Life InsuranceMay 31 2016

Fos reconsiders complaint in light of fresh evidence

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Fos reconsiders complaint in light of fresh evidence

Chase de Vere has been told to compensate a client for over-insuring her, after new evidence came to light.

Referred to as Ms C, the client complained Chase de Vere Independent Financial Advisers mis-sold her two income protection insurance policies.

When Ms C met with one of its advisers in 2006 she already held two income protection policies with an insurer, referred to in the decision only as ‘A’.

The adviser recommended she take out a further two policies with insurer ‘B’.

In 2014, Ms C had another meeting with the adviser, who by now was working for a different business. They told Ms C to cancel the two policies with insurer B because she was over-insured and couldn’t benefit from them.

Ms C cancelled the policies and complained to Chase de Vere it had mis-sold them to her.

Initially the ombudsman’s adjudicator did not recommend the complaint be upheld.

They found the adviser should have been aware of the two policies with insurer A, and based on the calculations provided by Chase de Vere, Ms C was only slightly over-insured after taking out the two policies with insurer B.

When the complaint was first made to Fos, Chase de Vere provided a calculation showing the extent to which Ms C was over-insured at the time of the 2006 sale if the two policies with insurer A were taken into account.

The firm stated it based this on information received from insurer A concerning the two policies, which showed the second of these policies provided £6,308 of cover a year.

It calculated Ms C therefore had total cover worth £51,442 a year and could have claimed a maximum of £45,800 under her policies with insurer B.

This meant she was over-insured by £5,642 which the Fos adjudicator thought was “arguably reasonable” given Ms C was expecting a pay rise.

When the adjudicator decided not to uphold her complaint Ms C did not dispute the findings and the file was closed.

But a couple of months later, she discovered information which showed Chase de Vere had based its calculations concerning her level of over-insurance on incorrect data. Her second policy with insurer A was for a higher amount than the firm had stated.

As a result, she believed it had underestimated the extent to which she had been over-insured.

Ms C first brought this to the attention of Chase de Vere, but it refused to consider the information, stating the matter had already been investigated.

She complained again, and when the firm failed to respond, she referred her complaint to the ombudsman.

In a final decision, ombudsman David Poley said Ms C’s evidence was “convincing”.

He said Chase de Vere sold Ms C a policy with insurer B that paid benefit after a 12 month deferred period of £16,328 a year and told the firm to put her back in the situation she would have been in had it advised her correctly.

Chase de Vere must pay Ms C the difference between the amount she paid for that policy and the amount she would have paid for a policy worth £6,520 a year - £16,328 to £9,808 - with interest of 8 per cent a year being added to that sum.