Not upheld: Investment mis-selling complaint against Scottish Widows Administration Services Limited

Decision detail

Summary

Mr M complained that Scottish Widows mis-sold him an endowment policy in 1994 to support an interest-only mortgage with Barclays, and failed to properly assign it to the lender. The policy lapsed after only one premium payment, leaving Mr M without means to repay the mortgage at term. Scottish Widows upheld the mis-selling complaint and offered £121.90 compensation but denied responsibility for the assignment failure. The ombudsman found the compensation offer fair given the minimal financial impact of the single premium, and declined to uphold the assignment complaint due to inconclusive evidence about whether the assignment form was received before or after the policy lapsed. The ombudsman accepted that standard practice would have involved notifying Mr M of arrears, even without documentary proof.

The Ombudsman's reasoning

The ombudsman applied the balance of probabilities standard due to incomplete evidence caused by the passage of time and data protection obligations. For the sale, an RU89 calculation was unnecessary as only one premium was paid before lapse, resulting in minimal or no capital loss compared to a repayment mortgage. For the assignment, the ombudsman found three equally possible scenarios regarding whether the assignment was received before or after the policy lapsed, making it impossible to fairly attribute fault to Scottish Widows. The ombudsman accepted that standard practice would have involved sending arrears notifications, even without documentary proof, and found no evidence Scottish Widows knew of Mr M's vulnerability at the time.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website