Insurer's direct marketing "misleading"

The letter did not comply with the Direct Debit scheme rules

People who have signed a direct debit instruction thinking they were just claiming a cash prize could get their money back under the Direct Debit Guarantee.

An insurance company has been using direct mail letters to market its policy.

But the Hospital Plan Insurance Services letter simply says that the recipient has won a cash prize, and asks them to fill in a claim form.

However, the form is also a direct debit instruction, and by filling it in, people have been signing up for the company's insurance policy, and authorising it to debit the premiums from their bank accounts.

It confused the cash prize draw with the direct debit instruction Sandra Quinn, Direct Debit spokesperson

BBC Radio 4's Money Box programme showed a letter containing the claim form to the Direct Debit scheme. It was adamant the letter did not comply with its rules.

Direct Debit spokesperson Sandra Quinn explained that it was wrong in one main area. She told the programme:

"It confused the cash prize draw with the direct debit instruction, so that somebody could feel that they were signing up for a cash prize and were in fact signing up for a direct debit instruction. And that would be misleading."

New mailing

Ms Quinn said the issue has now been raised with the bank that sponsors HPIS into the direct debiting scheme. And she continued:

"We have told them what we think should be amended, and following that, we have now seen a copy of their next mailing, which we think meets the requirements of the scheme.

"But it is for the individual bank to ensure that they do that, and they continue to meet the requirements of the scheme."

Old people are very likely to return the form without realising what they have signed for Kathryn Jones

Ms Quinn confirmed that people who filled in the form and were misled by it, could now possibly get their money back.

Money Box heard from a number of people who have been targeted by the mail. And not everyone felt misled.

Kevin Shuttleworth told the programme: "I have held a HPIS policy for many years, and I thoroughly approve of their marketing tactics.

"It is very easy to cancel before you pay anything, if you decide you do not want the policy. And they tell you clearly how to do this, it is not buried in small print anywhere."

And Nick Davies said it was easy to cancel the direct debit after receiving the prize: "You get the price of a couple of pints for two minutes work."

But Kathryn Jones' 70-year-old mother had a very different experience. She filled in the form and didn't realise what she had done for two years.

Kathryn told the programme: "I think this type of advertising is appalling. Old people are very likely to return the form without realising what they have signed for."

BBC Radio 4's Money box programme was broadcast on Saturday, 31 January, 2004 at 1204 GMT.