Partially upheld: service failure and delay in payment; administrative error in fund switch handling complaint against Scottish Widows Limited
Financial Ombudsman decision DRN-6287835 of 2026-05-19T00:00:00+00:00. service failure and delay in payment; administrative error in fund switch handling complaint against Scottish Widows Limited. Outcome: Partially upheld.
Decision detail
| Reference | DRN-6287835 |
|---|---|
| Decision date | 2026-05-19T00:00:00+00:00 |
| Firm | Scottish Widows Limited |
| Product | investment bond |
| Claim type | service failure and delay in payment; administrative error in fund switch handling |
| Outcome | Partially upheld |
| Remedy | Scottish Widows Limited directed to pay: (1) £500 compensation for distress and inconvenience (minus any amounts already paid); (2) 8% simple interest per annum calculated from 11 October 2024 to the date funds were paid to Mr T (minus any interest already paid). If not paid within 28 days, additional interest at 8% per year simple applies. Income tax may be payable on interest. |
Summary
Mr T complained to FOS about Scottish Widows regarding two issues: a 2014 fund switch where he claimed premiums continued in the old investment, and a delay in receiving his Bond maturity proceeds. Scottish Widows accepted they failed to send the maturity pack before the Bond matured in October 2024, resulting in payment delay until 27 October 2025. The ombudsman found no error in the 2014 fund switch, as Scottish Widows sent confirmation and Mr T received annual statements. For the maturity delay, the ombudsman upheld the complaint and found Scottish Widows' offer of £500 compensation plus 8% simple interest per annum from maturity date to payment date to be fair and reasonable, rejecting Mr T's argument that he would have made a specific investment or used funds to reduce his mortgage.
The Ombudsman's reasoning
The ombudsman found that Scottish Widows properly sent the 15 December 2014 letter confirming the fund switch to the same address where other correspondence was successfully received, and annual statements showed the investment position, so no error occurred in 2014. Regarding the delay in payment following maturity, Scottish Widows accepted the error. The ombudsman determined that since it cannot be established with certainty what Mr T would have done with the funds had they been paid on time (his stated intentions changed from mortgage reduction to investment), 8% simple interest per annum is a fair and reasonable measure of loss of use. The ombudsman rejected Mr T's argument that he would have made a specific investment because his account of intended use had changed and the funds could not simultaneously reduce mortgage interest and generate investment growth.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Scottish Widows Limited, all decisions | 827 | 20% |
Source
Read the original decision on the Financial Ombudsman Service website