(1)

In January 2005, Mr. E was diagnosed with lung cancer and put in a claim to the irm. !"er si# years
earlier, in $o"em%er 1&&', he had ta(en out lie and critical illness insurance co"er worth )150,000.
*ter carrying out en+uiries, the irm ound that in ,eptem%er 1&&- Mr. E.s /0 had recorded that Mr. E
was consuming appro#imately '0 units o alcohol a wee( (21 units is the recommended ma#imum
wee(ly amount or men). In 1e%ruary 1&&' Mr. E.s alcohol consumption was up to '2 units a wee( %ut
%y July o the ne#t year it had gone down to a more moderate 203 units a wee(.
4he irm said this diered greatly rom the declaration Mr. E made when applying or insurance. 5e
had said then that his a"erage alcohol consumption was i"e units a day (65 per wee(). 4he irm told
him that i it had %een aware o his drin(ing ha%its, it would ha"e increased his premium %y 2007
6008. It reused to pay the claim and it returned his premium, a"oiding the policy rom its start date.
Mr. E was e#tremely angry with the irm.s response. 5e said that when he applied or the insurance he
had answered all the irm.s +uestions accurately. 5e pointed out that he had, at that time, %een the
sole carer or his newly7%orn daughter and could not ha"e handled his responsi%ilities i he had %een
drin(ing as hea"ily as %eore. 4he irm still maintained that he was li(ely to ha"e %een drin(ing more
than he had claimed.
Complaint upheld
when the complaint was reerred to us we ound no e"idence concerning Mr. E.s drin(ing ha%its at the
time he applied or the insurance. 4he amount he had said he was drin(ing (i"e units a day or 65
units a wee() was close to the 203 units a wee( that his /0 had recorded eight months later. Mr. E
had gi"en a plausi%le e#planation or his answer and the irm had no 9ustiication or disregarding it.
*s there was no e"idence o non7disclosure or misrepresentation, we re+uired the irm to reinstate the
policy and meet the claim. 4he irm agreed to pay the ull sum o )150,000, plus interest.
(2)
In :ecem%er 2001, Mr. and Mrs. ; applied or term lie assurance and critical illness insurance. 4his
included own occupation co"er, which paid %eneits i either o them was una%le to continue with their
own occupation %ecause o permanent total disa%lement.
In response to the irm.s +uestions they %oth stated that they were not "currently receiving any
medical treatment or attention or awaiting any medical or surgical consultation, test or investigation"
and had "never had any medical or surgical treatment, including investigations, tests, scan or X-rays
for any mental or nervous illness (including depression) lasting for more than 3 months and/or
requiring more than ! consecutive days off wor"".
4he irm accepted the application on the condition that, since signing the application, Mr. and Mrs. ;
had not "suffered any illness or required any medical attention or changed occupation".
4wo years later, Mrs. ; su%mitted a claim or rheumatoid arthritis %ut the irm reused to meet it. It
said her medical records showed that she had %een consulting a doctor or carpal tunnel syndrome
and depression or a%out eight years %eore the date when she applied or the policy. ,he had not
disclosed this.
In addition, she had ne"er disclosed that < ater she had su%mitted her application %ut a ew days
%eore it was accepted < she had seen her doctor or pain and swelling in her an(le. *nd she had ailed
to tell the irm that, %eore she recei"ed the irm.s oer o acceptance, she had changed her
occupation.
4he irm said that although it was entitled to treat the whole policy as "oid rom the start, it would not
do this. 5owe"er, it would e#clude claims or Mrs. ;.s pre"ious health pro%lems and would no longer
pro"ide the own occupation cover. =nhappy with this, Mr. and Mrs. ; reerred the complaint to us.
Complaint rejected
we did not consider there to %e any %asis or re+uiring the irm to pay the sum insured or Mrs. ;.s
rheumatoid arthritis. ;e accepted that there was no lin( %etween her carpal tunnel syndrome and
depression and the onset o her rheumatoid arthritis. 5owe"er, this did not change the act that, in
response to clear +uestions, she had ailed to disclose inormation a%out her health.
In our opinion it was air and reasona%le o the irm to oer to rewrite the policy on the terms it would
ha"e oered originally > i it had %een gi"en the correct inormation. Mr. and Mrs. ; appeared to ha"e
gi"en "ery little thought to the accuracy o their answers, and their non7disclosure appeared to %e at
least rec"less, which would ha"e entitled the irm to "oid the policy.
(3)
Mr. 1 reerred his complaint to us when he was una%le to resol"e matters with his %an(. 5e had held a
current account with the same %an( or a num%er o years, and the o"erdrat acility had always %een
renewed automatically, without comment.
,o Mr. 1 said he had %een urious when he disco"ered the %an( had withdrawn the acility without
gi"ing him any notice. 4his had caused him some diiculties, since he had %een o"erdrawn at the
time. *nd although he managed airly speedily to transer his account to a dierent %an(, in the
meantime he had %een charged su%stantial interest, at the rate or unauthori?ed o"erdrats.
Complaint upheld
the %an( said it had made a num%er o (documented) telephone calls to Mr. 1 a%out the diiculties on
his account. *nd it said it could pro"ide comprehensi"e internal notes on its concerns a%out his
account, up to the point when it withdrew the o"erdrat acility.
It was clear rom the %an(@s records that Mr. 1 had %een ha"ing considera%le pro%lems (eeping his
current account in good order. *nd his che+ues had occasionally %een returned unpaid. 5owe"er, there
was nothing to suggest the %an( had e"er made its concerns clear to Mr. 1, either during the telephone
calls or at any other time.
;e accepted Mr. 1@s statement that the telephone calls had consisted o %rie re+uests that he call at
the %ranch or an Aaccount reviewA. 5e had interpreted these re+uests as Astandard mar"eting calls",
made with the intention o selling him some new product or ser"ice, so he had ignored them. $othing
speciic had %een said in the calls a%out his account and he had %een gi"en no reason to suspect his
o"erdrat acility was in 9eopardy.
4he %an(@s decision to withdraw the o"erdrat was a legitimate e#ercise o its commercial 9udgement.
5owe"er, we did not %elie"e this decision had %een carried out airly. In our "iew, the %an( should
ha"e gi"en Mr. 1 a clear warning a%out what would happen i he did not run his account properly. *nd
it should ha"e gi"en him a reasona%le amount o notice %eore withdrawing the o"erdrat acility.
;e accepted that the %an(@s ailure to gi"e a clear warning or any notice had caused Mr. 1 stress and
diiculty, %ecause he had %een orced to arrange a new account at short notice. ,o we said the %an(
should pay him )150 in recognition o the incon"enience it had caused.
;e also thought it unair o the %an( to charge Mr. 1 interest at its Aunauthori#edA rate, ollowing its
withdrawal o the acility. ,o we said the %an( should reund to Mr. 1 the dierence %etween its normal
rate o interest and the rate it had charged him.
(4)
A Frozen Accounts 5 and Ms 0 operated a pet supplies %usiness as a partnership. 4he partnership
had se"eral acilities with the %an( including an E140!, machine, a %usiness credit card and a
%usiness trading account. Either proprietor was authori?ed to operate the accounts.
4he partners %ecame in"ol"ed in a inancial dispute and ceased to operate the %usiness together. Ms 0
continued to trade as a sole proprietor, and the rele"ant change o ownership orms or the registered
%usiness name were lodged.
Ms 0.s dispute with the %an( arose when she deposited unds she had earned as a sole proprietor into
the partnership account, and drew che+ues against these unds. *s soon as the %an( %ecame aware o
the partnership dispute, it ro?e the account and dishonored the che+ues Ms 0 had issued. Ms 0 said
that she was una%le to continue to trade and was orced to close the %usiness.
Ms 0 argued that the %an( should not ha"e ro?en the account when it had %een a %an( oicer who
had ad"ised her to continue to use the partnership account. 4he %an( oicer concerned denied gi"ing
Ms 0 this ad"ice.
Issue
4he main issue or the case manager.s consideration was whether the %an( oicer had ad"ised Ms 0
that she could continue to operate the partnership account. It was diicult to determine this issue
%ecause there was no documentation recording the nature o the discussion %etween Ms 0 and the
%an( oicer.
Besolution
4he !m%udsman considered that a conciliation conerence was an appropriate method o trying to
resol"e the matter. 4he dispute was resol"ed at the conerence, with the %an( agreeing to pay Ms 0
C&,000. 4he early conciliation conerence a"oided the need or a long and diicult in"estigation.
(5)
Unauthorised Credit Card Transaction
Ms D applied or a credit card %ut says the application was declined and she ne"er recei"ed the card.
,ome time later, Ms D was contacted to ma(e payments on a de%t o C1,000 owing on the credit card
account. *lthough Ms D did not %elie"e she was responsi%le or the de%t, she %ecame ner"ous when
the %an( threatened to list the deault with a credit reporting agency. ,he reluctantly agreed to repay
C50 per month towards the de%t.
Ms D then recei"ed a letter rom a collection agency demanding repayment o the ull amount o the
de%t. Ms D contacted the %an( to as( how the account could ha"e %een opened in her name when her
application was declined. ,he re+uested copies o the identiication that had %een shown when the
account was opened, %ut she was ad"ised that she would ha"e to pay a ee or the inormation.
* deault listing was su%se+uently entered against Ms D.s name and when this was disco"ered, Ms D
wrote to the 1inancial !m%udsman ,er"ice re+uesting assistance.
4he dispute was reerred to the %an( or its consideration. 4he %an( conducted an in"estigation into
the matter and ad"ised that its records showed that the credit card application had, in act, %een
appro"ed %ut that it was not a%le to conirm that Ms D had recei"ed the card. 4he %an( accepted that
the card may ha"e %een used raudulently %y a third party, and the dispute was promptly resol"ed
with the %an( agreeing to e#tinguish Ms D.s lia%ility or the de%t and remo"ing the deault listing.
Travel-personal accident-total and irrecoverable loss of sight-policyholder retaining 3%
vision- hether loss sight claim valid!
4he policyholder went on holiday with her amily to 1lorida on 1 January 1&&'. 4hree days ater
arri"ing, they were in"ol"ed in a serious road accident. 4hey contacted the assistance company and
the policyholder and her daughter were hospitali?ed.
4he policyholder su%mitted a claim or loss o sight under the personal accident section o the policy.
,he said she had no useul "ision in her let eye and there was no prospect o impro"ement.
4he insurer insisted on o%taining additional medical e"idence. 4he insurer.s consultant concluded that
the policyholder had lost all central "ision %ut retained a small amount o peripheral "ision, which he
estimated at 2768. In his opinion, AIn theory, Ethe policyholderF had retained sight in the let eye.
5owe"er, it was so minimalG it EwouldF %e o no practical use to her. 1or practical purposes, Ethe
policyholderF had lost all sight with the let eyeA. 4he policy stipulated that the )25,000 %eneit was
paya%le only or Atotal and irreco"era%le loss o all sight in one or %oth eyesA. 4he insurer contended
that this pro"ision should %e interpreted literally and that thereore the claim was not "alid. 5owe"er,
ollowing our in"ol"ement, it oered an e# gratia payment o )12,500. 4he policyholder considered her
claim should %e met in ull.
Complaint upheld
;e noted that the ;orld 5ealth !rganisation deined Aproound %lindnessA as the ina%ility to
distinguish ingers at a distance o 10 eet. 4he Boyal $ational Institute or the Hlind ad"ised that only
a%out 1'8 o %lind people were classed as totally %lind and the ma9ority o those could distinguish
%etween light and dar(. ;e concluded that AsightA implied an a%ility to discern o%9ects. !n this %asis
we were satisied that the policyholder had, or all practical purposes, suered a total loss o sight. ;e
re+uired the insurer to meet the claim in ull, together with interest, rom the date o the accident.
(-)
Travel-curtailment-death of relative-relative resident abroad-hether policyholders return
to U!"! covered!
1ollowing the death o his mother in Denya, the policyholder and his wie had to return home to the =D
rom their holiday in *msterdam. 4he insurer reused to meet the claim as the policyholder.s mother
was not resident in the =D. It reerred to the policy section which co"ered curtailment due to Ithe
death, se"ere in9ury or serious illness o an immediate relati"e resident in the =nited DingdomJ.
Complaint upheld
*lthough the policy wording was unam%iguous, we considered that its application was unair in the
circumstances. 4he country in which the policyholder.s mother was resident at the time o her death
did not seem rele"ant, as he and his wie had irst to return home to the =nited Dingdom. 4he insurer
agreed to meet the claim.
(')
Cash machine-account-holding firm responsible!
Mrs. 4 had a %an( account with irm *. ,he tried unsuccessully to withdraw )60 rom this account,
using a cash machine owned %y irm H, a mem%er o the same cash machine networ( as irm *. ,he
later managed to withdraw the )60 rom another machine.
5owe"er, irm * de%ited her account with the irst (unsuccessul) withdrawal as well as with the
second one. 1irm * said that was not its responsi%ility and that Mrs. 4 should pursue a complaint
against irm H.
Complaint upheld
5a"ing e#amined the records or irm H.s cash machine, we were satisied that Mrs. 4 had not recei"ed
the irst )60. 5er complaint was thereore not a%out irm H.s machine ailing to issue the money, as
irm * had apparently suggested. It was a%out irm * de%iting her account with money she had not
recei"ed. ;e re+uired irm * to credit Mrs. 4.s account, and to compensate her or the incon"enience it
had caused %y trying to o% o her complaint.