Case Studies

2012

Maladministration by broker Complaint Upheld

This complaint relates to the Complainant's broker's action in respect of a claim that was submitted to the underwriters of a buildings insurance policy. The complaint is that the Provider did not supply, in a timely manner, written details of the underwriter's repudiation of their claim as requested.

In this case, a claim was submitted in relation to damage caused to the Complainant's business premises as a result of frost damage. The Complainant supplied the broker with details of the claim and supporting documentation and it is argued that the broker failed to respond in a timely manner. The only communication with regard to the claim was a telephone call advising that the underwriter was not covering the claim. The Complainant sought from the broker, a written reply with regard to the repudiation of the claim and also sought details of cover. It is argued that the Provider failed to respond to these requests.

The issue for adjudication here is whether the Provider, i.e. the Complainant's broker, correctly dealt with the claim that was submitted to it, in particular, whether the broker correctly communicated the insurance company's response to the claim.

There were a number of parties involved in the processing of this claim and they were the insured, the broker, the insurance company, the loss assessor and the loss adjusters appointed by the insurance company.

In this case the claim was first submitted by the Complainant directly to the broker. The claim was duly submitted to the insurance company and the broker appointed a loss assessor to deal with the claim on its behalf. The insurance company appointed a loss adjuster and for most part of the claim communications were between the loss adjuster and the loss assessor. The eventual declinature of the claim was communicated by the loss adjuster to the loss assessor. The loss adjuster concluded his correspondence to the loss assessor with the words “we trust you will advise the insured accordingly”. The loss assessor accordingly communicated matters with the broker, however, the only communication on the matter that the Complainant received, was a verbal communication which gave rise to the complaint. It is the broker's case that it was its procedure that the appointed loss assessor issue written notification directly to the Complainant but this did not happen in this case and on the complaint being made, the broker admitted he was aware of the Complainant's need for a written communication from the insurance company and policy details, but these were not actioned.

Having regard to all of the circumstances of the case, particularly the lapses in customer care outlined, I find that a substantial customer care award is merited and in order to do justice between the parties, my finding is that the Provider is to pay the Complainant €1,000 in full and final settlement of the dispute.

Commercial insurance case Complaint Not Upheld

The complaint relates to a claim in respect of malicious damage to a public house. The complaint is that the Company unreasonably delayed the settling of the claim. The Complainant points out at first that the Company declined the claim and then later instructed a loss adjuster to re-open its file and conclude the claim in the normal manner. The Complainant and his loss assessor consider that they co-operated fully with the loss adjuster in all his requests for information - some took longer to provide than others - but as far as they were concerned, the claim stands as presented. The Complainant's loss adjuster requested that interest be added over and above the amount already claimed and a modest fee for the loss assessor to take into account the delays.

It is the Company's case that it is clear that while there had been delays in the handling of the claim, these had occurred as a result of the Complainant and his loss adjuster's failure to co-operate with the Company's investigation of the loss and to provide the necessary documentation to enable validation of the large loss that took place. It is the Company's contention that the Complainant's duties in this regard are conditions precedent to any liability on the part of the Company to make any payment on foot of a claim and that the failure to adhere to the policy requirements is also in breach of the general condition of the Complainant's policy.

The correspondence between both parties to this complaint took place over an extended period of time with final documentation being received 26 months after the initial contact. At the time of the Finding being issued, the Company was still awaiting a signed statement from the insured before processing the matter further.

Insurers are entitled to investigate every claim presented and request supporting documentation or require a statement to be provided to ensure that it has all of the necessary evidence it needs in order to assess a claim under the policy of insurance. It is evident that delays have occurred on all sides in this case. The fact remains that while the protracted dispute has been ongoing between the Company and the Complainant's representative, the Complainant's claim for payment has, unfortunately for him, not been finalised. However, it is clear from the numerous requests made by the Company, and the specific conditions applicable to the policy, that the Complainant and his representatives did not fully, or adequately co-operate and provide the assistance necessary, to conclude the investigation of this claim.

In conclusion I am satisfied that the Company's attempts at settlement of the claim were fair and reasonable and in accordance with the policy terms and conditions. It is my finding therefore that the complaint is not upheld.

Farm insurance and non-disclosure Complaint Not Upheld

The complaint relates to a fire damage claim under an insurance policy covering a farm. The complaint is that the Company incorrectly repudiated the claim for non-disclosure. The material facts said not to have been disclosed were previous claims with another insurer. The insurance was taken out through an independent intermediary. The Complainant states that the intermediary completed a proposal form on his behalf, but did not ask him any questions about prior claims and convictions and did not inform him that cover may be refused as a result of same.

The Provider in this case is a broker and the issue for investigation and adjudication is whether the Provider correctly arranged cover for the Complainant. As the policy was taken out by an intermediary, the insurance company would not be responsible for any alleged act or omission of the intermediary.

Whilst investigating this claim, the insurance company discovered that the Complainant had two losses on his previous insurance policy. This information was not disclosed on the proposal form and subsequently the policy was cancelled with effect from inception date, due to the non-disclosure of a material fact.

There is a responsibility on a broker to alert the insured of the need to make a full disclosure when completing proposal. In this case, while the broker states that it did so, the Complainant argues that he was not so alerted to these matters.

The Complainant in this case had over 20 years exposure to the workings of insurance policies and I cannot accept that he would not have been familiar with the requirement to make a full disclosure of material facts.

Disclosure is necessary, even without being asked of all the material circumstances. This case highlights the importance of a person reading over a document before signing same. It is the responsibility of the person(s) seeking insurance to read over the questions and information on the application to ensure it is correct before signing. The argument is that it was not fully understood by the Complainant that there was a need to disclose claims that were made against another insurer or that there would be a consequence where that happened. Leaving aside that the application form and policy documentation would alert a person to this fact, there does not appear to have been any great enquiry from the Complainant about these requirements. It may have been a lack of understanding or forgetfulness on his part, but the position is that the claims were relevant and should have been specifically disclosed. Unfortunately, once non-disclosure takes place, for whatever reason, the legal affect of that can operate harshly.

On the evidence submitted by the insurance company, it is my Finding that it was entitled to repudiate the claim that was made under the policy. I find that all relevant material facts were not disclosed at application stage and the evidence does not support a finding against the broker. My finding in this complaint is not upheld.

Mortgages and buy-to-let interest only Complaint Not Upheld

This dispute concerns a mortgage, referred to as a residential investor (buy-to-let) mortgage regarding two apartments. The evidence indicates that the properties were re-mortgaged through the Provider at a tracker rate.

The complaint is that, despite the Complainants applying for two separate mortgages, the Bank unilaterally combined both into one mortgage and has now instructed them to come off interest-only or alternatively transfer to an interest-only variable rate, neither of which the Complainants can afford. It is further argued that by combining both loans this restricted their options for managing their debt and the Bank has not entertained requests to find alternative solutions. The Complainants requested separation of facilities for the properties as per their original application, the ability to sell or dispose of either property independently and a reasonable extension to the interest-only period to allow them to manage their finances.

The Provider states that the applications it received for separate mortgages were submitted through a broker. It argues that these were processes and its underwriters decided to issue one loan for the greater amount combining both applications. It argues that the broker would have been notified of the decision and approval issued on this basis which was signed by the Complainants.

With regard to the Complainants' reference to the grouping of the mortgages, the Provider states that at the application stage, the Complainants were represented by independent mortgage advisors and a separately regulated mortgage intermediary. The Provider states that the Complainant's decision to appoint a solicitor is their own decision. In this regard it cannot be ignored that the application was presented through an independent broker. Furthermore, there is merit to the Bank's argument that legal advice provided is a matter between the Complainants and their advisors.

In this case there is no evidence to suggest that the Bank acted incorrectly. The basis on which the Bank was willing to provide lending was clearly set out in documentation issued after receipt of the applications. This documentation was clear as to the rate, facilities and the security attached. It was for the Complainants, having taken advice from the relevant parties, to accept or reject the terms offered. By signing the acceptance, they agreed to be bound by the terms put forward.

Turning to the interest-only matter, the contract signed by the parties allows the Bank to review the mortgage and “require the repayment of principal and interest ... so that principal and interest will be discharged within the existing term of the loan”. While noting the Complainants' submissions as to the wording of the documentation, I must conclude that there is no evidence of a commitment by the Bank that the mortgage could be serviced through interest-only payments for the mortgages' duration. The approval letter referred to the loan type and interest-only but contractual conditions were attached. The Bank can review an interest-only arrangement and this is set out in a concise manner in the agreement. The signed documentation placed the Complainants on notice that the Bank would be entitled to review the interest-only basis. This option has occurred in this case.

I also note that the basis on which the Bank offered to allow the Complainants remain on interest-only payments was by converting to a variable interest rate.

On balance, having considered the entirety of the submissions and the complaint put forward, I find that the complaint has not been substantiated. The Bank has provided a reasonable justification for its actions by reference to, inter alia, the mortgage conditions.

Investments and incomplete fact finds Complaint Partly Upheld

This complaint concerns a €50,000 investment in an investment fund. It was purchased in 2006 and the funds were split between an Irish property fund (60%) and a managed fund (40%). The investment in the managed fund was subsequently switched to cash in November 2011 and the Irish property fund element was switched to cash in May 2012 following a 6 month deferral period. The Complainant suffered a 50% loss on his investment.

This dispute concerns the nature of the investment, the fact find, the Complainant's circumstances and advice received from the Provider, including advice after the Complainant received a valuation statement showing a substantial fall in investment value. The Complainant in this case received, on retirement, a lump sum of €66,000. A meeting was arranged with a financial consultant at which he says he explained his personal circumstances. He submits that he does not recall taking part in the fact find and that this fact find is inaccurate, contains errors and is not a credible document. He submits that it could not have been carried out in his presence as there are too many inaccuracies.

The Provider states that the product was suitable and sold after a full and accurate recording of the Complainant's circumstances and financial needs. It details the “fact find”, including recommendations, check list, warnings and definition of medium risk as per the attitude to risk assessment. It submits that risk was clearly explained and documentation also confirmed the non-guaranteed nature of both options. It refers to definition of medium risk in the context of both funds involved and the risk statement. The Provider claims that the funds were suitable and the nature of same was not misrepresented at the time. It states that the investment matched the Complainant's objective, preferred term and attitude to risk at that time. It argues that the funds were categorised as medium risk and capital guarantee did not apply.

While there may be some concerns as to the medium risk categorisation of the property fund, I would state that for the most part, the documentation in this case made it clear that the Complainant was investing in a product which was subject to value fluctuations and did not contain guarantees. The documentation set out how the products operate, including the possibility of a deferral period applying and that switches to other funds could be requested.

However, I do have serious concerns regarding the apparent inaccuracies in the fact find. I note that copies of same, submitted during this investigation, do not appear to have been signed. I do not however consider that the level of inaccuracies represented a fundamental flaw in the sales process.

The issuing of documentation, signed application forms, and the provision of cooling off periods must be acknowledged. However, the inaccuracies are a concern and add weight to the Complainant's submission as to the fact of the fact find document not being credible.

I also have concerns regarding the risk attitude as per the fact find, the medium risk definition and the classification of the property fund. There are problems with the Provider's reliance on the fact find wording in the context of the property fund. I do not accept its effort to link geographical diversification within an asset type, i.e. Irish property (with a medium risk definition as stated in the fact find). I do not accept its effort to rely on the phrase “are likely to be (as opposed to “will be or must be”) with regard to the definition. The fact find definition is a description of a type of fund involved when compared to other risk levels and funds available. Therefore, it must be reasonably interpreted as medium risk funds having at least some spread across asset classes. In this case, the evidence shows that despite the medium risk definition, 60% of the Complainant's investment was placed in a fund which, in effect, only contained one asset type. This raises an issue as to terminology in describing the fund, considering medium risk funds seem to have comprised only two funds at the time.

Having considered all the details relevant in this case, I conclude that there are not enough grounds to justify the extent of rectification that the Complainant requested, and therefore the majority of the complaint has not been substantiated.

Having taken account of the entirety of documentation and that 40% of the investment was not in the property fund, I find that the complaint has been partly substantiated and a compensatory award is justified in this instance.

The evidence suggests that the investment remains in place today. It is therefore for the Complainant to consider his options in that regard and he may wish to take independent advice. However, on the basis that the complaint is partly substantiated, I direct the Provider to pay the Complainant by way of cheque, a compensatory award of €5,000.

Fees levied before investment made Complaint Upheld

In this case the Complainant was introduced to an investment opportunity by a bank official and was given an Information Memorandum and a copy of the Bank's terms of business.

The issue to be determined in this complaint is whether the management fee should only be charged annually from the date of investment or whether it can be charged for the year in which the investment had been made.

In determining this complaint, I believe that the principles governing the construction and interpretation of agreements should be applied. What is clear from the evidence presented in this case is that the management fee is to be calculated, i.e. not dependent on actual fees or expenses incurred in managing the investment vehicle.

The management fee is based on the value of the higher of either the amount of the investment made or the average of the opening and closing net asset value by reference to the year for which the management charge is to be calculated. I believe that if the purpose of the management fee was to recoup the actual cost of managing the fund, I could understand why fees would be collected in arrears. However, in circumstances where the amount is based solely on the amount of the investment, and in circumstances where all other fees had been advised to the Complainant prior to the investment, I do not believe that on any objective analysis, the Bank had proper grounds to backdate a management fee. It is very clear in the Information Memorandum that the management fee would be charged per annum. My understanding of the everyday use of the term “per annum” is per year or annually. I am satisfied that the proper interpretation to be placed on the agreement between the parties is that the management fee of 1.5% in this case would be charged for each year and therefore I accept the Complainant's submission that the fees cannot be levied before any investment is made. It is clear that the Complainant invested a lump sum with the Bank on a date in March of 2008. I therefore direct that the Bank return to the Complainant, the proportion of the annual management fee paid by the Complainant between when the fund was set up and that date in March 2008.

Accordingly, having considered the evidence before me, I am satisfied that this complaint has been substantiated.

Maladministration by broker Complaint Partly Upheld

This complaint relates to the Complainant's broker's action in respect of a claim that was submitted to the underwriters of a buildings insurance policy. The complaint is that the Provider did not supply, in a timely manner, written details of the underwriter's repudiation of their claim as requested.

In this case, a claim was submitted in relation to damage caused to the Complainant's business premises as a result of frost damage. The Complainant supplied the broker with details of the claim and supporting documentation and it is argued that the broker failed to respond in a timely manner. The only communication with regard to the claim was a telephone call advising that the underwriter was not covering the claim. The Complainant sought from the broker, a written reply with regard to the repudiation of the claim and also sought details of cover. It is argued that the Provider failed to respond to these requests.

The issue for adjudication here is whether the Provider, i.e. the Complainant's broker, correctly dealt with the claim that was submitted to it, in particular, whether the broker correctly communicated the insurance company's response to the claim.

There were a number of parties involved in the processing of this claim and they were the insured, the broker, the insurance company, the loss assessor and the loss adjusters appointed by the insurance company.

In this case the claim was first submitted by the Complainant directly to the broker. The claim was duly submitted to the insurance company and the broker appointed a loss assessor to deal with the claim on its behalf. The insurance company appointed a loss adjuster and for most part of the claim communications were between the loss adjuster and the loss assessor. The eventual declinature of the claim was communicated by the loss adjuster to the loss assessor. The loss adjuster concluded his correspondence to the loss assessor with the words “we trust you will advise the insured accordingly”. The loss assessor accordingly communicated matters with the broker, however, the only communication on the matter that the Complainant received, was a verbal communication which gave rise to the complaint. It is the broker's case that it was its procedure that the appointed loss assessor issue written notification directly to the Complainant but this did not happen in this case and on the complaint being made, the broker admitted he was aware of the Complainant's need for a written communication from the insurance company and policy details, but these were not actioned.

Having regard to all of the circumstances of the case, particularly the lapses in customer care outlined, I find that a substantial customer care award is merited and in order to do justice between the parties, my finding is that the Provider is to pay the Complainant €1,000 in full and final settlement of the dispute.

Commercial insurance case Complaint Not Upheld

The complaint relates to a claim in respect of malicious damage to a public house. The complaint is that the Company unreasonably delayed the settling of the claim. The Complainant points out at first that the Company declined the claim and then later instructed a loss adjuster to re-open its file and conclude the claim in the normal manner. The Complainant and his loss assessor consider that they co-operated fully with the loss adjuster in all his requests for information - some took longer to provide than others - but as far as they were concerned, the claim stands as presented. The Complainant's loss adjuster requested that interest be added over and above the amount already claimed and a modest fee for the loss assessor to take into account the delays.

It is the Company's case that it is clear that while there had been delays in the handling of the claim, these had occurred as a result of the Complainant and his loss adjuster's failure to co-operate with the Company's investigation of the loss and to provide the necessary documentation to enable validation of the large loss that took place. It is the Company's contention that the Complainant's duties in this regard are conditions precedent to any liability on the part of the Company to make any payment on foot of a claim and that the failure to adhere to the policy requirements is also in breach of the general condition of the Complainant's policy.

The correspondence between both parties to this complaint took place over an extended period of time with final documentation being received 26 months after the initial contact. At the time of the Finding being issued, the Company was still awaiting a signed statement from the insured before processing the matter further.

Insurers are entitled to investigate every claim presented and request supporting documentation or require a statement to be provided to ensure that it has all of the necessary evidence it needs in order to assess a claim under the policy of insurance. It is evident that delays have occurred on all sides in this case. The fact remains that while the protracted dispute has been ongoing between the Company and the Complainant's representative, the Complainant's claim for payment has, unfortunately for him, not been finalised. However, it is clear from the numerous requests made by the Company, and the specific conditions applicable to the policy, that the Complainant and his representatives did not fully, or adequately co-operate and provide the assistance necessary, to conclude the investigation of this claim.

In conclusion I am satisfied that the Company's attempts at settlement of the claim were fair and reasonable and in accordance with the policy terms and conditions. It is my finding therefore that the complaint is not upheld.

Farm insurance and non-disclosure Complaint Not Upheld

The complaint relates to a fire damage claim under an insurance policy covering a farm. The complaint is that the Company incorrectly repudiated the claim for non-disclosure. The material facts said not to have been disclosed were previous claims with another insurer. The insurance was taken out through an independent intermediary. The Complainant states that the intermediary completed a proposal form on his behalf, but did not ask him any questions about prior claims and convictions and did not inform him that cover may be refused as a result of same.

The Provider in this case is a broker and the issue for investigation and adjudication is whether the Provider correctly arranged cover for the Complainant. As the policy was taken out by an intermediary, the insurance company would not be responsible for any alleged act or omission of the intermediary.

Whilst investigating this claim, the insurance company discovered that the Complainant had two losses on his previous insurance policy. This information was not disclosed on the proposal form and subsequently the policy was cancelled with effect from inception date, due to the non-disclosure of a material fact.

There is a responsibility on a broker to alert the insured of the need to make a full disclosure when completing proposal. In this case, while the broker states that it did so, the Complainant argues that he was not so alerted to these matters.

The Complainant in this case had over 20 years exposure to the workings of insurance policies and I cannot accept that he would not have been familiar with the requirement to make a full disclosure of material facts.

Disclosure is necessary, even without being asked of all the material circumstances. This case highlights the importance of a person reading over a document before signing same. It is the responsibility of the person(s) seeking insurance to read over the questions and information on the application to ensure it is correct before signing.

The argument is that it was not fully understood by the Complainant that there was a need to disclose claims that were made against another insurer or that there would be a consequence where that happened. Leaving aside that the application form and policy documentation would alert a person to this fact, there does not appear to have been any great enquiry from the Complainant about these requirements. It may have been a lack of understanding or forgetfulness on his part, but the position is that the claims were relevant and should have been specifically disclosed. Unfortunately, once non-disclosure takes place, for whatever reason, the legal affect of that can operate harshly.

On the evidence submitted by the insurance company, it is my Finding that it was entitled to repudiate the claim that was made under the policy. I find that all relevant material facts were not disclosed at application stage and the evidence does not support a finding against the broker. My finding in this complaint is not upheld.

Mortgages and buy-to-let interest only Complaint Not Upheld

This dispute concerns a mortgage, referred to as a residential investor (buy-to-let) mortgage regarding two apartments. The evidence indicates that the properties were re-mortgaged through the Provider at a tracker rate.

The complaint is that, despite the Complainants applying for two separate mortgages, the Bank unilaterally combined both into one mortgage and has now instructed them to come off interest-only or alternatively transfer to an interest-only variable rate, neither of which the Complainants can afford. It is further argued that by combining both loans this restricted their options for managing their debt and the Bank has not entertained requests to find alternative solutions. The Complainants requested separation of facilities for the properties as per their original application, the ability to sell or dispose of either property independently and a reasonable extension to the interest-only period to allow them to manage their finances.

The Provider states that the applications it received for separate mortgages were submitted through a broker. It argues that these were processes and its underwriters decided to issue one loan for the greater amount combining both applications. It argues that the broker would have been notified of the decision and approval issued on this basis which was signed by the Complainants.

With regard to the Complainants' reference to the grouping of the mortgages, the Provider states that at the application stage, the Complainants were represented by independent mortgage advisors and a separately regulated mortgage intermediary. The Provider states that the Complainant's decision to appoint a solicitor is their own decision. In this regard it cannot be ignored that the application was presented through an independent broker. Furthermore, there is merit to the Bank's argument that legal advice provided is a matter between the Complainants and their advisors.

In this case there is no evidence to suggest that the Bank acted incorrectly. The basis on which the Bank was willing to provide lending was clearly set out in documentation issued after receipt of the applications. This documentation was clear as to the rate, facilities and the security attached.

It was for the Complainants, having taken advice from the relevant parties, to accept or reject the terms offered. By signing the acceptance, they agreed to be bound by the terms put forward.

Turning to the interest-only matter, the contract signed by the parties allows the Bank to review the mortgage and “require the repayment of principal and interest ... so that principal and interest will be discharged within the existing term of the loan”. While noting the Complainants' submissions as to the wording of the documentation, I must conclude that there is no evidence of a commitment by the Bank that the mortgage could be serviced through interest-only payments for the mortgages' duration. The approval letter referred to the loan type and interest-only but contractual conditions were attached. The Bank can review an interest-only arrangement and this is set out in a concise manner in the agreement. The signed documentation placed the Complainants on notice that the Bank would be entitled to review the interest-only basis. This option has occurred in this case.

I also note that the basis on which the Bank offered to allow the Complainants remain on interest-only payments was by converting to a variable interest rate.

On balance, having considered the entirety of the submissions and the complaint put forward, I find that the complaint has not been substantiated. The Bank has provided a reasonable justification for its actions by reference to, inter alia, the mortgage conditions.

Investments and incomplete fact finds Complaint Partly Upheld

This complaint concerns a €50,000 investment in an investment fund. It was purchased in 2006 and the funds were split between an Irish property fund (60%) and a managed fund (40%). The investment in the managed fund was subsequently switched to cash in November 2011 and the Irish property fund element was switched to cash in May 2012 following a 6 month deferral period. The Complainant suffered a 50% loss on his investment.

This dispute concerns the nature of the investment, the fact find, the Complainant's circumstances and advice received from the Provider, including advice after the Complainant received a valuation statement showing a substantial fall in investment value. The Complainant in this case received, on retirement, a lump sum of €66,000. A meeting was arranged with a financial consultant at which he says he explained his personal circumstances. He submits that he does not recall taking part in the fact find and that this fact find is inaccurate, contains errors and is not a credible document. He submits that it could not have been carried out in his presence as there are too many inaccuracies.

The Provider states that the product was suitable and sold after a full and accurate recording of the Complainant's circumstances and financial needs. It details the “fact find”, including recommendations, check list, warnings and definition of medium risk as per the attitude to risk assessment. It submits that risk was clearly explained and documentation also confirmed the non-guaranteed nature of both options. It refers to definition of medium risk in the context of both funds involved and the risk statement.

The Provider claims that the funds were suitable and the nature of same was not misrepresented at the time. It states that the investment matched the Complainant's objective, preferred term and attitude to risk at that time. It argues that the funds were categorised as medium risk and capital guarantee did not apply.

While there may be some concerns as to the medium risk categorisation of the property fund, I would state that for the most part, the documentation in this case made it clear that the Complainant was investing in a product which was subject to value fluctuations and did not contain guarantees. The documentation set out how the products operate, including the possibility of a deferral period applying and that switches to other funds could be requested.

However, I do have serious concerns regarding the apparent inaccuracies in the fact find. I note that copies of same, submitted during this investigation, do not appear to have been signed. I do not however consider that the level of inaccuracies represented a fundamental flaw in the sales process.

The issuing of documentation, signed application forms, and the provision of cooling off periods must be acknowledged. However, the inaccuracies are a concern and add weight to the Complainant's submission as to the fact of the fact find document not being credible.

I also have concerns regarding the risk attitude as per the fact find, the medium risk definition and the classification of the property fund. There are problems with the Provider's reliance on the fact find wording in the context of the property fund. I do not accept its effort to link geographical diversification within an asset type, i.e. Irish property (with a medium risk definition as stated in the fact find). I do not accept its effort to rely on the phrase “are likely to be (as opposed to “will be or must be”) with regard to the definition. The fact find definition is a description of a type of fund involved when compared to other risk levels and funds available. Therefore, it must be reasonably interpreted as medium risk funds having at least some spread across asset classes. In this case, the evidence shows that despite the medium risk definition, 60% of the Complainant's investment was placed in a fund which, in effect, only contained one asset type. This raises an issue as to terminology in describing the fund, considering medium risk funds seem to have comprised only two funds at the time.

Having considered all the details relevant in this case, I conclude that there are not enough grounds to justify the extent of rectification that the Complainant requested, and therefore the majority of the complaint has not been substantiated.

Having taken account of the entirety of documentation and that 40% of the investment was not in the property fund, I find that the complaint has been partly substantiated and a compensatory award is justified in this instance.

The evidence suggests that the investment remains in place today. It is therefore for the Complainant to consider his options in that regard and he may wish to take independent advice. However, on the basis that the complaint is partly substantiated, I direct the Provider to pay the Complainant by way of cheque, a compensatory award of €5,000.

Fees levied before investment made Complaint Upheld

In this case the Complainant was introduced to an investment opportunity by a bank official and was given an Information Memorandum and a copy of the Bank's terms of business.

The issue to be determined in this complaint is whether the management fee should only be charged annually from the date of investment or whether it can be charged for the year in which the investment had been made.

In determining this complaint, I believe that the principles governing the construction and interpretation of agreements should be applied. What is clear from the evidence presented in this case is that the management fee is to be calculated, i.e. not dependent on actual fees or expenses incurred in managing the investment vehicle.

The management fee is based on the value of the higher of either the amount of the investment made or the average of the opening and closing net asset value by reference to the year for which the management charge is to be calculated. I believe that if the purpose of the management fee was to recoup the actual cost of managing the fund, I could understand why fees would be collected in arrears. However, in circumstances where the amount is based solely on the amount of the investment, and in circumstances where all other fees had been advised to the Complainant prior to the investment, I do not believe that on any objective analysis, the Bank had proper grounds to backdate a management fee. It is very clear in the Information Memorandum that the management fee would be charged per annum. My understanding of the everyday use of the term “per annum” is per year or annually. I am satisfied that the proper interpretation to be placed on the agreement between the parties is that the management fee of 1.5% in this case would be charged for each year and therefore I accept the Complainant's submission that the fees cannot be levied before any investment is made. It is clear that the Complainant invested a lump sum with the Bank on a date in March of 2008. I therefore direct that the Bank return to the Complainant, the proportion of the annual management fee paid by the Complainant between when the fund was set up and that date in March 2008.

Accordingly, having considered the evidence before me, I am satisfied that this complaint has been substantiated.

Critical illness - a cessation of benefit Complaint Upheld

The Company initiated a monthly payment of benefit to the Complainant in April 2006 and wrote to the Complainant in June 2007 advising it was ceasing payments of benefit to the Complainant giving 3 months notice. The Company subsequently reinstated the benefit with effect from the date of cessation and again ceased benefit in July 2011.

The Company claims that the Complainant had advised that he was suffering from a number of conditions which resulted in constant fatigue, pain and decreased mobility. In order to be eligible for benefit under the scheme a scheme member must be “totally incapable by reason of illness or injury of following his normal occupation”.

Significant volumes of medical evidence were submitted as part of the complaint. It is clear on the basis of the evidence submitted that the Complainant was diagnosed with Crest Syndrome in 1993 and was subsequently diagnosed with breast cancer in 2007. The Complainant has not been in employment as a secondary school teacher since 2006 and has been in receipt of benefit pursuant to the terms and conditions of a policy from April 2006 to July 2011.

Having reviewed the contents of the medical evidence submitted, I am satisfied that the Company incorrectly took the decision in April 2011 to cease the payment of benefit pursuant to the terms and conditions of the policy.

The report from the medical practitioner arising from the independent medical assessment did not confirm that the Complainant was no longer totally incapable by reason of illness or injury of following the occupational duties of a secondary school teacher on that date. The doctor merely stated that there is no reason for this patient to be permanently unable to work.

However, I take the view on the basis of the information and documentation before me that the medical evidence available to the Company did not establish that the Complainant was no longer “totally incapable by reason of illness or injury of following the occupational duties of a secondary school teacher” when the Company decided to cease payment of benefit to the Complainant. The Company's decision in that regard is not borne out by the evidence submitted in this case for the purpose of the investigation of this complaint.

Therefore it is our finding that the Company wrongfully ceased benefit payment to the Complainant and we directed that the Company re-commence payment of benefit and backdate payments to the date of cessation, pending further reviews of the Complainant in accordance with the policy provisions.

This complaint is upheld.

Income protection policy claim Complaint Not Upheld

The Company received a claim form in November 2008 in order to claim income protection benefit under a scheme. The Complainant's claim was admitted in March 2009 and backdated to the Complainant's benefit from January 2009, the expiry of the deferred period. The Company ceased paying benefit to the Complainant pursuant to her policy from November 2010. The Company ceased payments to the Complainant in 2010 as it was their view, based on the objective evidence at that time, that the Complainant was fit to resume her normal occupation and did not meet the definition of disablement, as required by the policy.

In arriving at this opinion, they thoroughly assessed the claim from a number of different perspectives. At the time of her claim, the Complainant was employed in a sedentary position in a bank, working 21 hours per week in an office. The Complainant is reporting symptoms of Fibro Myalgia. This is a condition of unknown cause, where a person complains of profound fatigue and joint pain and is not directly caused by any other medical conditions. In order for a diagnosis of Fibro Myalgia to be made, the diagnosing physician is reliant on the self reports of the patient. There are no recognised available tests to confirm the diagnosis and it is a diagnosis of exclusion. Furthermore, there is no recognised medical treatment for this condition apart from a mixture of cognitive behavioural therapy and a graded exercise programme, together with some medication.

A substantial amount of documentation has been exchanged between the parties in this complaint, including medical reports and video evidence totalling 36 minutes in length indicative of the Complainant's current level of mobility and activity as witnessed during the course of observation.

The terms and conditions of the Complainant's policy clearly and unambiguously state that in order to be eligible for benefit, the Complainant is required to be disabled and therefore “unable to carry out the duties pertaining to a his/her normal occupation by reason of disablement arising from bodily injury sustained or sickness or illness contracted”.

In light of the contents of the evidence submitted, I am not of the opinion that the Complainant is unable to carry out the duties pertaining to her normal occupation. Despite the Complainant's failure to provide clear and unambiguous evidence to support her case, I note that the Company offered to pay 50% of the full benefit payable pursuant to her policy for a period of 6 months to allow her to engage in a phased return to work as recommended by her own specialist. In these circumstances I am of the opinion that the Company acted in a fair and reasonable manner in endeavouring to resolve this dispute to the satisfaction of the Complainant.

For those reasons I am satisfied, on the basis of the evidence before me, that the complaint cannot be upheld.

Investment mis-selling alleged capital guarantees Complaint Upheld

This complaint relates to a capital security provided by an investment policy sold by a bank. The bank has confirmed that the capital security as provided by it remains in force and will continue to remain in force unless the Bank is unable to meet its obligations to its life subsidiary. The Provider has advised the Complainant that only in these circumstances may the Complainant lose all or some of the amount invested and/or any return on the investment at maturity date. The Complainant states that she took out this investment on the understanding that it was guaranteed and it turns out that it is not in fact guaranteed.

The complaint is therefore that the Complainant was mis-sold an investment by the Provider and she seeks a return of her capital.

The Complainant took out a guaranteed investment policy with an investment of €50,000 in a guaranteed bond with a term of 5 years and 6 months. The policy maturity date is April 2015. The policy has a promised gross return at maturity of 20% and the promised gross maturity value is €60,000.

The Complainant states that she invested on the basis of assurances given to her by the bank as to the capital security of it and the product.

The Complainant states that, to her horror, she received an annual statement from the Provider in 2011 which contained a note to the effect that if the bank could not meet its commitment to the Provider at maturity of the investment, the Complainant might lose some or all of the amount invested and/or any return on investment at the maturity date which, in the Complainant's case, is April 2015. The Complainant states that at no time in the sales process, and nowhere in the documentation she received, was this ever explained to her.

The complaint is therefore:

  1. that the Provider gave the Complainant misleading and confusing information from the beginning which led her to purchase an investment which the Complainant states is not safe or guaranteed;
  2. 2. that the Provider failed to provide the Complainant with all relevant documentation pertaining to the investment at the point of sale.

The Complainant states that she was mis-sold the investment by the Provider and is seeking a return of her capital.

The Provider in its response confirms that the policy does provide a capital security as requested by the Complainant during the sales meeting with the insurance and investment manager concerned. The Provider states that the guarantee remains in place and submits that the Complainant was provided with completed documentation which demonstrates that she was aware of how the guarantee operates.

The Provider refers to terms and conditions in the Complainant's policy document which, inter alia, outline that in order to provide a maturity value, the Provider purchases an asset from the parent bank. If the bank is unable to meet their commitments to the subsidiary company at maturity date then the investor could receive less than the original single contribution or less than the maturity value. The Provider states that the note for investors contained on foot of the annual statement received by the Complainant reinforces information already provided to her during the sales meeting and in the policy documentation provided to her.

It is my view, having identified and confirmed as a 100% capital secure investor requiring her maturity value to be no less than her original investment a policy which involved a risk, seemingly un-quantified, or losing not just the return of the investment but also part of the original capital investment sum itself, in circumstances where the consequence of this materialising were not explained until after the sales process was complete, cannot be considered an investment suitable or appropriate to the customer's needs.

I am satisfied therefore that the investment policy was mis-sold only to the failure of the Provider to outline and quantify the risk to the Complainant's capital before she proceeded with the investment. The Complainant made it clear that she needed capital security and I am satisfied that the Provider's failure in that regard denied the Complainant the opportunity to make an informed consent when electing to proceed with the investment.

The complaint is upheld and I am of the opinion that the Complainant should now be given the option, either to proceed with her investment and to leave it in place until maturity, thereby benefiting from a potential 20% return (but in the knowledge that there is a risk to her capital which remains un-quantified) or else take back her original investment of €50,000 now with no interest and forfeit this potential return.

Motor insurance maladministration car scrapped Complaint Upheld

The Complainant had a policy of motor insurance with the Provider. The Complainant reported a claim under the policy following the attempted theft of her car from outside her home in February 2011. The car had been damaged during the attempted theft and was removed by the Provider to its repair centre for an estimate to be prepared. The car was subsequently found to be uneconomical to repair and was destroyed later in February 2011.

The Complainant's complaint is that the Provider wrongfully destroyed her car without her knowledge or consent.

Following the attempted theft the car was towed away from her house by the Provider. Thereafter she received a telephone call from the Provider advising that to replace the car would cost approximately €2,200. The Complainant states that she instructed to do nothing with her car until she had received a written estimate of repairs. The Complainant states that she never received this estimate from the Provider and that the car was subsequently crushed 4 days later without her knowledge or consent. The Complainant acknowledges that her car was 18 years old but states that it was in excellent condition and in working order and that she had no intention of changing it. The Complainant believes that the Provider had no right to destroy her car and that by doing so without prior notification or consent, she was deprived of the opportunity to obtain her own independent motor engineer's assessment of the damage to the car, and in addition was deprived of the opportunity to avail of the Government Scrappage Scheme, under which she believes she would have been entitled to a minimum allowance of €3,000. The Complainant wishes to be reimbursed with a cost of replacement parking permits destroyed with the vehicle, for the cost of her road tax, for the cost of hiring a tow truck for a failed attempt to collect the vehicle before she discovered that it had been destroyed, and for the cost of a replacement vehicle of similar condition and size (€4,500). The Complainant has since purchased a replacement car for €6,200. The Complainant also seeks a sum of €1,300 for distress and inconvenience. A total compensation is sought of €5,800.

The Provider accepts that the Complainant's claim was not handled in a satisfactory manner and that it did not communicate correctly with the Complainant and that the car was destroyed before the Complainant had an opportunity to recover it.

The Provider has offered the Complainant a sum of €1,000 representing the pre-accident value of the car, and an additional €1,500 for the inconvenience, delays and poor customer service experienced by the Complainant.

While the Complainant seeks compensation in the sum of €5,800, she indicated that she was prepared to accept no less than €5,000.

Under the terms of the Complainant's policy, the Complainant is entitled to be reimbursed “the market value” of her car at the date of loss. The market value cost constitutes the cost on the public market of a replacement vehicle of similar make, model, age, condition and mileage. The market value of the vehicle is not necessarily its purchase price nor the value of the vehicle when the policy was originally effected. Deductions would be made for wear and tear and depreciation of the vehicle.

In the case of the Complainant's claim, the Provider initially placed a pre-accident value of €500 on the insured vehicle, subsequently increasing this figure to €1,000. While the Complainant purchased a replacement car for a higher amount she is entitled to so purchase, but she is only entitled under the policy to be reimbursed for the market value of her own damaged vehicle.

Having regard to the make, age and model of the Complainant's damaged vehicle, it is my opinion that a valuation of €1,000 placed on it by the Provider's motor assessor is a generous one.

Nevertheless, I am of the view that the overall settlement offer of €2,500 made by the Provider should be increased to €3,000 to reflect the particular circumstances of this complaint, the age and poor health of the Complainant and her brother, and the evident degree of distress caused by the sudden and unexpected destruction of the insured vehicle.

While I cannot award the level of compensation sought by the Complainant principally on the grounds that the Complainant is not entitled under the policy to be reimbursed more than the market value of the lost vehicle, I find it appropriate that the Provider should pay the Complainant a sum of €3,000 in settlement of this matter and I direct accordingly.

The complaint is upheld.

Home insurance Complaint Upheld

The Complainants purchased a Section 23 property in 2004 and insured it with the Provider. In 2006 the Complainants re-broked the insurance cover with an on-line insurance intermediary. The Complainants state that at no time did they change the usage of the premises which was for short term rental on an ongoing basis. The Complainants state that the intermediary re-broked the insurance contract from year to year and that cover was in place with the Company when the claim occurred in 2010.

The Complainants have stated that, in their view, any confusion regarding cover is between the intermediary and the Company. Furthermore, the Complainants are of the view that the Company has been negligent in taking 10 months to advise that it was refusing the claim.

The Company for its part has stated that the property was insured on its books as a standard homeowner's policy and that had the Company been made aware that the property was let without a lease to a third party, the policy would not have been incepted by the Company. In response, the Company has refused the claim due to the non-disclosure of a material fact. The Company states that had this fact been disclosed the proposal would not have met the underwriter's acceptance criteria and the policy would not have been put in place.

The complaint is therefore that the Company has unreasonably refused the claim and has acted negligently in delaying matters for over 10 months. The Complainants seek payment of the claim from the Company to enable them to rebuild the house and also for compensation on rent lost.

In declining the claim, the Company is relying on the fact that the loss adjusters appointed by the Company ascertained, during the claim investigation, that the property was not owner occupied, but rented to a third party. The loss adjusters' report clearly states that there appears to have been confusion regarding the statement relating to the Property Usage, which recorded that the property was “owner occupied”.

The loss adjusters were of the view that “the schedule as presented may well have been in error” given the fact that there were two addresses on the intermediary's file and that the original proposal was done by ‘phone.

The loss adjusters went on to state that “in light of the above, we now consider that the insurers must deal with this loss as no proofs are available in relation to misrepresentation of the usage of the property”. The Complainants' loss assessor has referred to the above recommendation in his submission on behalf of the Complainants and further states on their behalf, that any errors regarding the rental status of the property were a matter between the intermediary and the insurer.

In reviewing all submissions in this case, I find that there is one weakness in the argument put forward and that is contained in the correspondence sent to the Complainants by the intermediary on 30 August 2009. This letter and the statement of fact document which accompanied it, is of major significance in that the intermediary's letter clearly states:-

Please find enclosed - “Statement of Facts - this forms the basis of the contract between you and the insurer. You should satisfy yourself that it is absolutely accurate. It reflects the information provided by you to us. You should only return it if it needs to be amended in any way”.

The Statement of Facts document - under property details on Page 2 clearly records that the property is owner occupied”.

The above information in itself appears to leave the Complainants in a serious predicament. However, I must give consideration and take into account the tied agency relationship with the intermediary and the Company.

In this instance, under the intermediary's own terms of business document, the relationship between the intermediary and the Company is described as that of a tied agent. This means that the intermediary is acting as a direct agent of the Company and that any information in its possession is, in effect, in the possession of the Company. In this instance the intermediary is acting as the Company's tied agent and this brings with it obligations on the Company to ensure that its tied agent acts efficiently and effectively at all times in carrying out business transactions on its behalf. In this case the intermediary was aware of the two addresses appearing on the policy schedule and was corresponding at all times directly with the Complainant at their Dublin address which implies that the intermediary, acting as a tied agent on behalf of the Company, was aware that the risk address was not “owner occupied”.

On balance it is my view that the loss adjusters' assessment of this case is probably an equitable one in that the policy schedule and Statement of Facts reflect an error during the completion of the proposal over the telephone between the intermediary as the tied agent of the Company and the Complainants.

On the evidence presented I find that the Company is responsible for the actions of its tied agent in recording and administering risk information incorrectly on the Company's behalf. My finding is that there is insufficient evidence from the tied agent proving there was non-disclosure by the Complainants. This is further supported by the fact that the intermediary, as tied agent of the Company, was unable to give proof to the loss adjusters that misrepresentation occurred. On the above basis I find that the complaint is upheld, and that the Company should admit the claim in respect of the repairs to the property and reimburse the loss of rent suffered by the Complainants due to the delay in having this case resolved.

Mortgage Protection Scheme Complaint Not Upheld

The Complainant joined a local authority mortgage protection scheme in September 2002 and signed a declaration stating that she was in Good Health. In August 2009 the Complainant submitted a claim to the Company through an intermediary seeking the payment of benefit under the scheme. On investigation of the claim by the Company, it was found that the Complainant had undergone a pancreatic and kidney transplant in 2000 and was receiving ongoing medical reviews and medication from that date. The Company has repudiated the claim on the basis that the Complainant's medical condition would have excluded her from being eligible to join the group scheme in 2002.

The Complainant is of the view that the Company knew, or ought to have known, through its servants or agents that she had a complicated and difficult medical history which involved a double kidney and pancreatic transplant. She states that she disclosed all her medical history to the County Borough in September 2002 when applying for a social housing scheme and that all relevant parties were on actual notice of that medical history. She submits that she was in good health at the time she completed the declaration to the local authority mortgage protection scheme. The Complainant submits that as she was admitted to the affordable housing scheme, she automatically was part of the master insurance policy which she paid her premiums into on an ongoing basis.

She states that she had disclosed her complicated medical history to the County Borough who were organising the life cover and that the Company had an express or an implied obligation to inform themselves with regard to the background and circumstances of those from whom it was accepting premiums.

The Provider in its defence claims that it was not made aware by the Complainant or any other party that she had received a double pancreatic and kidney transplant in 2000. Had this information been disclosed the Company states, the Complainant would not have fulfilled the medical criteria of being in good health and would not have been accepted for insurance under the group master local authority mortgage protection plan.

On the basis of all medical information available to it, the Company has refused the claim on the basis that the Complainant did not meet the eligibility conditions contained in the local authority mortgage protection scheme and could not, in the medical opinion of the Chief Medical Officer, have been in “good health”.

A question that arises in this case is whether the Company or its agents had conveyed at any stage, to the County Borough, its obligations to forward to the Company any relevant medical information that might impact on the Company's underwriting criteria. On further examination of the Borough's loan offer, it is quite explicitly stated that the mortgage protection insurance will be arranged by the County Borough subject to the individual being on the date of this agreement (i) over 18 years of age, but under 55 years, (ii) gainfully employed, (iii) in good health. As this was a group life scheme, no other medical examinations other than the above declaration were asked in the application process. On examination of the policy conditions, the Company has not defined Good Health and has only provided a definition right in the course of the claim investigation. A definition of Good Health may be measurable to some extent by one's ability to attend work on a regular and normal basis.

In this instance I have reviewed the employment record of the Complainant at the time of proposing for this insurance which was September 2002 and find that her absenteeism in work due to her medical condition was significant in the period 2000 - 2003 (252 days). Much of this however, the Complainant states was due to her need to attend clinics in Dublin, rather than being out sick. In the years following from 2004 - 2008, the Complainant was absent 30 days per annum on average. The question here is would a reasonable and prudent person regard this amount of annual sick leave as indicative of a person in good health? On balance, the evidence points in the direction that the Complainant was not in good health at the time she proposed for the insurance in 2002. It is clear that the Complainant fully disclosed her medical history at the time of application to the County Borough who have confirmed in writing that it was organising the insurance cover.

While the Complainant and the Company's definition of Good Health differ, the fact that the term is not defined in the policy contract leaves the Company somewhat exposed. In drafting the policy, the Company is the professional and should have defined good health in the interests of clarity for all involved. Given the serious medical condition of the Complainant, she may well have felt in good health relative to her previous medical experience. The Company should also, in my view, have issued express instructions to the County Borough through its administrative agents on its requirement for considering lives with a higher risk profile.

There should at least have been an understanding that any official medical information submitted by a prospective group life member should have been relayed to the Company.

In my view the Company have been unprofessional in drafting its own contract and negligent in not putting in place a robust set of procedures to protect both itself and its prospective policyholders. In this instance my finding is that the Company has a case to answer here in that its drafting of the policy was not explicit enough to ensure ambiguity was avoided. Secondly, the operation of the application process was flawed in that the County Borough, whilst stating the life cover was a condition of the loan offer, was offering loans without referring critical medical information in its possession to the Company. In this case, the Complainant, in good faith, fully disclosed her medical information to the relevant authority. The fact that the Company was not given this information is a matter between the Company and the County Borough. In this instance, the Company did not apply its normal standards of underwriting. The Company has based its morbidity and mortality actuarial ratings on the assumption that the group risk would even out based on the large number of insured members.

In this case it is my view that given the full disclosure by the Complainant at the outset to the relevant authority and the payment of premiums in good faith by her over the intervening years, that the Company has, at this stage, an obligation to admit the claim and also reinstate the Complainant as a member. I direct the Company to initiate payment of the disability benefit to the Complainant for the period referred to. I also find that the Complainant should be re-admitted to the group life scheme with immediate effect at the normal group life cover premium rate.