Not upheld: claim denial / policy interpretation / freedom of choice complaint against ARAG Legal Expenses Insurance Company Limited

Decision detail

Summary

Mr P complained that ARAG unfairly limited his legal expenses claim to £600 plus VAT for costs incurred during an investigation by his regulator into allegations of unprofessional conduct. Mr P argued the matter should be treated as a disciplinary hearing entitling him to full cover and freedom to choose his own solicitor. The ombudsman found the matter was at the pre-disciplinary investigation stage before any disciplinary panel hearing, and therefore the policy's £600 plus VAT limit for pre-disciplinary hearings correctly applied. Freedom of choice rights only arise when formal proceedings commence, which had not occurred. The ombudsman upheld ARAG's position and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman determined that the matter was at the pre-disciplinary investigation stage, not the disciplinary hearing stage, because the Investigating Committee Panel had not yet established whether Mr P had a case to answer. The policy terms clearly limit pre-disciplinary hearing cover to £600 plus VAT through preferred law firms. Freedom of choice under Regulation 6 only applies when proceedings have commenced before a formal body such as a disciplinary panel, which had not occurred. ARAG's offer to pay Mr P's own solicitors at panel rates up to the policy limit was reasonable and exceeded their obligations.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website