FINANCIAL OMBUDSMAN SERVICE [Merged]

Wynn2022

I have an issue with my income protection plan, the company wanted to increase the premium by 35% (supposed to be by RPI), or reduce benefit substantially, together with other issues. I was getting no clarification from the company, just months of letters stating they were looking into the matter, still have not got clarification. I contacted the Financial Ombudsman Service.

The Financial Ombudsman is supposed to have investigated and state the company have done nothing wrong. The policy is working correctly even though they have not clarified the payments and benefits.

As I disagree with the decision, I can have the matter reviewed by an Ombudsman. I can send my concerns to the person who made the decision for forwarding to the Ombudsman.

My concerns are:

1.      Is the Financial Ombudsman Service working correctly or are they overworked and only look at major issues?

2.      Is it correct to be sending my concerns via the person I disagree with, is this the correct procedure?

Jenni_D

If this is the first level decision then it hasn't (yet) been reviewed by an actual ombudsman. The decision letter you received should outline the next steps if you disagree with the finding.

DullGreyGuy

They will have asked for the relevant information needed to assess your complaint from the company... this will be copies of the policybook, history of your policy, any operational guides relevant etc.

Income Protection is a marketting name that covers two different products... one is AS or ASU (aka PPI) which is an annual policy for which rates can normally move freely year on year or you may not even be offered renewal terms (many werent during covid if its the ASU varient). The other is PHI which is a form of long term insurance and a single policy written until your planned end date (eg 65th birthday). For these the premiums are much higher but are fixed on day 1 or both benefit and premium can be indexed.

What is the name of the product you have from whom? 

In answer to the questions...

1) They are overworked but are working correctly... all complaints are looked at not just major ones

2) Yes, its normal process that you feedback to the adjudicator why you disagree with their decision and then they pass the whole case to an ombudsman which is the final tier of complaint handlers.

Ditzy_Mitzy

On the face of it this isn't within the Financial Ombudsman's purview and shouldn't really have got as far as a formal complaint.  The fact of the matter appears to be that the OP's insurer have put their prices up and that the OP doesn't like it.  That's fair enough on his part, but the correct course of action is to negotiate rather than complain; shop around, look to see if another firm will provide equivalent cover for less and then put that case to the existing insurer.  A lot of them will price-match if asked.  Complaining, especially when it's patently obvious that nothing has been done wrong in the administrative or contractual sense, will put the insurer's back up and leave the ombudsman feeling as if his or her time has been wasted.  

Unless, of course, the OP has something in writing that premiums will remain fixed for X number of years.  Has he?  If not, forget the complaint and further reviews.  

eskbanker

Ditzy_Mitzy said:

Unless, of course, the OP has something in writing that premiums will remain fixed for X number of years.  Has he?  If not, forget the complaint and further reviews.  

RPI escalation was mentioned, so on the face of it the company's actions are in breach if that's a contractual commitment:

Wynn2022 said:

I have an issue with my income protection plan, the company wanted to increase the premium by 35% (supposed to be by RPI)

plus other, unspecified, matters:

Wynn2022 said:

or reduce benefit substantially, together with other issues

Ditzy_Mitzy

eskbanker said:

Ditzy_Mitzy said:

Unless, of course, the OP has something in writing that premiums will remain fixed for X number of years.  Has he?  If not, forget the complaint and further reviews.  

RPI escalation was mentioned, so on the face of it the company's actions are in breach if that's a contractual commitment:

Wynn2022 said:

I have an issue with my income protection plan, the company wanted to increase the premium by 35% (supposed to be by RPI)

plus other, unspecified, matters:

Wynn2022 said:

or reduce benefit substantially, together with other issues

They always mention RPI but then stick something in the small print about bigger price increases as the result of 'exceptional circumstances' or similar; believe me, I've seen enough of them!  

DullGreyGuy

Ditzy_Mitzy said:

eskbanker said:

Ditzy_Mitzy said:

Unless, of course, the OP has something in writing that premiums will remain fixed for X number of years.  Has he?  If not, forget the complaint and further reviews.  

RPI escalation was mentioned, so on the face of it the company's actions are in breach if that's a contractual commitment:

Wynn2022 said:

I have an issue with my income protection plan, the company wanted to increase the premium by 35% (supposed to be by RPI)

plus other, unspecified, matters:

Wynn2022 said:

or reduce benefit substantially, together with other issues

They always mention RPI but then stick something in the small print about bigger price increases as the result of 'exceptional circumstances' or similar; believe me, I've seen enough of them!  

Can you name any of these private guaranteed PHI policies that have an "exceptional circumstances" clause? I've not seen many but cannot remember any that have anything like that. Plus as the indexation applies to both premiums and limits it wouldnt serve much purposes for there to be one. 

Wynn2022

Further to my previous posting regarding an Income Replacement Plan, I have now received the Ombudsman final decision which basically agrees with the initial findings.

I received a preliminary decision from the Ombudsman which was general and concluding that the company had done nothing wrong and that the compensation offered was adequate, I responded in detail, commenting, clarifying and correcting what had been stated by the Ombudsman but the final decision still contained no detail or clarification as to my concerns.

My main concerns were: -

1.      The company was increasing payments by 35% and decreasing the benefit by 25%, this appeared to be contrary to the contract which appeared to state on several document and the annual statement that increases were limited to RPI or 12% whichever was the lesser, benefits would increase accordingly. Increases had been in accordance with RPI between 1 and 4% from 1997 to 2020 with the exception of 2009 when there was no increase. I considered this increase in payment and decrease in benefit a breach of contract. The Ombudsman stated “But it’s not within the remit of this service to decide matters of contract law – that’s something that only a court can determine.”

Surely the contract is fundamental and the ombudsman should be able to determine if the company was acting in accordance with the contract.

Neither the Ombudsman or the company identified any clause in the contract that allowed them to increase payment or decrease benefit beyond RPI.

2.      I was informed in October 2021 that I had options, also option 1 would apply if I did not state otherwise:

1.increasing payments by 35% and increasing the benefit by minus 25%.

2.increasing payments by 35% and decreasing the benefit by 25%.

3&4. Phone to discuss other options.

I tried to phone but the waits were too long so I e-mailed beginning of November requesting clarification as this was contrary to the agreement. Options 1 and 2 were the same amounts but one stated increase while the other decrease, both reduced my benefit as stated in the 2020 annual statement.

I received my annual statement in November stating an increase in payment of 5% and a decrease in benefit of 21%, this was not option 1 as previously stated.

The company then e-mailed me at the beginning of December to state “the statement contained confusing / incorrect figures and they were investigating and would get back to me as soon as they can.”

I assumed that the figures would shortly be corrected to RPI and carry on as normal.

I keep requesting clarification and was informed in March 2022 that there was a major issue with the plan and had been since 2011. They were still investigating the matter regarding the payment and benefit amounts. They did offer me compensation for distress caused but this was less than the amount they had received in payments since October 2021 when I could have discontinued the plan.

As it was unclear what I would be paying or may receive in benefit I considered that the plan was unfit for purpose and I informed them that I was discontinuing the plan as I had no confidence in the management of the plan. I then contacted the Ombudsman.

3.      I was led to believe that if I did not make any claims there would be a cash payment at termination of this plan. This was stated and illustrated extensively in documents when I started the plan, and was clearly a main selling feature. While I accept that this was not the main purpose of the plan and the amount was not defined, all indications were that there would be a little something at the end of the plan. Apparently, this was used up in the failing plan. Something I was not clearly made aware of in 2011 and subsequent yearly statements.

The Ombudsman considered this to be my main concern and seems to have focused on this matter and concluded that there was nothing wrong with the plan and the problems and delays were down to IT issues. The Ombudsman also stated, “ It’s not however in our service’s jurisdiction to look further into complaints about the way the company dealt with Mr ’s complaint. The industry regulator, the Financial Conduct Authority (FCA), says our service can only look into complaints about ‘regulated activities’ and complaint handling isn’t a regulated activity.”

 

I feel that I have not understood the purpose of the Financial Ombudsman Services and not clearly identifying my concerns. I thought the events spoke clearly for themselves and there would be dialogue to enable the situation to be fully understood, this seemed to be the what was implied from the initial phone call from the Ombudsman service. I considered that something was wrong and needed investigated namely:

1.      The company were changing the terms which appeared to be contrary to the contract.

2.      If they could make such a change in one year, what could they do in subsequent years with no prior indication.

3.      I was not given correct information in October 2021 to enable me to make a decision to either continue or stop the plan.

4.      They did not clarify the situation over a 5-month period even though they admitted there was an error.

5.      They had not informed me that the plan was failing in 2011 or in subsequent annual statements until March 2022.

6.      The plan appears to have a fundamental problem and was always apparently going to run into trouble in later years at a time when age would be more likely to affect health.

7.      How could a plan go so badly wrong in one year, there had not been a financial crisis or war in Europe.

8.      The plan was sold with a type of no claim bonus which could only work if the fund grew at an exceptional rate, something I had no influence over. I did not choose or have any knowledge of the plan fund contrary to the statement by the Ombudsman. The plan as sold appeared to show that everything would be fine even if the growth rate was low.

9.      I wonder if instead of giving options and increasing payments by a small amount every year when there is an issue, they make a large increase in one year to get clients to cancel the plan when there is a greater possibility that they could make a claim.

Who is the Ombudsman, what is their background? I was surprised that they did not sign the decision with their qualifications, most official letters and documents are usually signed with professional qualifications listed.

Does anyone have any comments on the above or can provide advice as to how I should proceed?

eskbanker

Difficult to understand their stance about contract law if you're challenging the company's interpretation of the contract between you, but perhaps it'll all be clearer in context - are you able to share the full decision document ahead of its publication online?

The comment about not being able to investigate complaint handling isn't uncommon, the FOS remit does only apply to regulated activities, as defined at https://www.handbook.fca.org.uk/handbook/glossary/G974.html, so they often confirm that the way in which a regulated company deals with activities not on that list is out of scope.

The ombudsman should put their name to the decision, but isn't obliged to share any details of professional qualifications.

Unfortunately if this is their final decision then, as that term suggests, you've reached the end of the line with FOS, so if you wish to pursue the matter further then your only option is to do so in court.  You can complain about the way FOS has acted via their independent assessor, but they won't reopen the case itself.

DullGreyGuy

Wynn2022 said:

Who is the Ombudsman, what is their background? I was surprised that they did not sign the decision with their qualifications, most official letters and documents are usually signed with professional qualifications listed.

THE Ombudsman is Abby Thomas, (Removed by Forum Team) but in any other organisation she'd just be called the CEO 

There are however a small army of ombudsmen, its a job title, and they are the ones that look at individual cases. There are 255 people who claim they are currently an ombudsman at the FOS on LinkedIn with a wide range of backgrounds... some are professional ombudsmans having come up internally and then moved between the different ombudsmans out there, some come from compliance, some from law

You will have the name of the ombudsman that reviewed the case and so its easy to find them if your curious 

eskbanker

https://www.financial-ombudsman.org.uk/who-we-are/staff/ombudsmen has a potted biography for each of them....