Lloyds appealed against an Financial Ombudsman Service decision, arguing it was unreasonable to expect the business to have residual information about a policy that began in 1995 and was surrendered in 2007.
The bank disagreed with a provisional decision made by Fos back in June, arguing that the ruling did not appear to be based on factual information or evidence, but speculation.
The complainant, known as Mrs T, argued Lloyds Bank mis-sold her a savings endowment policy that wasn’t suitable for her needs, stating the adviser did not establish her attitude to risk and other affordable types of investments were not discussed.
Lloyds said there was no evidence that Mrs T did not have any savings set aside for emergencies and pointed out she subsequently made lump sum investments while not drawing any money from her savings policy.
While Mrs T planned to retire at 60, Lloyds argued she continued paying in to her plan for a further five years, proving the premiums were affordable after retirement.
Ombudsman Tony Moss said that despite Lloyds’ protests he still believed the policy was not suitable for Mrs T’s circumstances at the time.
In a final ruling, he acknowledged that the business has no reason to retain information about the sale of a policy which was surrendered many years ago.
“As such there is no hard evidence about her financial objectives or existing savings. But I don’t think that a 15-year savings policy was a suitable recommendation when she planned to retire in seven years time.
“I’ve seen no evidence that she had sufficient savings to ensure she could safely make this long-term commitment, particularly as she didn’t have a company or private pension.
Mr Moss accepted that Mrs T did not take any money out during the 12 years she held the policy, and continued to pay premiums for five years after her retirement age. However he did not feel that any conclusions could be drawn from this about the affordability of these premiums and her overall financial circumstances.
“Overall, I don’t believe a 15 years savings endowment was a suitable recommendation,” he added.
Lloyds Bank was ordered to put Mrs T in the position she would now be in if she had been offered a general investment opportunity, involving some modest risk and appropriate withdrawal flexibility.
The ombudsman stated the appropriate investment return rate would be 1 per cent above the Bank of England base rate.
emma.hughes@ft.com
