Not upheld: insurance policy administration error and failure to activate policy complaint against HSBC UK Bank Plc

Decision detail

Summary

Ms B and Mr M complained to HSBC after discovering in 2025 that a home insurance policy they had arranged in 2018 alongside their mortgage had never been activated, leaving them without cover for seven years. HSBC acknowledged the error and arranged a retrospective policy at no cost, agreeing to cover all associated expenses including any claim costs. HSBC offered £500 compensation for the original error and delays in resolution. The ombudsman found HSBC's response fair and proportionate, rejecting the complainants' request for additional compensation on the grounds that they had opportunities to notice the missing policy and did not suffer distress during the period when they were unaware of the lack of cover.

The Ombudsman's reasoning

The ombudsman accepted that HSBC made an error in 2018 by failing to activate the policy automatically. However, the ombudsman found that HSBC's remedial response was fair and proportionate: it arranged a retrospective policy at no cost and agreed to cover all associated costs. The ombudsman reasoned that while HSBC was responsible for the initial error, Ms B and Mr M also had opportunities to notice the problem (no renewal invitations, no premium payments) during the seven-year period. The ombudsman rejected the argument that they suffered distress during the seven-year period since they were unaware of the lack of cover. The ombudsman also found that HSBC's handling of the complaint process was appropriate, including keeping the complainants informed and providing FOS referral rights when the eight-week deadline could not be met. The £500 compensation was deemed fair and proportionate to the circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website