Not upheld: claim decline based on misrepresentation; policy cancellation complaint against National Deposit Friendly Society Limited

Decision detail

Summary

Mr A complained that National Friendly unfairly declined his income protection claim and cancelled his policy. The ombudsman found that Mr A had failed to take reasonable care when answering health-related questions on the application form, specifically about conditions in the last five years and absences from work in the last two years. Medical records obtained after the claim revealed Mr A had anxiety from 2022 and was signed off work for approximately one year starting in September 2023, plus another three-month absence earlier in 2023. The ombudsman concluded this was a qualifying misrepresentation under CIDRA and that National Friendly was entitled to cancel the policy and decline the claim. The ombudsman upheld National Friendly's offer of premium refund and £100 compensation for a separate handling error where the firm incorrectly changed one answer from 'yes' to 'no'.

The Ombudsman's reasoning

The ombudsman found that Mr A failed to take reasonable care when answering the five-year and two-year health questions, as evidenced by medical records showing anxiety from 2022 and periods of absence from work in 2023. This constituted a qualifying misrepresentation under CIDRA because National Friendly provided underwriting evidence that it would not have offered the policy had the questions been answered correctly. Since the misrepresentation was careless rather than deliberate or reckless, National Friendly was entitled to cancel the policy and decline the claim, and its offer of premium refund and £100 compensation for the handling error was fair and reasonable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website