Whether or not the financial business made a recommendation, it is under a duty to provide adequate information. In the words of the FCA:
A financial business must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.
In considering complaints, the ombudsman will assess the information provided - and the context in which it was provided. If the sale was made primarily by phone or at a meeting, and the evidence suggests failures in the oral disclosure of information by a financial business, we are unlikely to consider that subsequent written information automatically corrects previous shortcomings.
In the case of Mr and Mrs B (PDF 62KB), having explained the significant shortcomings in the phone sales-process used by the financial business, the ombudsman said:
I do not view the information provided after this in writing as sufficiently clear to correct the position. The arrangements being entered into were significant. It is reasonable to assume that Mr and Mrs B took some time and trouble to consider the matter.
But only the most careful and assiduous reader of the documentation would have been able to identify the important factors here. I conclude that the financial business did not pay due regard to the information needs of Mr and Mrs B.
As the FCA notes, particular difficulties may arise if the process requires "a consumer to read and understand the written material and recognise (without reviewing the documents with this purpose in mind) that the position differed from his previous understanding."
Where consumers have accepted recommendations to buy PPI on the basis of inadequate information, there is a real risk that they would regard the written material only as a formality - and simply sign and return the documents.
So whilst it is important that the consumer has access to the full policy documentation, it is not enough for the financial business to say it met its obligations simply by sending the consumer the policy document and highlighting the consumer's right to cancel the policy.
We need to consider the overall impression left by the disclosures made by the financial business. Does this represent a fair and balanced summary of the policy - noting not just its benefits but also its limitations and exclusions? Or is the impression given by the financial business one that understates or ignores the limitations of the policy?
Overall, we will look to see whether or not the consumer was put in a position where they could make an informed choice about the policy.
There is more information about this in the section of our website our approach to payment protection insurance (PPI) mis-sale complaints.