Upheld: policy administration errors, erroneous cancellation and reinstatement complaint against Vitality Life Limited

Decision detail

Summary

Mrs A complained about Vitality Life Limited's administration of her life and critical illness policy. Vitality had erroneously cancelled the policy citing inaccurate medical declarations, then later agreed to reinstate it but required Mrs A to pay premiums for the cancellation period. Although Vitality waived three months of premiums and offered £75 compensation, Mrs A remained dissatisfied. The ombudsman upheld the complaint, finding the repeated errors caused avoidable distress and inconvenience, and directed Vitality to pay an additional £100 compensation (total £175), rejecting Mrs A's request for £500 as disproportionate given the remedial actions already taken.

The Ombudsman's reasoning

The ombudsman found that while Vitality's requirement for Mrs A to pay premiums to backdate the reinstated policy was reasonable, and the waiver of three months' premiums was appropriate, the repeated administrative errors caused avoidable distress and inconvenience beyond minimal impact. The ombudsman considered that £175 total compensation (£75 already paid plus £100 additional) fairly reflected this impact, while rejecting Mrs A's request for £500 as disproportionate given that the policy was reinstated and three months' premiums were waived.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website