Close Premium Finance and Unfair Charges: A Closer Look

Close Premium Finance, a prominent player in the UK premium finance market, provides loans to businesses and individuals to pay their insurance premiums in installments. While premium finance can be a useful tool for managing cash flow, concerns have been raised regarding potentially unfair or opaque charges levied by Close Premium Finance. Understanding these charges and what constitutes an unfair practice is crucial for borrowers.

Common Charges & Potential Issues

Several types of charges are commonly associated with premium finance agreements, including:

• Arrangement Fees: Charged at the outset of the loan, these fees cover the administration involved in setting up the agreement. While legitimate, concerns arise when these fees are disproportionately high relative to the loan amount or insufficiently transparent.
• Interest Rates: Premium finance agreements involve interest charges. The advertised rate should be competitive and clearly stated. Problems occur if interest rates are excessive compared to market averages or if they are variable without adequate disclosure, potentially leading to unexpected increases in repayments.
• Late Payment Fees: Penalties for missed or late payments are standard. However, these fees should be reasonable and proportionate to the missed payment. Excessive late payment fees, particularly when applied repeatedly or aggressively, can be deemed unfair.
• Default Fees: In the event of a default (failure to make payments), further charges can apply. These charges should be justifiable and reflect the actual costs incurred by Close Premium Finance in recovering the debt.
• Cancellation Fees: If the underlying insurance policy is cancelled, or the finance agreement is terminated early, cancellation fees may apply. The terms surrounding cancellation and associated fees should be clearly defined in the agreement. Unfairness can arise if these fees are excessive or lack transparency.

What Constitutes Unfair Charges?

Under UK law, particularly the Consumer Credit Act and Financial Conduct Authority (FCA) regulations, certain practices are considered unfair. Charges may be deemed unfair if they are:

• Disproportionate: The charge is significantly higher than the actual cost incurred by the lender.
• Opaque: The charge is not clearly explained or disclosed in the agreement, making it difficult for the borrower to understand.
• Unexpected: The charge is applied in circumstances not adequately outlined in the agreement.
• Unreasonable: The charge is applied excessively or unfairly in the context of the borrower's situation.

Seeking Redress

If you believe you have been unfairly charged by Close Premium Finance, you have several options:

1. Contact Close Premium Finance Directly: Raise your concerns with their customer service department and attempt to negotiate a resolution.
2. File a Complaint with the Financial Ombudsman Service (FOS): If Close Premium Finance fails to resolve your complaint, you can escalate it to the FOS, an independent body that investigates and resolves disputes between financial institutions and consumers.
3. Seek Legal Advice: Consult with a solicitor specializing in consumer credit law to assess your options for legal action.

Thoroughly review your premium finance agreement, document all charges, and gather any evidence to support your claim of unfair charges. Proactive investigation and understanding of your rights are crucial in challenging potentially unfair practices and seeking fair resolution.