Not upheld: policy administration, premium increases, and failure to provide clear information about policy costs complaint against Aviva Life & Pensions UK Limited (formerly Norwich Union)

Decision detail

Summary

Mr H complained that Aviva improperly increased premiums on his whole of life policy from £19.98 to £59.15 per month in 2024, arguing this breached the policy term limiting increases to 125% of the original premium. Aviva explained that the 125% limit applies only to compulsory increases under HMRC qualifying policy rules, and that it was offering an optional increase to restore benefits after a review reduction. The ombudsman found Aviva correctly applied the terms but identified a failing in not providing clear information about policy costs from around 2008 when costs began exceeding premiums. However, the ombudsman concluded on the balance of probabilities that Mr H would not have taken different action even if properly informed, given his clear desire to maintain the cover for inheritance tax purposes and unwillingness to pay significantly higher premiums. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the 125% premium increase limit in Section 5 of the policy terms relates to the tax status of the policy under HMRC qualifying policy rules and applies only to compulsory premium increases. Where Aviva reduced benefits at review, it offered an optional option to restore benefits by paying a higher premium, which is not subject to the 125% limit. Although Aviva failed to provide clear information about policy costs from around 2008 onwards (when costs exceeded premiums), the ombudsman concluded on the balance of probabilities that Mr H would not have taken different action even if properly informed, given his clear desire to maintain the cover for inheritance tax purposes and his stated unwillingness to pay significantly higher premiums.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website