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ombudsman news

issue 107

January/February 2013


We insure a farmer who is claiming for storm damage to an outbuilding on his land. We sent out loss adjusters to inspect the building, and they found that it was in a very bad condition - in fact, they described it as being "at the end of its useful life". In spite of the loss adjuster's findings, we decided to pay the claim - and we appointed contractors who carried out £3,000 worth of repairs. A few months on, the repairs haven't worked at all and water is coming in through the roof in several places. Would the ombudsman say that we have to pay out again?

We would probably want to ask you more questions about your decision to pay for the repair work in the first place. If there was evidence of significant wear and tear - which you say there was in this case - we wouldn't expect you to have paid for the damage caused by the water as long as wear and tear was clearly excluded in the consumer's policy.

However, if the loss adjuster found that there was genuine storm damage, we might ask why you didn't make a cash offer rather than going ahead with the building work.

You've confirmed that your contract with the consumer says that you will "indemnify him". This means putting him back in the position he was in before the storm. If this hasn't happened, we might say that you need to make another payment.

I work for a charity that runs a women's shelter. Clients ask me all kinds of questions - and financial matters often come up. Just after Christmas someone spoke to me about her credit card bill. She was expecting it to be high, but when it arrived it was even higher than she'd expected. When we looked through the statement together, it turned out that the credit card company had increased her interest rate. She's really worried about how she's going to pay. What can she do?

The first thing to do is contact the credit card company to talk about it.
It might be that your client had a promotional interest rate that has ended.

Or that she has been using the account in a way that the business sees as more "risky" - for example, she might have been making a lot of cash withdrawals, or paying less than usual.

Credit card terms and conditions often say that the business can increase interest rates for "other reasons", so check the agreement carefully or ask to see a copy of the terms.

The business should be able to explain what has happened. Your client should have been told that the rate was going to change at least 30 days before, she should go through the paperwork or ask the business for a copy of this letter if she thinks she hasn't received it.

If your client doesn't want to accept the rate increase, she can tell the business within 60 days of when it wrote to her about the change. She won't be able to use her card any more and her account will be closed. But she can pay back the money she owes at the interest rate she had before the business changed it.

If your client was sent a letter about the change but didn't read it - and more than 60 days have passed - it might now be too late to opt out. But the business must treat her sympathetically if she is going to have problems paying. Encourage her to talk to the company first, but if this doesn't sort things out, then she can bring the complaint to us. She might also want to chat to her local branch of Citizens Advice or a free debt advice organisation like StepChange.

image: ombudsman news issue 107

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.