Not upheld: GAP / warranty insurance mis-selling complaint against FMB Insurance Services Ltd

Decision detail

Summary

Mr W purchased a buildings warranty through FMB Insurance Services in 2017 for an extension built by C, a member of organisation F. After C abandoned the work in January 2018 and was subsequently expelled from F in March 2018, Mr W complained that FMB Insurance Services had sold him a warranty with an unsuitable builder, claiming C had not met F's membership criteria. Mr W alleged FMB Insurance Services failed to conduct adequate checks, pointing to C's lack of one-year trading history and the director's previous company liquidation. The ombudsman found that FMB Insurance Services carried out appropriate due diligence within its role as a regulated broker, including membership verification, dispute checks, and credit checks, all of which showed no adverse information at the time of sale. The ombudsman concluded that FMB Insurance Services was not responsible for F's vetting procedures and had no reason to be put on notice of C's unsuitability based on the checks it performed, therefore not upholding the complaint.

The Ombudsman's reasoning

The ombudsman assessed FMB Insurance Services' actions at the point of sale without knowledge of subsequent events. FMB Insurance Services is a separate regulated entity from F and is only responsible for checking that a builder is a member of F and conducting its own credit checks, not for verifying F's vetting procedures. At the time of placing the warranty, C met all of FMB Insurance Services' checks: membership status, no disputes, fees up to date, and no adverse credit records. The ombudsman could not hold FMB Insurance Services responsible for F's vetting process or for information that was not revealed by the checks it was responsible for conducting.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website