Not upheld: claim handling - unreasonable claim decline complaint against British Friendly Society Limited

Decision detail

Summary

Mr H claimed under his income protection policy after being signed off work from early February to mid-March 2025. British Friendly declined the claim, concluding that Mr H's income received in March 2025 exceeded 65% of his average weekly income from the preceding 12 months, meaning there was no loss of income to replace under the policy terms. Mr H disputed this, arguing the March salary came from his business account and should be repaid. The ombudsman found British Friendly acted fairly in its assessment based on available evidence, noting no compelling evidence of salary repayment and that Mr H returned to work by April 2025. The ombudsman upheld British Friendly's position that the claim should not be paid based on the income calculations at the time of decision.

The Ombudsman's reasoning

The ombudsman found that British Friendly fairly calculated that Mr H's income received in the weeks after the deferred period exceeded 65% of his average weekly income from the preceding 12 months, meaning there was no loss of income to replace under the policy terms. The ombudsman accepted that the accountant's emails did not provide compelling evidence that salary was actually repaid, and noted that Mr H returned to work by April 2025 when salary payments were to cease. The ombudsman considered British Friendly's offer to reassess if company accounts confirmed higher dividend income to be fair and reasonable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website