Marshmallow Car Insurance complaints NOT covered by the Financial Ombudsman

kw03

Hi fellow forum members,

this is my first post and is about an issue my daughter had with a formal complaint raised with Marshmallow Insurance. She did not like Marshmallow's final decision to her complaint relating to the way they handled her car insurance claim and so took it to the Financial Ombudsman believing they would investigate as Marshmallow are regulated by the Financial Conduct Authority (FCA). However, it turns out that as Marshmallow insurance are based in Gibraltar they fall outside of the Financial Ombudsman's jurisdiction. This means that Marshmallow's decision is final unless you want to take legal action against them yourself.

The Financial Ombudsman have a voluntary jurisdiction that companies can join, but Marshmallow are not a member.

This clearly does not give the level of support and regulation she expected and I just wanted to make people aware that if you have a complaint about Marshmallow insurance you cannot take this to the Ombudsman and legal action is your only means of recourse, as I understand it. Marshmallow state on their website that they are regulated by the FCA, and it was very disappointing to find out that the Ombudsman currently cannot investigate complaints. So please be aware.

dunstonh

Policies are underwritten by Marshmallow Insurance Ltd, which is based in Gibraltar and authorised by the Gibraltar Financial Services Commission.   However, the retail side of their business is regulated by the FCA and the FOS is available.

So, if your complaint is against Marshmallow Insurance Ltd then you cannot use the FOS.  However if the complaint is against Marshmallow Financial Services Ltd then the FOS can be involved.  e.g.if the complaint as about policy servicing (e.g. incorrect cancellations) then the FOS can be involved.

Personally, I would avoid any company that uses loopholes like this to reduce consumer protection.   They are not doing anything wrong as the rules allow it.  However, as this is a consumer site, it is clear that it reduces consumer protection.

Alderbank

There has never been any secrecy about this, but I bet most of the people who choose Admiral or any of the many other Gib-based insurers are simply not interested in the legal framework of the regulatory and supervisory arrangements which support the Gibraltar Authorisation Regime (Gar) policy..

As you say, membership of the FOS is optional for those firms at present. Discussions are going on with the Treasury, and have been since 2020, about making it compulsory.
I don't know how far the discussions have got. Do you know any more, kw03?

shagzdan

I had a very similar problem with Hastings, It went to the ombudsman and they never followed up. I had numerous calls from people wanting to hear my complaint despite me sending emails and using the Resolver tool but at the end of the day I have heard nothing back (24 months since last contact) I just lost interest in it and didn't feel my issue was being taken seriously.

It is possible that the ombudsman members actually contribute funds towards the running of the organisation who may just exist for bogus reasons. I found this out with a housing association ombudsman, funded by the very people that you're complaining about.

DullGreyGuy

shagzdan said:

It is possible that the ombudsman members actually contribute funds towards the running of the organisation who may just exist for bogus reasons. I found this out with a housing association ombudsman, funded by the very people that you're complaining about.

Financial services companies fully fund the financial ombudsman... each company has to pay an annual fee based on their size. That gives them X complaints per year, if the total complaints go over X then they are charged circa £500 per complaint on top of the annual levy. 

A UK based FS company has no option but to be part of the Ombudsman, the problem in this case is the OP bought a policy from an overseas company and the law doesn't require overseas companies to be part of it.

The thing with the FOS is that its powers and parts of its rules are enshrined in statute (FSMA 2000) and they are intentionally an independent body (most people mistake them for a consumer champion). The upheld rate does vary notably between years and depending on trends but given the fees involved, which are levied even on fairly frivolous cases, you'd expect the majority not to be upheld as if someone complains about hold music pay them off for £100 rather than have it go to the ombudsman for £500 irrespective of if you in or lose. The rates tend to be between 50% and 30% upheld, last year was 38%.

Where complaints of bias are more common is on if awards are sufficient - personally I struggle to see it but given I am in the industry I may suffer the same bias.

dunstonh

It is possible that the ombudsman members actually contribute funds towards the running of the organisation who may just exist for bogus reasons. I found this out with a housing association ombudsman, funded by the very people that you're complaining about.

Nobody is a member of the ombudsman.     The FOS is independent but is funded via a levy on financial services firms. As is FCA, FSCS, MAS and several other levies made.   

The FOS is not bogus.  It is an independent arbiter of complaints.   However, if anything, the FOS is slightly consumer biased as it will take into account things that a court would not which can favour a consumer but not a firm.

. I found this out with a housing association ombudsman, funded by the very people that you're complaining about.

You appear to have made the wrong conclusion there as well.  It too is an independent arbiter of complaints.  However, it is more of a membership scheme as its voluntary for private landlords (but not social/local authority) and it does not have the legal ramifications that the FOS has.   It is an ombudsman but at the weaker end of the scale.

No ombudsman services are consumer champions.

Annemos

Alderbank and other posters.

Is the Marshmallow example above containing more loopholes than some of the other foreign company examples. German and Swiss ones, for example? 


Take this example below which says the Underwriter is regulated by the FCA. 

Is this one safer than that Marshmallow example above, as regards getting assistance from the Financial Ombudsman, for example? .......


Your policy is underwritten by Great Lakes Insurance SE (UK branch) 
Great Lakes Insurance SE is a German insurance company with its headquarters at Königinstrasse 107, 80802 Munich. Great Lakes Insurance SE, UK Branch, is authorised and regulated by Bundesanstalt für Finanzdienstleistungsaufsicht. Deemed authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website

The law applicable to the policy:         You and we can choose the law which applies to this policy. Unless we agree otherwise the law of England and Wales will apply to this policy

DullGreyGuy

Annemos said:

Alderbank and other posters.

Is the Marshmallow example above containing more loopholes than some of the other foreign company examples. German and Swiss ones, for example? 


Take this example below which says the Underwriter is regulated by the FCA. 

Is this one safer than that Marshmallow example above, as regards getting assistance from the Financial Ombudsman, for example? 

As you see though, these are EU companies and therefore no longer have passporting rules since Brexit and so have a UK fully authorised branch.

This company, and a number of others, however are based in a British overseas territory and therefore do not need to establish a UK branch but can write directly into the British market... there is a reason why a small island like Gib has 40 insurer groups based there!

Annemos

Gosh that is unbelievable! 

They are a member of the Association of British Insurers! Not enough for the OP's daughter, unfortunately. 


https://www.abi.org.uk/news/news-articles/2022/02/abi-welcomes-marshmallow-as-its-latest-member/

Marshmallow Insurance Limited

Address

C/o Regus
World trade Centre
GX11 1AA

DullGreyGuy

Their policy book does state you can complain to the FOS, the OP should check their own policy book and the complaints process. 

If theirs says the same and doesn't highlight the fact its for sales/service issues only and excludes claims then I'd certainly be arguing that its misleading... the purpose of the statutory cooling off period is to give you time to review the policy book and ensure its suitable for your needs. If it has misleading information then that can incorrectly influence your decision