Lloyds Banking Group has admitted it did not explain any differences between a couple’s existing critical illness policy and a new one at the centre of a mis-selling allegation.
In a letter seen by Financial Adviser, the bank said the definition of critical illness was “extremely complex” and claimed it “would not be possible” for its advisers to have set out the differences in depth.
The letter was sent to the Financial Ombudsman Service by Lloyds working on the case of Melanie and Kevin Randall.
The pair have been battling Lloyds since the Scottish Widows critical illness policy they were sold in 2008 failed to pay out when Mr Randall survived a heart attack 18 months later. He now cannot work. In a ruling from 2010 the Fos ruled in favour of Lloyds Bank after the Randalls claimed their new policy was mis-sold.
However, Alan Lakey, founder of Hemel Hempstead-based CI Expert, said: “The model wording is a minimum requirement and insurers can go beyond that if they want. The new wording means claims for one in five heart attacks will fail.
“The Fos is wrong to say that Scottish Widows followed the ABI statement of best practice as if that constitutes an obligation. It did not, it merely set out minimum claim wording requirements. It could have exceeded this.”
Ms Randall said: “The Fos is only taking into account the fact that Lloyds felt it was the right policy for us.”
Right to reply
A Lloyds spokesman said: “The Fos reviewed the sales process and wording of the definitions of heart attack between the old and new policy and found in favour of the bank.”
