Partially upheld: Service failures generally complaint against Collingwood Insurance Company Ltd
Financial Ombudsman decision DRN-6177598 of 2026-02-25T00:00:00+00:00. Service failures generally complaint against Collingwood Insurance Company Ltd. Outcome: Partially upheld.
Decision detail
| Reference | DRN-6177598 |
|---|---|
| Decision date | 2026-02-25T00:00:00+00:00 |
| Firm | Collingwood Insurance Company Ltd |
| Product | Motor insurance |
| Claim type | Service failures generally |
| Outcome | Partially upheld |
| Remedy | CICL directed to: (1) not charge Miss M more than a pro-rata charge for her time on cover (reducing the charge from £961.80 to approximately £500.00); (2) refund any resulting balance due to Miss M; (3) pay simple interest at 8% per annum from 13 May 2024 to date of refund, with tax certificate if required; (4) pay £300.00 compensation for distress and inconvenience. |
Summary
Miss M, a single parent in temporary accommodation, purchased a learner driver motor insurance policy for £1,678.00 payable over 12 months. After four months, she passed her driving test and requested cancellation. CICL applied a 60% premium charge (£961.80) rather than a pro-rata charge, claiming a balance of £260.37 was due from Miss M. The ombudsman found that CICL's short-period rate was a significant and unusual term that required clear highlighting at point of sale but was buried in the policy terms requiring multiple steps to discover. Although CICL provided evidence that learner driver policies have front-loaded risk, it failed to demonstrate the rate was highlighted to Miss M. The ombudsman directed CICL to apply pro-rata charging (approximately £500.00), refund any balance to Miss M with 8% interest, and pay £300 compensation for distress and inconvenience caused by the unfair charge and Miss M's vulnerable circumstances.
The Ombudsman's reasoning
The ombudsman found that CICL's short-period rate charging (60% for four months) was a significant and unusual term that should have been clearly highlighted at point of sale. The IPID and policy terms required consumers to read multiple sections, understand a change in wording from 'refund of premium' to 'Premium Percentage Charged', and perform arithmetic to discover the short-period rate. CICL failed to provide persuasive evidence that the short-period rate was highlighted to Miss M at point of sale. Although CICL later provided evidence that risk is front-loaded in learner driver policies (justifying some premium adjustment), this did not excuse the failure to highlight the short-period rate clearly. The ombudsman applied the FOS expectation that motor insurance cancellations should result in pro-rata charges unless the short-period rate is clearly highlighted. Given Miss M's vulnerable circumstances and the unfair maintenance of the claim since May 2024, compensation for distress and inconvenience was warranted.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Collingwood Insurance Company Ltd, all decisions | 23 | 50% |
| Service failures generally, all decisions | 32,767 | 33% |
| Motor insurance, all decisions | 24,036 | 35% |
Source
Read the original decision on the Financial Ombudsman Service website