Upheld: service failure in bond settlement and fund transfer delays complaint against Zurich Assurance Ltd (trading as Sterling)

Decision detail

Summary

Mr P and Mrs P, as trustees of an investment bond held in a Flexible Gift Trust managed by Zurich Assurance Ltd, instructed the firm to settle the bond in May 2025 for the benefit of beneficiary Dr P. However, the settlement was not completed until August 2025, three months later, due to Zurich's inexperience with the requested payment method and two instances of incorrectly sending funds to an intermediary bank. Dr P claimed compensation for lost investment opportunity (citing 51% returns in his brokerage account) and professional time spent resolving the matter. The Ombudsman upheld the trustees' complaint, finding Zurich responsible for delays from mid-June onwards, but rejected Dr P's higher compensation claims and ruled him ineligible as a complainant. The firm was ordered to pay 8% simple interest on the £8,166 bond balance for the period of delay.

The Ombudsman's reasoning

The Ombudsman agreed that Zurich failed to act fairly in settling the bond within a reasonable timescale. While the first couple of weeks of delay were unavoidable due to necessary verification and clarification, delays from mid-June onwards were attributable to Zurich's inexperience with the payment method and two instances of incorrectly sending funds to the intermediary bank. The Ombudsman rejected Dr P's claim for higher compensation based on missed investment returns, finding insufficient evidence that he would have invested the full £8,166 in the same high-risk investment as his smaller brokerage account. The standard remedy of 8% simple interest was deemed fair and reasonable, balancing the service failures against Zurich's genuine attempts to resolve the matter and its openness in acknowledging failings.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website