Not upheld: mis-selling — suitability of reviewable whole of life policy complaint against Phoenix Life CA Limited

Decision detail

Summary

Mr and Mrs P complained that they were mis-sold a reviewable whole of life policy by Phoenix Life CA Limited, taken out in the late 1990s for £27.10 monthly premiums with £100,000 sum assured. After the 2025 review failed, Phoenix required them to either increase premiums to £226.44 or accept a reduced sum assured of £30,277. Mr and Mrs P claimed they were not made aware the policy could be subject to significant changes or lack a cash-in value. The ombudsman found the policy was suitable at the time of sale and that point of sale documentation indicated they were aware of its reviewable nature and potential for change, though not the extent thereof. The ombudsman reasoned that given their stated preference for minimal premiums, they would not have chosen the more expensive standard cover alternative that would have better mitigated future changes.

The Ombudsman's reasoning

The ombudsman found the policy was suitable at the time of sale as it met Mr and Mrs P's stated need for family protection at an affordable initial cost. While acknowledging they were not made aware of the potential extent of future changes, the ombudsman reasoned that the point of sale documentation clearly stated the policy was reviewable and could be subject to change. The ombudsman considered that Mr and Mrs P's preference for minimal premiums made it unlikely they would have chosen the more expensive standard cover option (£83.41 vs £27.10), which would have better mitigated future changes. The ombudsman also found they were not misinformed about investment returns, as the illustration clearly showed minimal returns.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website