Upheld: unfair charges - administration fee complaint against First Central Insurance Management Limited

Decision detail

Summary

Mr F purchased a motor insurance policy with First Central after obtaining quotes on a price comparison site. First Central's validation checks identified a mismatch in how business and pleasure mileage were classified between the comparison site and First Central's own system. During a phone call to clarify, Mr F increased his business mileage from 1,000 to 4,000 miles to ensure adequate cover. First Central charged a £50 administration fee under its misrepresentation clause, which Mr F disputed. The ombudsman upheld the complaint, finding that Mr F had taken reasonable care to declare his mileage according to the price comparison site's categories, no misrepresentation occurred, and the fee was therefore unjustified. First Central was ordered to refund the £50 fee and pay £50 compensation.

The Ombudsman's reasoning

The ombudsman found that Mr F did not misrepresent his mileage. He reasonably declared 5,000 miles based on his actual usage and the price comparison site's categorization, which separated commuting from business mileage differently than First Central. The mileage increase to 4,000 business miles was Mr F's own decision during the validation call to ensure adequate cover, not a correction of a misrepresentation. Since no misrepresentation occurred, the £50 administration fee charged under the misrepresentation clause was not justified.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website