Not upheld: mis-selling of life insurance policy complaint against Zurich Assurance Ltd

Decision detail

Summary

Mr and Mrs H complained that a reviewable whole of life policy sold to them by Zurich Assurance Ltd in the early 1990s was mis-sold. They argued the policy structure was unfair because it would pay nothing if they lived beyond a certain age, the costs were disproportionate to benefits, critical terms were not properly explained, and their vulnerability was exploited. Zurich rejected the complaint, arguing the advice was suitable and documentation fully explained the policy. The FOS investigator also did not uphold the complaint. The ombudsman found that the adviser had properly assessed Mr and Mrs H's circumstances and objectives (family protection) and made a suitable recommendation, that the available documentation explained the policy's reviewable nature, and that the first death basis was appropriate for family protection purposes. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the regulatory standards applicable in 1993, which required firms to obtain sufficient information about consumer objectives and circumstances and make suitable recommendations. Given that over 30 years had passed, it was unreasonable to expect all original documents to be available. The ombudsman assessed the balance of probabilities based on available evidence. The application form demonstrated that the adviser had assessed Mr and Mrs H's circumstances and objectives, with family protection identified as the main priority. The policy recommendation was suitable given their need for protection at a low premium with flexibility to increase cover when their financial situation improved. The ombudsman rejected the argument that the policy was unfair because it might pay nothing if they lived beyond a certain age, noting that insurance protection is the primary purpose and the policy has no set term. The first death basis was appropriate for family protection purposes.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website