The Financial Ombudsman Service has rejected a complaint made against Sanlam by a claims management company.
The claims company said there was no evidence a single female client with no dependents, referred to as Ms G, required a long-term Sanlam Life & Pensions UK Limited savings plan which was sold to her in 1991.
However the ombudsman rejected the complaint and noted Ms G had been provided with documentation at the time of the sale to show the term of the plan plus it was recorded she was looking to save for the future.
Back in 1991 Ms G committed £30 a month for the purpose of producing a lump sum in the future.
She was recorded as having around £870 of disposable income a month so it seems she thought the monthly premium was affordable.
The notes made by the adviser indicated Ms G had a number of financial aims including wanting a mortgage, family and break from work.
But there was no timescale ascribed to any of these goals and there no evidence the plan was recommended to meet any of the particular aims noted by the adviser.
It was recorded that Ms G already held three savings plans, which the ombudsman said indicated Ms G had an established practice of using such plans as a way of building up savings for the future.
The claims management company argued Ms G was aware of the end date of the policy – when no further premiums would be payable - but she was led to believe the policy was suitable for a medium-term savings need.
Ms G surrendered the plan in 1996 because she needed the money as she was made redundant.
The company claimed there was evidence of Sanlam’s consultants giving mixed messages about this type of plan in other complaints it has dealt with.
But in a final decision, ombudsman Doug Mansell ruled it was feasible Ms G would have been willing to save over the longer term and the product was suitable.
In response to the claims management company complaining the plan contained life cover, which Ms G didn’t want, the ombudsman pointed out this would mean she wouldn’t be liable for any personal tax on the proceeds.
Mr Mansell said: “Given Ms G’s age, the cost of the life cover is unlikely to have reduced the investment potential to any great extent. So I don’t think the inclusion of life cover made it unsuitable.
“It is also worth noting that the options for making regular savings were much less in 1991 than now. Using a life assurance based product, such as an endowment policy, would have been generally seen as a valid way of saving over the medium or long term.”
In terms of when she cancelled the plan, Mr Mansell said it seems she took this action as a result of a change in circumstances rather than because she was unhappy with the plan.