Not upheld: Other regulated complaint complaint against U Drive Cover Limited

Decision detail

Summary

Mr D applied for motor insurance and was quoted £410, paying a £40 deposit. U Drive completed validation checks and identified material discrepancies in Mr D's application (commuting use, occupation, policy start date), resulting in a premium increase from the insurer. Mr D declined to proceed with the increased premium, but U Drive retained his deposit and charged a £45 cancellation fee in accordance with its Terms of Business. The ombudsman upheld U Drive's position, finding that Mr D had been notified of the cancellation fee terms before applying, the validation checks were necessary and identified legitimate changes to the risk, and U Drive's costs in administering the policy justified the fee.

The Ombudsman's reasoning

The ombudsman found that Mr D was provided with clear notice of the cancellation fee in U Drive's Terms of Business, which he confirmed reviewing before proceeding. The validation checks identified material changes to the risk (commuting use, occupation, policy start date) that justified the premium increase. U Drive, as a broker, incurs reasonable costs in setting up and administering policies including validation checks, and these costs can be recovered through cancellation fees under regulatory rules. The ombudsman accepted that U Drive's costs exceed the £45 fee and that retaining Mr D's £40 deposit was more favorable than charging the full fee. The ombudsman noted that validation checks are necessary to ensure policyholders have valid cover.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website