Legal position following insurer error

dunstonh

I think the whole thing will come down to reasonable expectation. For example, if the statement before surrender said £40k and the OP got a surrender payment of £40k and then continued to get statements saying that the value was £40k (plus investment returns) then it is very hard to show reasonable expectation that this money was theirs.

The actual letter sent out on surrender would be interesting to read as well as that may well state that it is full and final surrender and thank them for investing with them etc etc. So, again, suggesting an ending.

If it was a bit left over after surrender then reasonable expectation may work. But expecting a £40k investment to still be worth £40k after drawing out £40k is really pushing things.

jukeboxs

Thank you for your replies.

In response to Colsten, I still stand by my general comments (although perhaps my wording was a bit loose), in that:
- I originally surrendered the policy assuming that this was a full surrender, but
- Once the insurer confirmed in writing that the policy was not fully surrendered and was still in-force, I then assumed that the original amount represented only a partial surrender.

It is not simple to compare the £40k payout to the full value of the policy, for me the policyholder, as there is the additional terminal bonus and demutualisation windfall benefits on top of the disclosed unit fund value, and so I then assumed that the original payment amount did not represent the full value of the plan.

I accept that the fair resolution here is that moneys will have to be returned to some degree. However, I do think the insurer should be liable for their repeated mistakes.

I can feedback once I know more.

Thanks again for your input.

colsten

I wasn't judging, just observing that you were contradicting yourself in what you posted, and concluding that you wouldn't be in strong position to claim if you contradicted yourself in the actual claim.

xylophone

You are contradicting yourself in your short post. Not a great position from which to make a complex complaint.

I am not sure that this is the case.

The OP had a single premium policy. There were various bonuses and demutualisation amounts paid. These were calculated by the insurer/its actuaries.

The OP requested full surrender and received £40,000.

He was surprised to receive annual statements after this event and queried the matter several times with the insurer.

The insurer assured him several times ( and in writing) that the policy was still in force.


This led the OP to believe that the insurer had made an error in that it did not effect a full surrender, only a partial one and that was why the policy was still in force.

I have always assumed that the insurer had made a mistake when surrendering my policy originally, and that they had only surrendered part of the policy, which is why I checked several times in writing that the policy was still in-force. So, my subsequent withdrawals were based on this assumption.

In the circumstances, after all those assurances by the company that the policy was still extant, it was not unreasonable for the OP to believe that his policy had only been partially surrendered and that he could continue to make withdrawals?

The insurer ( in full possession of the facts and expert actuaries at hand) failed to check the position although several requests were made and compounded its error by making payments over ten years.

It might be possible for the OP to draw a direct comparison between his position and that of HMRC - see https://www.gov.uk/tax-appeals/hmrc-dont-act-on-information

"You can ask HM Revenue and Customs (HMRC) to cancel your tax arrears if you think they’ve made a mistake because they failed to act on information they had.

Eligibility
You can make a request if all of the following apply:

HMRC haven’t used tax information provided to them, eg about a change of income or job
HMRC told you about the arrears more than 12 months after the end of the tax year in which they received your information

you have a reasonable belief that your tax affairs are up to date."

The OP had provide all the necessary information, the insurer took ten years to rectify its error, the OP had a reasonable belief after several assurances that his position was correct?

dunstonh

Some FOS decisions on similar: (last one in the list is an interesting read)

http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=73250
http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=70406
http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=72183
http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=58457
http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=35522

In one ombudsman case they said the following: (which gives you an idea of the thinking used)
When considering what is fair and reasonable, I am required to take into account, amongst
other matters, relevant law.

The legal position is that money paid by mistake is generally recoverable – as Aviva has
pointed out, it has a duty to other policyholders to seek to recover the overpayment. But,
in certain circumstances, the recipient of an overpayment may have a defence to repayment
in part or full. The main defence, as mentioned by the adjudicator, is change of position. Put
simply, the recipient has to show that he spent money which he would not otherwise have
done and the money spent cannot now be recovered.

In order for a change of position defence to succeed, Mr B must have been unaware that an
error had been made and that he was not entitled to the payment. Aviva contends that as a
result of the conversation on 3 February 2012, Mr B should have been fully aware that about
£5,000 was paid to him in error.

steelbru

Agree with 2 important points mentioned above :-

a) what did the letter that accompanied the £40k payout say ?

b) assuming you were receiving annual statements, what value did the one before and the one after the 40k payout show.

From a combination of these it should have been obvious that they had made an administrative error.

jamesd

jukeboxs wrote: »

I can feedback once I know more.

Best for you not to simply sit back and wait. Better to look over the FOS decisions, look over statements and exactly what was said in letters from and to you and in the statements. then demonstrate that you had reason from the statements and their letters to believe that they originally did only a partial redemption. Then you can move on to your own financial position and whether it's easy to repay or not. All based on what the FOS decisions say mattered in those decisions.

Essentially, set out your case now so that they include all factors in their own decision-making before things go to the FOS, and cite those FOS decisions in your reasoning and suggested resolution.