Upheld: General financial advice complaint against The Mansfield Building Society
Financial Ombudsman decision DRN-7002050 of 2015-08-03T00:00:00+00:00. General financial advice complaint against The Mansfield Building Society. Outcome: Upheld.
Decision detail
| Reference | DRN-7002050 |
|---|---|
| Decision date | 2015-08-03T00:00:00+00:00 |
| Firm | The Mansfield Building Society |
| Product | Other regulated product |
| Claim type | General financial advice |
| Outcome | Upheld |
| Remedy | The Mansfield Building Society must refund Mr and Mrs W the difference between what they paid for their block policy and what an individually rated policy would have cost for each year from 2005/6 to 2012/13. If The Mansfield cannot retrospectively calculate the cost difference for each year, it should refund 80% of each premium paid during this period (based on the 2012/13 cost difference). Interest at 8% simple per annum must be added to each refund from the date each premium was paid until payment, less any tax required by HM Revenue & Customs. |
Summary
Mr and Mrs W complained that The Mansfield Building Society charged them excessive premiums for buildings insurance. The couple had been on a block policy since 1988, but in 2005 The Mansfield changed its operations and began offering individually rated policies. The firm did not inform Mr and Mrs W of this new option, and they continued paying block policy premiums until 2013, when they queried the price and were offered an individually rated policy at approximately 80% less cost. The ombudsman upheld the complaint, finding that The Mansfield failed to treat the customers fairly by not disclosing the availability of the potentially cheaper product. The firm was ordered to refund the difference between block and individually rated policy costs for 2005/6 to 2012/13, plus interest.
The Ombudsman's reasoning
The Mansfield is required to treat customers fairly. Although there was a risk that premiums could increase or cover be declined when switching from a block to an individually rated policy, The Mansfield should have informed Mr and Mrs W that this option was available and explained the potential benefits and risks. This would have been providing general information rather than advice, and would have allowed Mr and Mrs W to make an informed decision. The failure to disclose this information was unfair treatment. Had Mr and Mrs W been properly informed in 2005, they would likely have enquired about and switched to the individually rated policy, as evidenced by their willingness to do so in 2013.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| The Mansfield Building Society, all decisions | 8 | 31% |
| General financial advice, all decisions | 4,578 | 36% |
| Other regulated product, all decisions | 51,105 | 30% |
Source
Read the original decision on the Financial Ombudsman Service website