Not upheld: mis-selling of insurance — alleged unsuitability and duplication of cover complaint against St. James's Place Wealth Management Plc (SJP)

Decision detail

Summary

Ms P complained that she was mis-sold two income protection policies in 2016 by SJP because she already had protection through her Teacher's Pension Scheme. She argued the policies were unnecessary and, when combined with her TPS, exceeded the 60% maximum salary limit. SJP defended the sale on the basis that Ms P had not disclosed her TPS protection at the time. The ombudsman found the policies were suitable because the TPS and income protection operate differently—the TPS can only be claimed upon medical incapacity to return to her profession, whereas income protection covers any incapacity. The ombudsman also found that when the TPS was properly excluded from calculations, the policies provided approximately 55% of protected income, within the insurer's limit. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that income protection and a pension scheme serve different purposes and operate differently depending on specific life events. The TPS could only be claimed if Ms P became medically incapable of returning to her profession, whereas income protection would pay benefit for any incapacity. Recommending that Ms P rely on early TPS withdrawal instead of income protection would have been unsuitable as it would have unnecessarily reduced her pension. The two income protection policies were appropriately structured with different deferred periods to cover the gaps in occupational sick pay (six months and 12 months respectively). When the TPS is properly excluded from the calculation, the policies provided approximately 55% of protected income, which is within the insurer's limit.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website