Upheld: Service failures generally complaint against Collingwood Insurance Company Ltd

Decision detail

Summary

Ms C took out a learner driver motor insurance policy with Collingwood on a monthly payment plan. Her second payment due on 31 May 2023 failed, and despite warning messages sent on 31 May, 1 June, and 2 June, Collingwood cancelled the policy at 11.59pm on 2 June without providing the standard seven days' notice. Ms C's father later claimed they had not received the warning messages and raised concerns about authentication issues with the payment. The ombudsman found Collingwood acted unfairly by cancelling the policy too quickly without adequate notice, as cancellation should be a last resort. The ombudsman ordered Collingwood to remove all cancellation records and pay £300 compensation for the frustration and inconvenience caused to Ms C.

The Ombudsman's reasoning

The ombudsman found that while Collingwood's policy terms permitted immediate cancellation for non-payment, this was unfair in practice. Cancellation should be a last resort, and industry practice typically provides seven days' notice. Cancelling only 3-5 days after a missed payment was unreasonable, particularly given that Ms C would likely have paid had she been aware of the problem. The ombudsman noted the significant impact on Ms C (inability to continue learning to drive) and that the situation could have been avoided with a more measured approach.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website