Not upheld: General financial advice complaint against Scottish Widows Administration Services Limited

Decision detail

Summary

Mr A complained that Lloyds TSB advisers misled him about his income protection policy benefit, claiming he was told he would receive 75% of gross earnings rather than net earnings. The policy was sold in 1993 with an initial benefit of £350 per month based on net relevant earnings of £11,400. At a 2008 financial review, his benefit had increased to £974 but his recorded earnings were £30,000 gross. When Mr A claimed in 2011, he received £695.56 monthly instead of the expected £1,303. The ombudsman found no misleading advice, as the 1993 documentation clearly explained benefits were based on net earnings, and the 2008 adviser acted on the earnings figures Mr A provided and was not unreasonable when Mr A declined a detailed review.

The Ombudsman's reasoning

The ombudsman found that at the 1993 meeting, the adviser correctly calculated the benefit based on net relevant earnings, and Mr A was provided with sufficient information through the Personal Financial Review document and policy brochure to understand this. At the 2008 review, the adviser could only act on the information Mr A provided (£30,000 gross, £2,000 net monthly), and based on those figures, the £974 benefit was actually lower than the maximum allowable. The adviser was not unreasonable in not suggesting a reduction when Mr A declined a detailed review. The actual benefit payable depended on the previous year's earnings, which could have fluctuated.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website