Partially upheld: GAP / warranty insurance mis-selling complaint against HSB Engineering Insurance Limited
Financial Ombudsman decision DRN-5357536 of 2025-03-20T00:00:00+00:00. GAP / warranty insurance mis-selling complaint against HSB Engineering Insurance Limited. Outcome: Partially upheld.
Decision detail
| Reference | DRN-5357536 |
|---|---|
| Decision date | 2025-03-20T00:00:00+00:00 |
| Firm | HSB Engineering Insurance Limited |
| Product | Other regulated product |
| Claim type | GAP / warranty insurance mis-selling |
| Outcome | Partially upheld |
| Remedy | HSB Engineering Limited directed to pay Mr R £150 compensation for distress and inconvenience caused by lack of clarity regarding Building Control certificate requirements and delays in arranging inspections. |
Summary
Mr R complained to HSB Engineering Insurance Limited about its handling of a self-build warranty administration, specifically regarding unclear communication about Building Control certificate requirements and delays in arranging inspections, which delayed policy issuance by approximately two months. Mr R sought backdating of the policy certificate to enable the 12-month no-sale clause to expire before his intended property sale. Although HSB acknowledged its failures, it refused to backdate the certificate. Mr R subsequently sold the property in December 2024, within the 12-month exclusion period, rendering the warranty non-transferable, and sought a premium refund. The ombudsman upheld the complaint in part, awarding £150 compensation for the administrative failures but rejecting backdating and refund requests, finding that even with backdating, the exclusion period would have ended after the sale date, and Mr R made a reasonable business decision to proceed with the sale.
The Ombudsman's reasoning
The ombudsman accepted that HSB made mistakes in not clearly highlighting the Building Control certificate requirement and in arranging inspections unreasonably, causing approximately two months delay. However, even if the policy had been backdated by two months to January 2024, the 12-month no-sale clause would have ended in January 2025, not before Mr R's December 2024 sale. Therefore, backdating would not have put Mr R in the position he would have been in but for the error, as he would still have sold within the exclusion period. The ombudsman found it unlikely Mr R would have delayed the sale by one month given his stated financial burden and the risk of losing the cash buyer. Mr R made a reasonable business decision to proceed with the sale despite the warranty implications. He did receive the benefit of site inspections during the build. The £150 compensation appropriately reflects the frustration caused by HSB's administrative failures.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| HSB Engineering Insurance Limited, all decisions | 16 | 38% |
| GAP / warranty insurance mis-selling, all decisions | 1,203 | 26% |
| Other regulated product, all decisions | 51,462 | 30% |
Source
Read the original decision on the Financial Ombudsman Service website