I am writing in response to the Financial Ombudsman Service (Fos) ruling that SPF Private Clients has to compensate a client after it was ruled she should not have been sold cover on a level term basis.
Once again, this is another stupid and narrow-minded decision from a bunch of do-gooders living in cloud cuckoo land.
Setting up level term, especially with critical illness (CI) cover alongside a reducing mortgage, has always been a perfectly viable option for the many reasons stated, and often costs little more for the extra benefits in later life when cover also gets more expensive to buy – if you can get it then, especially where there are dependents involved.
I agree to a point about reducing cover for a single person, but CI cover is always important, and should never be reducing if it can be afforded. This could have been set up as a separate CI cover of course, but cost would then possibly have come into it more, making an either/or plan better value.
All in all, however, Fos must not ignore and marginalise all of the other relevant issues here, and we also do not know, of course, whether the commission offset more fees than would otherwise have had to be charged for the advice service. So this punter has had her cake and duly eaten it – a disgraceful verdict.
Dennis Burling
Chartered financial planner,
DPI Financial Services,
Bristol
