Upheld: Card / payment disputes complaint against Principal Insurance Limited
Financial Ombudsman decision DRN-5210272 of 2024-12-13T00:00:00+00:00. Card / payment disputes complaint against Principal Insurance Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-5210272 |
|---|---|
| Decision date | 2024-12-13T00:00:00+00:00 |
| Firm | Principal Insurance Limited |
| Product | Motor insurance |
| Claim type | Card / payment disputes |
| Outcome | Upheld |
| Remedy | Principal Insurance Limited must: (1) Refund Mr M £281.77 for the commission clawback with 8% simple interest per year calculated from 18 December 2023 (policy cancellation date) to the date the refund is issued, with a provision that if Mr M fails to provide requested bank details or address confirmation within two weeks, interest will only accrue to two weeks after the request; (2) Pay Mr M £100 compensation for distress caused by the delay in issuing the premium refund. |
Summary
Mr M complained about charges retained by Principal Insurance Limited after his car insurance policy was cancelled due to non-disclosure of motoring convictions. Principal retained £763.57 in charges and took 78 days to process a premium refund. The ombudsman found that while the broker fee (£62.50) and discount clawback (£353.22) were fairly applied, the commission clawback (£281.77) was not sufficiently disclosed at the point of sale, making it an unfair deduction. The ombudsman also found the delay in processing the refund to be excessive and unfair. The complaint was upheld, requiring Principal to refund the commission clawback with 8% interest and pay £100 compensation for distress caused by the refund delay.
The Ombudsman's reasoning
The ombudsman found that while the broker fee and discount clawback were fairly applied and clearly disclosed, the commission clawback of £281.77 was not sufficiently brought to Mr M's attention at the point of sale, making it an unfair deduction. The ombudsman determined that Mr M should have received his refund within a reasonable timeframe and that the 78-day delay from cancellation to refund was excessive. The ombudsman rejected Mr M's claims for credit card interest and lost petrol money as these were not caused by Principal's unfair actions. However, the ombudsman upheld the complaint regarding the commission clawback and the delay in processing the refund, awarding compensation for distress caused.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Principal Insurance Limited, all decisions | 10 | 25% |
| Card / payment disputes, all decisions | 14,085 | 18% |
| Motor insurance, all decisions | 24,036 | 35% |
Source
Read the original decision on the Financial Ombudsman Service website