Concerns have arisen over the quantity of complaints being received by the Financial Ombudsman Service regarding reviewable whole of life policies.
Concerns have arisen over the quantity of complaints being received by the Financial Ombudsman Service concerning reviewable whole of life policies.
Caroline Mitchell, lead investments ombudsman for the FOS, commented in the Daily Telegraph that last year around 1,400 complaints were received by the FOS regarding whole of life policies. Out of the 1,400 complaints approximately one third were upheld.
This figure is down from 2009/2010 where 1,690 complaints were made about whole of life policies, however only 28% were upheld.
Mitchell stated that scores of consumers complained it was not apparent to them at the start of their policy that premiums would be reviewed and could significantly increase over time.
According to Mitchell, the FOS expects businesses that sell these policies to explain fully that they are subject to review, including any effects on consumers’ future premiums.
Mitchell added that a small amount of these complaints concern whole of life policies taken out for inheritance tax planning, however they had not been put into a trust for the beneficiaries. The FOS believes the onus is on the business selling the policies to create the trusts or to check the policy holder has made their own arrangements.
There is clear anger from consumers where their premiums have increased significantly and in some instances where they have had to settle for lower policy benefits.
This annoyance is reflected by the FOS revealing that last year complaints about whole of life policies and savings and endowment products accounted for one fifth of total investment complaints.