The Financial Ombudsman Service has ruled in favour of a mortgage adviser, in a case in which a client falsely claimed a "payment protection insurance" (PPI) policy was mis-sold to her more than a decade ago.
The policy in question was a BUPA critical illness with life cover, recommended to the client by Mortgage Intelligence Ltd when she took out a mortgage in 2007.
The adviser had identified a need for the policy as the client confirmed if she became critically ill, she would want her mortgage to be repaid in full.
But 11 years later the client returned to Mortgage Intelligence complaining she had been mis-sold the policy, which she believed to be a PPI policy, claiming she was under the impression she needed to purchase the policy in order to get a mortgage.
The client also claimed the policy would not pay out now as she was self-employed when she purchased it.
When Mortgage Intelligence replied clarifying that the cover was not PPI policy, the client escalated the case to the ombudsman service.
But the FOS ruled in favour of Mortgage Intelligence, agreeing that the cover was not a PPI policy, had not been mis-sold and there was nothing to suggest the policy was unsuitable for the client.
The ombudsman referred to the original dates of the client’s mortgage and her protection policy to determine that it would have "been clear" that she had a choice in taking out the policy.
The ombudsman said: "The mortgage illustration says that buildings insurance is compulsory with her mortgage - but it doesn’t say that any other sort of insurance policy is necessary.
"And I can see that the policy hadn’t started by 23 November 2007 – but the client says the mortgage was taken out in October 2007.
"So because the client already had the mortgage when she took out the policy, I think she would have known she didn’t have to have it to get the mortgage."
The Fos also found that the client's self-employed status would not have affected the cover provided by the policy.
The ombudsman concluded: "Overall I don’t think the policy was unsuitable for the client. It provided a useful benefit to her, and I think it would’ve been clear to her that she didn’t have to have it.
"So although I’m sorry to disappoint her, I’m not going to uphold her complaint."
rachel.addison@ft.com
