AVOIDING GHOST BROKERS

IF YOU’RE in the market for car insurance don’t be tempted to go with the cheapest quote online and remember, as reader Luke found out: ‘if it sounds too good to be true it almost certainly is’.

After years of staying loyal to the same insurance company, Luke decided to shop around for his new car insurance, as he had received penalty points for using his mobile phone while driving which greatly affected his premium.

He took to the internet and soon found a broker that claimed to specialise in obtaining competitive insurance deals where the driver has penalty points.

Luke completed the online form and started the process of obtaining a quote. He was then contacted by the broker and taken through some additional questions.

Two days later the broker confirmed that they had obtained a competitive quote. Luke agreed to proceed. He was then instructed to send the premium money so they could set up the policy. Within three days Luke received a pack of paper from the insurer (a household name).

Four months later Luke was stopped by the police who had captured him on an ANPR camera, which showed he was not insured. Naturally he did not accept the officer’s allegation as he had purchased a policy. However, after speaking to the insurer it became clear that in fact he Check, check and check again when you are shopping for car insurance was not insured as he had been scammed.

WHAT HAPPENED?

THIS is what is known as a ghost broking scam. The fraudster really did set up the policy for Luke with a reputable household insurer. However, the insurer was not informed of Luke’s penalty points, in order to obtain a competitive quote.

Once the fraudsters knew that Luke had received the documents, they contacted the insurer and cancelled the policy and of course obtained a refund. Luke knew nothing about this and the fraudsters now had all his money.

THE LEGAL POSITION

ORDINARILY when the you are scammed you lose your money. However, I have an issue with Luke’s case which is the reason why I have not named the insurer at this stage.

They therefore 1) should have known that they were dealing with a broker that was not registered on the financial services register and 2) questioned the direct payment from the broker.

In my views the insurer therefore must accept some responsibility. I’ve advised Luke to go to the Financial Ombudsman.

FOLLOW these three steps: ■ Find a legitimate broker via the BIBA website and check your adviser is on the Financial Services Register. ■ Beware of buying insurance policies from unusual sources such as social networks, bars, pubs or newsagents.

■ Check your insurer is a Motor Insurers’ Bureau (MIB) member.

■ Dean is solicitor-advocate, barrister, arbitrator at Consumer Dispute Resolutions Ltd and consumer lawyer of the year (2018)