Not upheld: Complaints handling failures complaint against RAC FINANCIAL SERVICES LIMITED

Decision detail

Summary

Mr T complained to the FOS about RAC Financial Services Limited regarding his motor breakdown policy, claiming poor service, poor complaints handling, and excessive charges without due notice. Mr T had held the policy since 2021 on continuous monthly renewal and experienced significant premium increases over the years, culminating in a 2024 increase to £499.99 per month. RAC sent renewal documents and pricing information via email and online portal each year, but sent its final response letter to an incorrect email address, delaying Mr T's receipt by two weeks. The ombudsman found that RAC had properly communicated the automatic renewal terms and premium increases in advance, and that Mr T's continued use of the policy demonstrated his acceptance. Although RAC's complaints handling was poor, the firm's offer to refund the entire 2024/2025 premium charge was considered adequate compensation. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that RAC had clearly communicated the automatic renewal terms in the original 2021 policy documents and in subsequent annual renewals. Mr T's continued use of the policy from 2021 to 2024 demonstrated his acceptance of the automatic renewal arrangement. RAC sent renewal emails to Mr T's correct email address in advance of each premium increase, allowing him the opportunity to cancel before charges took effect. The premium increases were reasonable given Mr T's claims history. While RAC's complaints handling was poor (sending the final response to an incorrect email address, causing a two-week delay), this was partially mitigated by RAC's decision to refund the entire 2024/2025 premium charge, which the ombudsman considered was not strictly obligatory but demonstrated good faith. The ombudsman considered complaints handling to be ancillary to the regulated activity and therefore within jurisdiction, but found the impact was limited.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website