Lloyds charged my mum an astronomical amount for insurance

I have power of attorney over my 86-year-old mum’s finances due to her failing health.

I received a letter regarding her Lloyds Bank home insurance policy which was up for renewal. The price was £606, a crazy figure given that she lives alone in a modest terrace house.

I got replacement cover with another insurer for £127, and cancelled the Lloyds policy which auto-renewed each year.

She had been with Lloyds since 2009. The backlog of excessive charges for her home insurance must be astronomical.

Have I any recourse to claim any of this back on her behalf?

DF, by email

On 1 January the Financial Conduct Authority introduced rules that require insurers to offer the same price to existing policyholders as they do to new customers. The move was, in part, to stop people like your mother from paying so much more than those who shop around.

My initial thought was that the rules hadn’t worked. But it emerged that the policy had been auto-renewed in August. In theory, she should have received a lower quote had she renewed this year.

Despite that, I can see why you feel so aggrieved, given that it looks as though your mother has been considerably overpaying for many years. It is not the first time that Lloyds has been called out for this behaviour.

The bank defended its position on the basis it had written to her before each renewal asking if it “could offer something better dependent on the level of cover required”. It said that the £606 had been “calculated correctly”.

“We’ve taken into consideration the information provided to us by her son who highlighted her vulnerability later in life.

“In recognition of her specific circumstances, we are offering a payment of £588,” it tells me.

Is this enough? I suspect that if you went to court for the remainder of the £2,000 or so that she may well have overpaid, Lloyds would likely settle – but only after a lengthy and time-consuming battle on your part. The Financial Ombudsman Service would probably side with Lloyds.

In your shoes I would take the offer and move on.

In the meantime, this letter should serve as a reminder to others with elderly parents to make sure they are paying a fair price for their policies.

I fear insurers will find ways around the new FCA rules by claiming that existing policies differ from those offered to new customers, meaning you may still want to shop around at renewal time.

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