Partially upheld: poor claim handling, service failures, delays in claim progression, inadequate communication complaint against Marshmallow Insurance Limited

Decision detail

Summary

Miss P claimed on her motor insurance policy with Marshmallow after her parked car was hit by a stolen vehicle in August 2024. She complained about the vehicle valuation (£2,100), delays in claim progression, poor communication, and ongoing premium payments. Marshmallow sent multiple final response letters between November 2024 and August 2025, initially offering £200 compensation and later increasing to £400. Miss P referred the complaint to FOS in November 2025, over six months after some final responses. The ombudsman found that most complaint points fell outside FOS jurisdiction due to time limits, but partially upheld the complaint regarding service failures between March and July 2025, directing Marshmallow to pay an additional £200 (total £400) to reflect poor claim handling and inadequate communication to a vulnerable customer.

The Ombudsman's reasoning

The ombudsman found that while many complaint points fell outside the FOS's jurisdiction due to the six-month referral time limit under DISP 2.8.2R(1), the August 2025 final response letter allowed consideration of service failures between March and July 2025. The ombudsman determined that Marshmallow's lack of active follow-up with the third-party insurer until July 2025, combined with failure to provide updates to a vulnerable customer over several months, constituted service failures. The ombudsman rejected Miss P's argument that exceptional circumstances (pregnancy and stress) prevented timely referral, finding she was capable of contacting FOS during her interactions with Marshmallow. The £400 compensation was deemed fair for the identified service failures.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website