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Sanlam to pay back premiums after protection complaint

Money-Coins-Pound-Currency-Close-up-700x450.jpgSanlam must refund premiums paid on a life cover protection plan a customer complained she was sold unnecessarily because she was single and had no dependents at the time.

According to a Financial Ombudsman Service decision, the complainant, Ms M, was recommended the Sanlam life cover plan prior to the Financial Services Act 1986, which led to investment advice being regulated.

However, the decision says she only recently became aware the cover was unnecessary recently.

An adjudicator initially upheld the complaint and said that even though the recommendation was made prior to the legislation, it still needed to represent a “reasonable fit” with the consumer’s circumstances.

The decision says: “So even though this was a pre-regulated sale, the business shouldn’t have sold Ms M a plan that, in practical terms, wasn’t needed.”

The adjudicator found the protection plan was a complex product and could operate either as a whole-of-life plan or, if a minimum sum was assured, as a savings plan.

However, the FOS decision says: “Because of the way it worked, [the adjudicator] didn’t believe Ms M would’ve simply walked into one of Sanlam’s offices and
asked for such a complex product. At least some discussion about her needs would’ve occurred before she was handed the product.”

Sanlam did not agree with the adjudicator’s decision and said there was no evidence one of its advisers recommended the plan.

Sanlam said Ms M already held three savings plans and was well-informed. The firm also said the complainant understood the nature of the life insurance, and was provided with clear documentation.

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Ombudsman Tony Moss agreed with the adjudicator and upheld the complaint. He says there is no “persuasive evidence” Ms M needed life cover at the time of the sale.

Moss also agreed with the adjudicator’s decision regarding the recommendation taking place before the 1986 legislation.

He says: “Advisers’ requirements Pre ‘A’ day were considerably less than they became afterwards, however, I’ve seen no evidence to indicate the adviser did seek to establish whether Ms M wanted or needed life cover – or why she allegedly chose the fund in question.”

Moss also says Ms M’s purchase of three other insurance plans should not have been an indication she was actively considering life cover.

He says: “This was a relatively complicated product and required making choices about various options including between selecting from a range of funds. I think it is more likely than not that a Sanlam adviser led her through these options.”

Sanlam has been instructed to refund the premiums at the Bank of England’s base rate plus one per cent.



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There are 5 comments at the moment, we would love to hear your opinion too.

  1. It’s unclear from the adjudication, but it looks like this complaint concerns a policy that was taken out over 30 years ago. This is absurd – has the complainant taken this long to realise she didn’t need the life cover and if so should she be placed on a special register to prevent her from making any financial decisions?

  2. This is why no IFA, as far as we know, has ever signed up to voluntary jurisdiction. PI insurers would not accept it but the old insurance ombudsman scheme existed pre-‘A-day’ and most life offices signed up to it.

    There are unlikely to be many records left and whole of life was a popular product that usually paid more commission than an endowment.

    At least they didn’t apply the judgement rate on the refund.

  3. Robert Milligan 4th April 2018 at 4:05 pm

    Is not time wonderful, many a mortgage adviser prior to 88 had no option than to sell Whole of Life as term assurance was limited to certain situations, Abbey Life would not allow its Business Term to be used for a residential mortgage, so you had to sell WOL, also, back in the day life policy’s were assigned to the lender, so life cover was mandatory, no wonder we are afraid of retrospective FOS decisions based upon todays understanding, DB transfer beware!!

  4. Unless Sanlam (or its entity involved at that time) signed for voluntary prior jurisdiction for FOS complaints, this one should never has passed the starting blocks at the FOS. It’s not whether it was right or wrong (and far too many life savings’ plans were sold of course, without merit) but the Ombudsman’s jurisdiction does not stretch to pre-regulation and even to spend time on investigating and communicating should therefore not have happened. (Still no excuse but I wonder whether she has had any form of dependants since the original sale however…).

    • The wonderful MI Group where their staff used to stand on desks to dominate calls, which caused great hilarity when walking passed their city centre offices in Bristol.

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