Sesame has been told to pay back all the premiums of a mortgage payment protection insurance it sold.
A financial ombudsman ruled that the product was unsuitable because the person who bought it was self-employed and the policy included conditions which made it harder for self-employed people to claim unemployment benefit.
The ruling came after a complaint by two clients referred to as Mr and Mrs M.
Sesame has been told to pay Mr and Mrs M the amount they paid each month for the insurance and to add simply interest to each payment from when they paid it until they get it back.
If the couple made a successful claim under the policy, Sesame can take off what they got back from the amount it owes them.
Ombudsman Caroline Stirling said: “I don’t think Mr and Mrs M would have bought the policy if Sesame had made it clear it wasn’t suitable.
“So, I think Mr and Mrs M have lost out because of what the business did wrong.
“I’m not persuaded Mr and Mrs M would have bought this policy at all if the restrictive terms for self-employed people had been made clear to them.
“So I’m satisfied that Sesame should refund the full amount of the premiums they paid plus interest.”
The complaint stems from a policy taken out with a mortgage in 2005.
Mr and Mrs M applied for the MPPI at a meeting, and the policy provided Mr M with cover if he couldn’t work because of accident, sickness or unemployment.
A Financial Ombudsman Service adjudicator upheld the complaint and said Sesame should refund all of the MPPI premiums Mr and Mrs M had paid, plus interest.
But Sesame said it would only refund the part of the premiums that related to unemployment cover plus interest.
Mr and Mrs M didn’t accept Sesame’s offer so the complaint was passed to an ombudsman.
damian.fantato@ft.com
