Upheld: failure to make contractual distribution payments; system errors; poor complaint handling complaint against Scottish Widows Limited
Financial Ombudsman decision DRN-6351826 of 2026-05-15T00:00:00+00:00. failure to make contractual distribution payments; system errors; poor complaint handling complaint against Scottish Widows Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6351826 |
|---|---|
| Decision date | 2026-05-15T00:00:00+00:00 |
| Firm | Scottish Widows Limited |
| Product | investment bond |
| Claim type | failure to make contractual distribution payments; system errors; poor complaint handling |
| Outcome | Upheld |
| Remedy | Scottish Widows must: (1) pay all outstanding monthly payments with a detailed schedule for reconciliation; (2) add 8% simple interest on late payments from the date they should have been paid to the actual payment date; (3) arrange manual monthly payments until automatic payments can be implemented; (4) pay £450 compensation for inconvenience; (5) address any tax implications arising from backdated payments in incorrect tax years and reimburse any additional tax Mrs M would not otherwise have paid; (6) pay 8% simple interest on any outstanding amounts if not paid within one month of Mrs M's acceptance of the decision. |
Summary
Mrs M complained to Scottish Widows about not receiving regular monthly distribution payments from her Flexible Options Bond, an issue she had previously complained about. Scottish Widows admitted the regular withdrawal had been cancelled in error and made some corrective payments, but further payments were subsequently missed and Mrs M could not reconcile the payments received. The investigator recommended Scottish Widows pay all outstanding payments with 8% interest, make manual payments until the system was fixed, pay £450 compensation, and address tax implications. Although Scottish Widows accepted these recommendations, it failed to implement them or respond to follow-up inquiries, and the underlying system issue remained unresolved. The ombudsman upheld the complaint and issued a final decision to ensure Scottish Widows understood its regulatory obligations to put matters right.
The Ombudsman's reasoning
The ombudsman upheld the complaint because it was undisputed that ongoing errors in monthly distributions had occurred over an extended period, with Mrs M having previously complained about the same issue. Although Scottish Widows accepted the investigator's conclusions, it failed to implement them or communicate further with Mrs M, and the underlying system issue remained unresolved. The ombudsman issued the final decision to ensure Scottish Widows understood its regulatory obligations to put matters right.
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