Not upheld: failure to disclose charges; lack of clear information about costs of life cover complaint against Prudential International Assurance Plc

Decision detail

Summary

Mr M complained that Prudential failed to provide clear information about the cost of providing life cover on a flexible protection bond taken out in 2002 until an August 2024 statement, preventing him from making an informed decision to surrender earlier. The bond was reviewable and reviews in 2007, 2012, 2017 and 2022 indicated it was not on track to provide whole-of-life cover without additional premiums or reductions in sum assured, but Mr M made no changes. The ombudsman found that while Prudential should have disclosed the charges by 2018, the evidence did not support that Mr M would have surrendered the bond earlier if informed sooner, given his continued holding despite warnings and value fluctuations. The complaint was not upheld, and Prudential's £200 compensation offer for handling of initial queries was deemed appropriate.

The Ombudsman's reasoning

The ombudsman acknowledged that Prudential failed to provide clear information about the cost of providing life cover until 2024, which it should have done by 2018. However, the ombudsman found that the review letters provided sufficient indication that the bond was at risk of lapsing without changes, and Mr M had options to mitigate risks. The annual statements showed positive bond performance and value recovery despite fluctuations. Critically, Mr M did not take action to surrender the bond despite receiving warnings in 2017 and 2022 reviews and seeing value decreases in 2019-2020, suggesting he valued continuing to hold the bond. The ombudsman concluded that the evidence did not support that earlier disclosure of charges would have led Mr M to surrender the bond sooner, particularly given his circumstances changed by 2024 and the 2024 cost was the highest ever.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website