Not upheld: unfair policy cancellation; fraudulent misrepresentation by ghost broker intermediary complaint against Mulsanne Insurance Company Limited

Decision detail

Summary

Mr A purchased motor insurance through an unregulated ghost broker who deliberately recorded his date of birth incorrectly (10 years older) to obtain a lower premium. When Mr A claimed following a road traffic accident, Mulsanne discovered the misrepresentation and cancelled the policy, retaining the premium. Mr A complained that this was unfair given he was a victim of the ghost broker and had not personally provided false information. The Ombudsman found the cancellation fair because the deliberate misrepresentation by the broker acting on Mr A's behalf constituted a qualifying misrepresentation under CIDRA, and Mulsanne's actual approach was more favourable than the alternatives CIDRA would have permitted (policy avoidance with no claims cover). Mulsanne's agreement not to record the cancellation on databases further protected Mr A from future detriment.

The Ombudsman's reasoning

Although Mulsanne was contractually entitled to cancel under policy terms, the Ombudsman assessed fairness by comparing the outcome to alternatives under CIDRA. The deliberate misrepresentation by the ghost broker acting on Mr A's behalf constituted a qualifying misrepresentation. Under CIDRA, Mulsanne could have avoided the policy entirely, retained premiums, and declined claims (or returned premiums if treated as careless). Mulsanne's actual approach of cancelling from discovery, continuing to handle the third-party claim without seeking cost recovery, and not recording the cancellation on databases placed Mr A in a more favourable position than CIDRA would have permitted. Therefore, the decision was fair and reasonable in the circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website