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Whole-of-life shock for watchdog

The Financial Ombudsman has seen a sudden rise in complaints where whole-of-life insurance products were sold without clients being told that policies would be reviewed.

The ombudsman claims that trends of complaints by consumers about whole of life policies have changed.

The FOS was previously getting complaints about policies that were sold without regard for customers&#39 individual circumstances.

But FOS officials now say there has been a sudden rise in complaints from people who were never told the policy would be reviewed and the firm would compare the value of the plan with the benefits that it provides.

This may result in the firm asking policyholders to increase their contributions or, where the policy stays the same, benefits being reduced when the policyholder dies.

In looking at these complaints, the FOS has had to start considering whether the firm made it clear there would be reviews at the time of sale.

The FOS brieifing reports are issued so firms and intermediaries can see what pattern of complaints are being received and where they can tighten up compliance.

The report says: “Depending on the particular facts of the complaint, it will not always be sufficient for the firm merely to say that it mentioned the potential for review in its product literature.

“So we may uphold complaints where the possible effects of plan reviews are not, in our view, made sufficiently clear or given sufficient prominence.”

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