Advice given by a now deceased adviser in the months before the protection industry was brought under regulatory control has been cited by Scottish Provident after it refused payout on a £70,000 life insurance policy and substantially reduced the cover on another.
The insurer has refused to pay out on a life insurance policy taken out by a client who died of cancer in June of last year, due to his adviser giving incorrect information on his application and understating his weight by eight stone.
Brian Henderson had a £70,000 self assurance policy with Scot Prov which he took out in July 2004. After his daughter Karen Edwards submitted the claim, she was told the adviser, Trevor Oakley of now wound-up PBF Financial, had entered Mr Henderson’s weight at 16 stone, instead of 24 stone.
A spokesperson for Scottish Provident said if the correct information been provided at the time of the policy application Mr Henderson would have been refused cover. The spokesperson added that the insurer has handed back the premiums paid by the client.
When Ms Edwards realised mistakes had been made on her father’s form, they then checked his wife’s application and found similar mistakes relating to her weight and undisclosed illnesses.
Scottish Provident has retained the level of premiums for Mrs Henderson but has cut her sum assured to £28,000 from £70,000.
Ms Edwards told FTAdviser the family was only shown a one-page declaration document by Mr Oakley and were unaware that he should have shown them a much lengthier document to confirm information was correct.
The case appears not to be isolated. In 2012, the Daily Mail reported that Scot Prov did not pay out on another £240,000 life insurance policy also involving Mr Oakley.
Payment was refused due to a clause in the policy stating that terminal illness payouts can only be made to someone with less than 12 months to live. The client had motor neurone disease so doctors could not give a reliable estimate for how long he would live.
Again, the clients were reported to have said the clause was buried in the small print of documentation that was not included in any paperwork they were given by the adviser.
Mr Oakley was quoted by the Mail as admitting to not going through documentation with clients, saying: “Do I go through them? No, not really — not aware of going through 28 pages of a life insurance policy.
“People get given stuff and they have a look at it. If they want it, they take it. I don’t know what the terms and conditions are under terminal illness. I have no idea at all.”
According to the Financial Services Register, Mr Oakley was not formally authorised until October 2004 and was director of PBF until November 2011. At the time the Hendersons took out their policies in July 2004 there was no regulation for protection business, which was introduced in January 2005.
Mr Oakley received a final notice from the regulator in October 2012 for failing to disclose to the Financial Services Authority his criminal convictions, including a “conviction for an offence of dishonesty”.
He also failed to disclose that he was subject to a criminal investigation in 1998, in which he was arrested by Essex police and charged with mortgage fraud against Nationwide Building Society. Mr Oakley was not convicted of that matter.
Scottish Provident told FTAdviser that Mr Oakley’s firm PBF Financial was listed in their system as an appointed representative of network Personal Touch Financial Services. Personal Touch is currently investigating that claim.
According to people familiar with network processes, prior to regulation in 2005 it was standard for directly authorised firms to partner with networks without becoming members in order to gain access to certain providers they otherwise may not be able to access.
A spokesperson for Scottish Provident said: “We are very sorry for Mrs Henderson and her family’s loss and we have carefully considered the details of this case.
“Unfortunately, Mr Henderson’s weight was significantly under recorded on his signed application form and his height was also incorrect. Had we been aware of Mr Henderson’s correct weight at the time he applied for the policy we would have not been able to insure him.
“Therefore, we have had to decline his family’s request to pay the claim following Mr Henderson’s death and have paid back the premiums that were paid to us.”
