Upheld: Unknown / needs review complaint against AmTrust Speciality Limited

Decision detail

Summary

Mr H complained that AmTrust Speciality Limited mistakenly told him he had legal expenses cover attached to his home insurance policy when he did not have this optional add-on. AmTrust corresponded with Mr H's solicitors (MES) as if cover existed, but on 3 May 2024, just days before a scheduled three-day Employment Tribunal hearing, AmTrust notified MES that no cover was in place and would only reimburse the initial £1,500 + VAT reserve, leaving Mr H liable for £4,895 + VAT in fees incurred to that date. The ombudsman found AmTrust's communication inadequate throughout, particularly its failure to clearly communicate its lawyers' concerns about prospects of success or to respond to MES's funding requests. The ombudsman upheld the complaint and ordered AmTrust to cover all reasonable and necessary legal costs up to 7 May 2024 (when a settlement was reached), finding it would be unfair for AmTrust to benefit from its poor communication and that Mr H would not have pursued legal representation had he been correctly informed of the lack of cover.

The Ombudsman's reasoning

AmTrust is wholly responsible for the error of advising Mr H he had legal expenses cover when he did not. The firm's communication and conduct of the claim was inadequate throughout. Although AmTrust's lawyers concluded on 22 March that prospects had diminished, AmTrust failed to communicate this clearly to MES until 2 April, and then failed to set out the next steps (requiring Counsel's opinion) or respond specifically to MES's subsequent emails and funding requests. AmTrust had multiple opportunities to engage with MES but failed to do so promptly and specifically. The firm should not benefit from its poor communication and lack of meaningful engagement. Had AmTrust correctly informed Mr H at the outset that he had no legal expenses cover, he would likely not have pursued the claim with legal representation, given the risks of costs in Employment Tribunal proceedings. Therefore, it is fair that AmTrust covers the reasonable and necessary costs incurred, up to the point when cover was withdrawn (7 May 2024, accounting for the weekend and bank holiday).

How this compares

Source

Read the original decision on the Financial Ombudsman Service website