Upheld: Other regulated complaint complaint against Collingwood Insurance Company Ltd

Decision detail

Summary

Mr B purchased a learners motor insurance policy from Collingwood for £205 and cancelled it approximately 8 months into the term after passing his driving test. He received only a 10% refund and was left owing £26.50 to his broker. The ombudsman found that while the refund terms were not inherently unfair, Collingwood breached its regulatory obligations by failing to disclose in the Insurance Product Information Document that the policy must be cancelled upon passing the test and that refunds are not calculated on a pro rata basis. The ombudsman upheld the complaint and awarded £50 compensation for the distress and inconvenience caused by this inadequate disclosure.

The Ombudsman's reasoning

While the ombudsman found the refund terms themselves were not unfair (as Collingwood discounts premiums upfront and claim likelihood is lower in later months), Collingwood breached its ICOBS obligations by failing to include critical information in the IPID. For a learners policy that must be cancelled upon passing the driving test, the IPID should have explicitly stated this mandatory cancellation requirement and the non-pro rata refund structure including the zero-refund period in the final three months. Although Mr B would likely have purchased the policy anyway given the competitive premium, he suffered distress and inconvenience from the unexpected refund outcome that could have been avoided with proper disclosure.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website