Not upheld: unfair cancellation charges and fee disclosure complaint against Principal Insurance Limited

Decision detail

Summary

Mr F complained about Principal Insurance Limited's calculation of his motorcycle insurance policy refund upon cancellation in November 2025, specifically objecting to a £62.50 cancellation fee, retention of £16.84 commission, and a £31.04 pro-rated discount clawback. The ombudsman found that Principal had clearly disclosed all these charges in its Terms of Business Agreement and that they were fairly applied, as Mr F cancelled outside the 14-day cooling off period. While the ombudsman noted that Mr F may have been charged cancellation fees by both Principal and his insurer (which is generally considered unfair), this did not affect the decision regarding Principal's charges. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Principal had clearly disclosed all charges, fees, and commission terms in its Terms of Business Agreement before Mr F cancelled his policy. The £62.50 cancellation fee was appropriate as Principal performed work to cancel the policy and had informed Mr F of the charge. The non-refundable commission of £16.84 was disclosed in the TOBA. The pro-rated discount clawback of £31.04 was also disclosed and fairly applied on a pro-rata basis. While Mr F was charged cancellation fees by both Principal and his insurer, the ombudsman noted this may warrant a separate complaint to the insurer, as FOS policy generally considers it fair for either a broker or insurer to charge, but not both.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website