Not upheld: incorrect advice and settlement deduction complaint against Wakam UK Ltd

Decision detail

Summary

Mrs S claimed on her motor insurance policy with Wakam after her car was deemed a total loss. Wakam's online chat agents incorrectly assured her on two occasions that she could cancel the policy without further payment. However, Wakam deducted the remaining premium from the settlement, causing Mrs S to receive less than expected. Although Wakam acknowledged the agents' mistake and offered £350 compensation, Mrs S remained unhappy and escalated to the FOS. The ombudsman did not uphold the complaint, finding that the policy terms clearly required the full premium to be paid upon claim and that £350 compensation was fair for the distress caused by the incorrect advice.

The Ombudsman's reasoning

The ombudsman applied the principle of putting the consumer in the position they would have been in but for the mistake. Since Mrs S would have known about the premium obligation if the agents had provided correct information, it would not be fair to refund the premiums. The policy terms clearly state the full premium becomes due upon claim, which is standard practice in motor insurance. The ombudsman considered the distress and inconvenience caused by the mistake and found the £350 compensation offer to be reasonable and in line with FOS guidance for similar situations.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website