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Review of some Financial Ombudsman Service recent decisions

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Posted by Susan Hopcraft on 07 February 2020

Susan Hopcraft - Professional Negligence Lawyer
Susan Hopcraft Partner

The Financial Ombudsman Service (the “Ombudsman”) is the independent dispute resolution service for financial services businesses and their customers.  This includes private individual customers but also small businesses.

The Ombudsman applies regulatory standards rather than the strict letter of the law.  It decides based on what is fair and reasonable in all of the circumstances, meaning customers might expect a wider assessment of the whole issue than might be possible in Court.  In 2018/19 alone the Ombudsman received 388,392 new complaints.

The Ombudsman can now require a financial services business to compensate a customer for up to £350,000.

This article summarises three Ombudsman decisions from November and December 2019 and illustrates recent decision-making within the Ombudsman.

Household insurance

This Ombudsman’s decision concerned a home contents insurance policy holder, whose claim was declined by Admiral.

The complaint arose after a burglary at the insured address in which several items were stolen. The intruder entered the property using a bathroom window at around 7.30am. The window was left open after a family member took a shower in the downstairs bathroom. The intruder entered the property whilst the policyholder and family were at home.

Admiral declined the claim, relying on a security endorsement in the policy as follows:

“just to let you know an endorsement will be applied to your policy that requires you to use the locks your home has whenever you leave it or go to bed. If you don’t use them you might not be covered for theft or burglary from your home’

Minimum security requirements

f.   when you go to bed, all the window and door locks and bolts fitted to your home, other than for windows in occupied bedrooms, are put into effective operation and keys removed and placed out of sight or reach of a potential intruder. (For safety reasons key should be accessible to the occupants so that the property can be exited in an emergency)”

The initial assessment of the complaint by an adjudicator at the Ombudsman was that the exclusion did not apply as the policyholder was in the property and the burglary did not happen at night. Admiral refused to accept the initial view on the basis that the bathroom window had been open.

The matter was escalated to an ombudsman.   The ombudsman accepted the account put forward by the policyholder around how the events transpired on the day of the burglary and upheld the decision of the adjudicator. The ombudsman’s decision confirmed that it was unfair and unreasonable for Admiral to rely on the endorsement in these circumstances. In view of the delay and distress caused to the policyholder the ombudsman directed Admiral to deal with the claim under the terms and conditions of the policy and also pay the policyholder £150 for distress and inconvenience. 

Medical insurance

A complaint arose under an employer’s group private medical insurance policy with Axa.

In 2018 the insured contacted Axa and explained that they had been suffering from depression and had been advised to undergo an inpatient programme. After initial consultation with Axa’s recommended psychiatrist, the insured was admitted to hospital. They were discharged nearly four weeks later. Shortly after discharge, the insured was advised by Axa that they were not covered under the policy as their depression was pre-existing under the terms of the policy and thus excluded from cover.  Axa relied on the insured’s consultation with their GP in 2016 for a similar issue.

Axa relied on an exclusion in the policy for:

“…any disease, illness or injury that:

  • you have received medication, advice or treatment for before the start of your cover, or
  • you have experienced symptoms of before the start of your cover; whether or not the condition was diagnosed.”

The insured had visited their GP in 2016 complaining about stress at work and rising anxiety. The GP prescribed two weeks of medication and the insured then recovered.

The ombudsman recognised that symptoms of the two events were overlapping, although not identical. Nonetheless due to the similarity the ombudsman agreed with Axa that the exclusion applied.

The ombudsman noted that the insured was admitted to hospital before Axa had a chance to properly assess the claim but it was nonetheless considered by the ombudsman to be reasonable for Axa to decline the claim under the policy. 

Car finance

The complainant purchased a car on finance. In the following months the car developed numerous issues and consequently was sent for repair on three separate occasions. The nature of repair was different each time.   The borrower tried to reject the car but the finance company contended that a used car couldn’t be fault free and that defects could occur at any time even if the vehicle was of satisfactory quality.

In the first instance, an adjudicator upheld the complaint on the grounds that the vehicle had been back for repairs three times in the past five months. This demonstrated that the car was not of durable quality. The adjudicator recommended that the finance company:

  • allow the car to be rejected and unwind the finance agreement with no further payments;
  • collect the vehicle at no cost to the complainant;
  • refund the complainant’s deposit with 8% interest; and
  • pay the complainant £110 compensation for distress and inconvenience.

The adjudicator did not recommend any refund of payments made as the complainant had some use from the car.

The finance company did not accept the adjudicator’s decision. When escalated, the ombudsman indicated that when the problems occurred in the first six months the finance company should have arranged an independent inspection of the car to assess the allegations set out by the complainant, but nonetheless agreed with the adjudicator’s decision. The complaint was upheld.


In each case the complaint will have been considered internally by the business’s own complaint handling process.  Often this route provides no remedy for a customer and it is important to have an alternative independent review available, by escalating the complaint to the Ombudsman.  

For claims valued at more than £350,000 the Court is often the better option but for lower value claims the Ombudsman can be a viable alternative.

The success of an Ombudsman referral can depend on how well presented the complaint is and we have a great deal of experience in presenting claims for review at the Ombudsman for private individuals and businesses, with funding options available to manage the costs.

About the author

Susan is a disputes and professional negligence lawyer, mainly in the financial services sector.

Susan Hopcraft

Susan is a disputes and professional negligence lawyer, mainly in the financial services sector.

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