSA registration details etc. Also, it should tell you what their process will be when your renewal falls due in 12 months time.

As well as that, they should inform you 2-3 weeks before renewal that your renewal is coming up and that they will automatically renew unless you contact them and instruct them not to.

If they didn't do all the above, then the FSA would probably feel that Budget had not satisfied the FSA requirement to treat all customers fairly. If you had proof of insurance elsewhere from your renewal date, they would expect a full (and prompt) refund.

This business practice, of burying "tacit renewal" disclosure in the depths of the print which is too small and too feint to read, may be strictly legal.

Any conpany that actively seeks to cheat its former customers in this way would appear to be morally bankrupt.

What did Gordon Brown actually mean when he talked earlier today of "cleaning up" City practices?

Well here is one sharp practice that could very easily be targetted for the benefit of consumers and honest brokers alike.

Hi -- Inform Budget that unless they make a full and speedy refund of all the money they have taken, that you will make a complaint to the OFT about their breach of The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs).

http://www.oft.gov.uk/advice_and_resources/resource_base/legal/unfair-terms/

A term is unfair if:

contrary to the requirement of good faith it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of consumers.

'Good faith' means that you must deal fairly and openly with consumers. Standard terms may be drafted to protect commercial needs but must also take account of the interests and rights of consumers by going no further than is necessary to protect those legitimate commercial interests.

The Plain Language Requirement.

According to the UTCCRs, a standard term must be expressed in plain and intelligible language. A term is open to challenge if it could put the consumer at a disadvantage because he or she is not clear about its meaning - even if its meaning could be worked out by a lawyer. If there is doubt as to what a term means, the meaning most favourable to the consumer will apply.

I think you guys are getting a bit carried away...it's not that complicated. Budget should send the renewal invitation approx 14-21 days before renewal, giving notice of when renewal is due and what will happen. The letter should explain that the renewal will proceed automatically unless you decide you don't want it and notify them accordingly before renewal date. If no such letter was received, then Budget don't have a leg to stand on. If it was received (and it sounds like it was), then the question is - were they actually instructed to cancel the policy at renewal?

On a technical point, the practice of 'tacit' renewal is perfectly legal, provided there is the opportunity to opt out. Unfair terms are generally those where you have no option but to accept them i.e. they are non-negotiable. Anyhow, strictly speaking the relationship with the broker (as opposed to the insurer) is not a contract as such. Budget is a broker.

Despite all the above, I reckon Budget will fully refund if there is proof that the renewal was not required (e.g. evidence that the car was insured somewhere else from renewal date). It's not the kind of complaint that they would want to be put in front of the Financial Ombudsman.

I agree with Reservoir Cat here, Budget will fully refund with evidence of another insurance policy.

Tacit renewals are a very important part of motor insurance especially. I have dealt with many cases where people forget about renewing their insurance policy. With good reason there is 'no grace period' for motor insurance as there may be with some property or commercial insurances, and it is a legal requirement to have it. The only way to ensure cover is effective without payment is by a 'Promise to Pay'. Tacit renewals are certainly not 'buried in small print' as your renewal invitation will clearly point out that the policy will be automatically renewed unless otherwise instructed.

I understand that CharteredAccountant hung up in frustration, and that no-body deserves to be spoken to rudely, but hanging up without giving a clear indication that you do not wish to proceed with the renewal is probably a slight lapse in common sense by the OP. The fact of the matter is that the OP called Budget, for some reason was peeved, then hung up. Budget will need clear indication that you do not wish to proceed otherwise they would be held liable if it were lapsed and the person left without policy cover; precisely why tacit renewals were made common throughout the industry.

On a positive note, CharteredAccountant has highlighted a good point that Budget provide Budget prices for a reason. You pay for service accordingly.

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Coyote

I hope for your sake you never have a claim. I have had two accidents recently, both not my fault, but Budget has done all they can to be rude and unhelpful. Sadly I was even caught in their renewal scam so I am still stuck with them, but am trying to get away as soon as I possible can.

Be warned about Budget - they may be cheap, but the low price is certainly not worth the hassle.

I spent a year covered by Budget (I renewed to a proper insurer last month) - I certainly regretted choosing Budget last year - I never felt secure with them - luckily, I never had an accident - but in general communications - they were extremely lacking - I made sure that I wrote to them (snail mail) to cancel their "automatic policy renewal" procedure.

Anyway - their renewal was higher than I found with my present "proper" insurance company

Guys, from this thread it seems that tacit renewal is legally ok for an insurance company to do, however I was insured through 'LocalBroker' with an AXA policy last year, and this year someone called aquote has approached me with the tacit renewal trick - um, policy. Does 'tacit renewal' apply for a different company to renew the policy?

no, this is not permitted - you would have to agree to it in advance

furthermore, as these appear to be separate companies, there could well be a breach of data protection law - as one company cannot pass your information to another one without your prior consent

from what I have ascertained from the FSA site, Local Broker was one of several trading names of the FSA authorised firm called Budget Retail Ltd, located in Peterborough at the same address as Budget Insurance Services ltd (BISL). I assume there is a connection with BISL. Budget Retail are no longer authorised by FSA to do business, so would not have been able to handle your renewal. It appears they have handed their business on, but you should have been informed about this in advance, if so.

You can contact Budget Retail to get an explanation or complain etc on 01733-845405 or email julie.raistrick AT budgetinsurance.com

again, according to FSA website, A Quote is a trading name of Hero Insurance Services Ltd, which is an authorised firm with FSA

hope this helps...let me know what transpires!

I don't see how making a complaint will help. The Local Broker website clearly states the following:

Data Protection

By supplying data to us you will provide information about yourself and others which the Data Protection Act defines as personal data or sensitive personal data. The data controller will be BISL Limited.

Data, including your telephone number, mobile, email will be used by BISL Limited and other carefully selected companies for administration, renewal, claims handling, credit checking, marketing and research purposes and will be added to certain databases which may be checked by various organisations including the police.

By supplying data you give explicit consent for all the data provided to be used in this way unless you tell us otherwise.

For mutual security calls are recorded and may be monitored for training purposes.

This will also be given in writing to the Insured Policyholder. If the Insured has not read this, then this is down to them. If the Insured was not given this in a 'durable medium' then this can be challenged but I guarantee this will have been in the T&C's.

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Coyote

Thanks for the info, Cat. Coyote, I guess that although it could be that LocalBroker were allowed to provide aquote with my details, it is still unclear whether aquote could legally use the Tacit Renewal definition to 'renew' an insurance policy which they never took out in the first place. I have had some email response from aquote, and asked them this question, so will await a response.

The only saving grace is that aquote could not actually get the payment from my card as it was changed a few months ago (stolen and replaced), so at least I will not be in the position of having to chase monies from them, but they will have to do that from me if the action they took was legally viable. If it was not, then I guess that a complaint to the FSA on that basis could still be made against aquote.

So maybe a lesson to learn is to use a specific card for Direct Debit transactions, and change your credit card annually !!!! :)

Will keep you posted.

RoboCop:

So maybe a lesson to learn is to use a specific card for Direct Debit transactions, and change your credit card annually !!!! :)

...or write to them at the beginning of the insurance period stating that you do not wish to include 'tacit renewal'? It's not really an opt-out scheme as it is part of their terms and conditions but I can't see any reason why your request will be denied?

Within your terms and conditions you would have been advised of the tacit renewal procedure, in addition to the 'data, including your telephone number, mobile, email will be used by BISL Limited and other carefully selected companies for administration, renewal, claims handling' etc.

To be completely honest with you, I think it's a good thing. According to their site they have over 90 different schemes. If they are acting as a broker to search around the market at renewal and offer your renewal with a different company, perhaps it's because the new company are cheaper than the previous? It's very common for people to be on the road without insurance due to simply forgetting about the renewal or the date it was supposed to be renewed. Rather than the policy lapsing leaving a percentage without cover, it's actually quite a good idea!

I can understand the frustration from some people but I really don't see the problem if you are searching around the market for cheaper prices (as most do), going with it then advising your current company that you no longer wish to contine. 'Tacit Renewal' does not mean 'Gun against head, you're staying with us' but merely 'Your policy will continue if you do not inform us otherwise'. It's not a difficult task.

If you want to spend more time writing to the FSA then that is your prerogative as a Policyholder of the insurer; but I personally wouldn't want to waste my time. That said, the FSA take the side of the Policyholder over the insurance company in most instances where the insurer has been negligent or unclear.

Either way, keep us updated and I hope you resolve it soon. Good luck :)

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Coyote

well, where to start....?

Local Broker is not a trading name of BISL Ltd on FSA website!

BISL Ltd is not registered as a Data Controller with ICO!

Local Broker was a trading name of Budget Retail Ltd, which according to FSA site was not connected to BISL, and is now not authorised

A Quote is a trading name of Hero Insurance, which has no apparent connection with Budget Retail or BISL

So, even if the Data Protection Notice quoted is valid (which seems debatable), I don't think it provides implied consent to pass over data to an entirely unconnected legal entity.

Reservoir Cat:

well, where to start....?

Local Broker is not a trading name of BISL Ltd on FSA website!

BISL Ltd is not registered as a Data Controller with ICO!

Local Broker was a trading name of Budget Retail Ltd, which according to FSA site was not connected to BISL, and is now not authorised

A Quote is a trading name of Hero Insurance, which has no apparent connection with Budget Retail or BISL

So, even if the Data Protection Notice quoted is valid (which seems debatable), I don't think it provides implied consent to pass over data to an entirely unconnected legal entity.

. There's really little point in spelling it out to you because you still wouldn't get it lol.

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Coyote