Not upheld: policy cancellation for non-payment and claims handling complaint against Marshmallow Financial Services Ltd

Decision detail

Summary

Mr P complained that Marshmallow Financial Services Ltd mishandled his motor insurance policy by cancelling it when he failed to pay the September instalment by the deadline of 11:00 on 14 October 2025. Although Mr P experienced payment processing difficulties and updated his card details on 9 October 2025, the payment ultimately went through at 19:15 on 14 October 2025, after the deadline. Marshmallow had provided clear written notice of the cancellation deadline through emails dated 30 September and 3 October 2025, and reiterated this on 13 October 2025. The ombudsman found that Marshmallow acted fairly in cancelling the policy, that Mr P should have relied on the email communications rather than the app display, and that he should have contacted Marshmallow when he made the late payment to query whether cancellation would be reversed. The complaint was not upheld, and Marshmallow was required to honour its £100 compensation offer for live chat inconvenience.

The Ombudsman's reasoning

The ombudsman found that Marshmallow had a valid contractual right to cancel for non-payment and provided adequate written notice through emails dated 30 September and 3 October 2025, with a clear deadline of 11:00 on 14 October 2025. Although the app showed the policy as active, the ombudsman considered that Mr P ought reasonably to have relied on the clear email communications and should have known the payment had not gone through before the deadline. The ombudsman noted that Mr P used the app on the evening of 14 October 2025 to verify his card and see the payment processed at 19:15, after the deadline had passed, and should have contacted Marshmallow at that point to query whether cancellation would be reversed. The ombudsman was satisfied that Marshmallow only charged for cover up to and including 14 October 2025, as evidenced by the refund calculation. The £100 compensation for live chat inconvenience was found to be fair and reasonable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website