Fos reports rise in life policy complaints
Complaints to the Financial Ombudsman Service in relation to whole-of-life policies are on the increase, with the latest figures showing that there have been 530 new cases to the ombudsman over thee three months to June 2012.
If the run-rate for the period, which represents the first quarter in the ombudsman’s financial year, continues complaints over life policies would rise above 2,000 for 2012 as a whole, significantly above the number seen the past three years and the second successive annual rise.
There were 1,828 complaints over life policies in the 2011-2012 financial year, 1,444 in 2010-2011 and 1,690 in 2009-2010.
The number of complaints found in favour of consumers is dropping, however. For the three months to June 26 per cent of claims were decided in favour of the complainant, down from 32 per cent last year.
In 2010-2011 and 2009-2010 the figure stood at 33 per cent and 28 per cent respectively.
In its latest newsletter, in which the complaints figures are published, Fos says that the majority of the complaints it receives in this area are about “reviewable” whole-of-life policies, that is policies where the premium and amount of cover is reviewed periodically in relation to performance of the underlying investment fund.
Fos highlights three representative case studies, in two of which consumers stated they had “not realised that their policy would be reviewed”.
The ombudsman says: “As with any investment, it’s important that a consumer who chooses a whole-of-life policy understands exactly what they are taking out and what to expect in the future.”
The claims statistics reveal that complaints in relation to payment protection insurance continue to dominate Fos workload, with more than 56 per cent of the 57,790 complaints it received over the period relating to the product.
Of the 32,445 cases, 69 per cent were found in favour of the consumer, down from 82 per cent in the last financial year.