Not upheld: mis-selling of investment product and customer service failures complaint against Phoenix Life Limited

Decision detail

Summary

Mr B complained that Phoenix Life Limited mis-sold him a savings endowment policy sold in 1988 by Clifton Financial Management Ltd, claiming he was told the maturity proceeds would be tax-free but later learned he might owe tax if he became a higher rate taxpayer. Phoenix upheld the complaint in part, offering £150 for customer service failures but defending the sale as appropriate. The ombudsman found the policy literature from 1984 clearly explained the different tax treatment for basic rate and higher rate taxpayers, making the sale not mis-sold. The product was suitable for the customer's long-term savings objectives, and his potential future change in tax status could not have been predicted at the time of sale. The ombudsman upheld Phoenix's £150 offer as fair compensation for the service issues and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied FIMBRA rules requiring the firm to understand the customer's circumstances and recommend suitable products with clear risk disclosure. Given the 40-year gap since sale, limited evidence was available, but the policy literature clearly explained the tax position for both basic rate and higher rate taxpayers. The product was suitable for a customer seeking long-term savings, and it was reasonable to recommend to a basic rate taxpayer at the time. The customer's potential to become a higher rate taxpayer could not have been predicted, and the policy had flexibility allowing early encashment without fees if circumstances changed. The compensation for a different policy from another provider did not evidence systemic mis-selling of the complained-of policy.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website