Partially upheld: Service failures generally complaint against Cirencester Friendly Society Limited

Decision detail

Summary

Mr V complained about Cirencester's decision to decline his income protection insurance claim for anaemia and myelofibrosis. In September 2016, after being diagnosed with these conditions, Mr V telephoned Cirencester and was incorrectly advised by an adviser that he would be covered if unable to work, despite the policy containing an exclusion for thrombocytosis and related conditions. When Mr V made a claim in January 2017, Cirencester declined it, acknowledging the wrong advice but offering only £50 compensation and a premium refund. The ombudsman found the claim decline was reasonable under the policy exclusion but upheld the complaint in part, requiring Cirencester to add interest to the premium refund and increase compensation to £300 to reflect the distress caused by the wrong advice.

The Ombudsman's reasoning

The ombudsman found that Cirencester was entitled to decline the claim because Mr V's condition (anaemia and myelofibrosis) was reasonably assessed as associated with his high platelet count, which fell under the policy's exclusion. However, the ombudsman found that Cirencester's wrong advice in September 2016 caused Mr V loss of expectation and distress. The ombudsman applied the principle that when an insurer gives wrong advice, the remedy should reflect the effect of that advice. Since Mr V stated he would have cancelled the policy had he been correctly advised, and could not obtain cover elsewhere, a premium refund with interest was appropriate. The £50 compensation was insufficient given Mr V's serious medical condition and the additional distress caused by discovering the assurance of cover was incorrect.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website