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ombudsman news

issue 131

January/February 2016

complaints involving relationship breakdowns

Each year we hear from people whose relationship troubles have led to problems with their finances - whether they've got divorced, had a break-up or fallen out with family members.

As our case studies highlight, many of the complaints we see centre on previously joint finances - and the new arrangements that have been set up.

Any difficulties will be coming at an already stressful time - and the people involved may well be upset with each other, as well as with the financial business. Our role is to decide whether a business has treated their customer fairly, which may only be part of the wider issues their customer needs to sort out.

On the other hand - while a business is unlikely to have directly caused the relationship breakdown - their actions may have caused their customer further upset. So if something's gone wrong, we'll always consider whether the business has recognised the emotional and practical impact of their mistake.

There's more information about our approach to compensation for trouble, upset and other non-financial loss on our website.

index of case studies

  • 131/7- consumer complains insurer has unfairly relied on exclusion to turn down claim for wedding ring
  • 131/8 - consumer complains about administrative errors and data breach in removing ex-partner from joint breakdown cover
  • 131/9 - consumer complains that insurer nearly refunded premiums to ex-partner
  • 131/10 - consumer complains that insurer unfairly rejected claim for vet's bills - on grounds that dog's condition was pre-existing
  • 131/11 - consumer complains that loan provider won't refund money for faulty furniture left in ex-girlfriend's flat
  • 131/12 - consumer complains that she shouldn't have been accepted as guarantor for her son's loan
  • 131/13 - consumer complains pension provider's mistake left him out of pocket

consumer complains insurer has unfairly relied on exclusion to turn down claim for wedding ring

Mr and Mrs L were in the process of getting divorced, but were still living together. When Mrs L's wedding ring went missing, she blamed Mr L and reported him to the police. Two weeks later, she made a claim for her ring on her contents insurance.

After investigating the claim, the insurer told Mrs L that they wouldn't pay out as her policy didn't cover "loss or damage caused by any of your family".

Mrs L then told the insurer she wasn't sure Mr L had taken the ring after all - and asked them to reconsider her claim. But the insurer wouldn't change their position, so Mrs L asked us to help.

complaint upheld

We asked the insurer for more information about how they'd investigated the claim. They said Mrs L had initially told them she'd last seen the ring in a room where Mr L was sleeping - which was why she thought he must have taken it.

Mrs L had also told the insurer that she'd reported the lost ring to the police. It seemed the insurer had decided that the ring had been stolen by Mr L - and that the claim shouldn't be paid - based only on her initial report to the police. We noticed that the insurer hadn't spoken to Mr L at all, even though he'd been a joint policyholder at the time.

We listened to all the phone calls between Mrs L and the insurer. In one conversation we noticed that she mentioned the possibility that she might have accidentally donated the ring to a charity shop with some clothes. There was no evidence that the insurer had considered this in making their decision about rejecting the claim.

Given Mrs L's doubts as to whether the ring had been taken by Mr L - and the fact that the insurer hadn't investigated any other possible reasons for the loss - we decided it wasn't fair for them to rely on the exclusion for theft or loss by family members.

Mr L had since given up all rights to the couple's joint accounts, including insurance policies. We told the insurer to deal with Mrs L's claim as if she'd lost it herself - in line with the remaining terms and conditions of the policy.

consumer complains about administrative errors and data breach in removing ex-partner from joint breakdown cover

Mr and Mrs Y were in the process of getting divorced. As part of sorting out their joint accounts, Mrs Y asked their car breakdown provider to remove Mr Y from their joint cover. Mr Y set up his own cover with the same provider.

A few months later, Mrs Y received a letter from her breakdown provider referring to a breakdown she hadn't been involved in. When Mrs Y called the breakdown provider, she was told that the breakdown related to Mr Y. When she pointed out that Mr Y was no longer on the policy, the insurer realised that there had been an administrative error that had led to the previously joint policy being put into Mr Y's sole name.

Mrs Y was told the policy details would be corrected and that she'd receive written confirmation. When she hadn't heard anything after a few weeks, she called the breakdown provider again - and found the cover was still in Mr Y's name.

Mrs Y spent several months trying to update her details. During that time, letters about her policy were mistakenly sent to Mr Y - some of which gave Mrs Y's new partner's name.

Eventually, Mrs Y cancelled her cover completely and made a complaint. The breakdown provider apologised. But feeling this wasn't enough, Mrs Y contacted us.

complaint resolved

Mrs Y told us she felt her breakdown provider had broken the law by sending her letters to the wrong address. We explained that it isn't our role to fine businesses for data protection breaches - and that the Information Commissioner's Office would be better placed to look into whether the breakdown provider had broken the law.

But we told Mrs Y that we could look into how the breakdown provider had dealt with her concerns. Mrs Y accepted that, at first, she'd just been frustrated that letters continued to be sent to Mr Y. But after she'd called to add her new partner's name to the policy, two letters had been sent to Mr Y giving her partner's name.

Mrs Y told us that this had been particularly upsetting, as Mr Y hadn't known her new partner's name before then. She told us that her separation and divorce had caused her a lot of stress over the past few years - and the breakdown provider's mistakes had made things even worse.

From what we'd seen, it was clear the breakdown provider had made a number of mistakes over nearly a year. Mrs Y hadn't lost out financially. But she'd gone through the inconvenience of repeatedly trying to sort the problem out - as well as the upset of her ex-husband finding out her partner's name.

When we pointed this out to the breakdown provider, they offered Mrs Y £175 in recognition of the trouble they'd caused her. We thought this was fair in the circumstances - and Mrs Y accepted the offer.

consumer complains that insurer nearly refunded premiums to ex-partner

When Ms B split up with her boyfriend, she called her insurer to remove his car from her "multi-car" insurance policy. But the insurer said her ex-boyfriend had already phoned to remove his car from the policy - and to ask for a refund of the relevant premiums.

Ms B told the insurer that it was her policy - so any refund should go to her. The insurer told her that the refund would have gone to Ms B's ex-boyfriend as the "named driver" of the car in question. But since he'd only called the day before, nothing had been paid out yet. The insurer said they'd make sure it was Ms B who got the refund.

After receiving the refund, Ms B made a complaint. She felt the only reason the insurer hadn't refunded her ex-boyfriend was because she'd happened to call shortly afterwards. She wanted the incident reported as fraud.

The insurer apologised for their original mistake. They told Ms B that they couldn't see that she'd lost out - but offered her £50 for the upset they'd caused her.

Unhappy with this answer, Ms B complained to us.

complaint not upheld

The insurer told us that the money would never have gone to Ms B's ex-boyfriend - because it would have been refunded to Ms B's debit card instead. They said their system was designed to stop problems like this from happening.

Of course, Ms B hadn't known she would always have received the money anyway. And listening to the phone call between the insurer and Ms B, it was clear the insurer's call handler had made a mistake in what they'd told her. This had led Ms B to believe she'd lost money at an already very stressful time.

On the other hand, it seemed that the insurer had dealt with Ms B's concerns quickly - apologising and making sure she had her refund. We could see they'd also recognised the worry they'd caused and offered Ms B compensation.

We appreciated that Ms B was frustrated. But we explained that, based on everything we'd seen, we thought the insurer's offer was fair.

consumer complains that insurer unfairly rejected claim for vet's bills - on grounds that dog's condition was pre-existing

When Miss V split up with her boyfriend, the couple's dog stayed with Miss V. Shortly after Miss V's ex-boyfriend moved out, she found out he'd cancelled their pet insurance policy, which had been in his name.

Miss V called the insurer and asked if her boyfriend's policy could be put into her name. When the insurer told Miss V that this wasn't possible, she set up a new policy in her own name.

A few weeks later, Miss V's dog had trouble with the elbows of his front legs and needed treatment at the vet's. But when Miss V claimed on her insurance policy, the insurer rejected the claim.

The insurer said they had evidence that the dog had seen a vet about lameness the previous year - and they believed this had been caused by the elbow condition. They told Miss V that her new policy didn't count as a continuation of the one in her ex-boyfriend's name, so the elbow condition was "pre-existing".

Miss V complained. She pointed out that the vet had said the dog's elbow condition was nothing to do with the previous lameness. She also argued - even if the conditions had been linked - that it was unfair to treat her policy as a new one, just because the insurer's computer system hadn't allowed her to switch the policy to her name.

But the insurer wouldn't reconsider their decision - and Miss V complained to us.

complaint upheld

We asked the vet to send us the notes that he had made about her dog's health. These were very detailed - and clearly said that the elbow condition was a new problem, which wasn't linked to the lameness the dog had experienced the previous year.

The insurer confirmed that they couldn't change a policy from one name into another. But they told us that that Miss V had taken nearly a month to let them know she needed a new policy after the original one was cancelled.

When we asked Miss V about this, she told us that she'd contacted the insurer as soon as she realised that the policy had been cancelled. We thought it was reasonable that - going through the upset of a difficult break-up - Miss V might not have known straight away.

In any case, the dog's health problems that Miss V was claiming for hadn't arisen during the gap in the cover - but after she took out the new policy. We had no reason to doubt the vet's opinion that the two problems weren't linked. So we didn't agree that the condition Miss V was claiming for pre-dated the new policy.

In the circumstances, we told the insurer to pay Miss V's claim.

consumer complains that loan provider won't refund money for faulty furniture left in ex-girlfriend's flat

After Mr C moved in with his girlfriend, Miss R, the couple ordered some new furniture for her flat. But when it arrived, the tables were faulty and the sofa was the wrong colour.

Mr C had bought the furniture with a loan he'd taken out in the shop. When he spoke to the shop and explained the problem, they sent out replacements. But they repeatedly tried to exchange the furniture at a house a few streets away.

Mr C contacted the furniture company to sort out the problem with the address. But before the furniture could be exchanged, he and Miss R split up. The couple weren't on talking terms - and Miss R wouldn't let Mr C access the flat or the furniture.

Mr C then explained the situation to the loan provider. They agreed to suspend repayments for a while - and said they'd refund everything he'd paid on the condition he returned the furniture.

Because he still hadn't returned the furniture after some time, the loan provider began to try to collect payments from Mr C. When he refused to pay, his details were eventually passed to a debt-collection company.

Mr C made a complaint. He said it wasn't his fault he couldn't get the furniture back - and wanted the loan provider to take Miss R to court.

He also said he'd been told the agreement was "buy now, pay later". So he was unhappy about being asked to repay the loan anyway - especially by debt collectors.

But the loan provider maintained that Mr C needed to find a way to return the furniture if he wanted his money back. Frustrated, he contacted us.

complaint not upheld

Mr C told us that the trouble he'd had with the furniture had caused arguments between him and Miss R. He felt this had been one of the reasons they'd broken up.

Mr C said that, seeing as he wasn't using the furniture himself, he didn't think it was fair that he had to pay for it. He also insisted he'd signed up to "buy now, pay later" - and was unhappy that the loan provider had already passed his details to debt collectors.

We checked the paperwork Mr C had received about the loan. In our view, the agreement was clearly set out - and there was no evidence that Mr C had been told it was "buy now, pay later".

We also noticed that the loan provider had agreed to suspend repayments. But from the records we saw, they'd explained that this was only while he sorted out replacement furniture with the furniture shop. And the terms and conditions of Mr C's loan said clearly that his debt would be passed to debt collectors if he didn't pay.

We were sorry to hear about the trouble Mr C was having. But given everything we'd seen, we didn't think the loan provider had acted unfairly. It wasn't their responsibility to negotiate with Miss R - and we couldn't make them take her to court.

consumer complains that she shouldn't have been accepted as guarantor for her son's loan

Mrs T agreed to act as guarantor for a loan for her son. He wanted to invest in equipment to start a pet grooming business, but had a poor credit history and had struggled to get a loan himself.

A few months later, Mrs T and her son had a falling-out and he left home. Soon after, the loan company asked Mrs T to go to a pay point in a local shop to make a loan repayment - as her son had missed several instalments.

Mrs T told the loan company she couldn't get out, because she was recovering from a major operation and couldn't leave her house. She argued that she couldn't afford the repayments anyway - and that the loan company shouldn't have accepted her as a guarantor in the first place.

But the loan company maintained that Mrs T was responsible for the loan. Unhappy, she contacted us.

complaint upheld

Mrs T told us the loan company had pressured her into agreeing to be a guarantor. She said that when she and her son were applying for the loan, the adviser had encouraged her to reduce her stated outgoings.

When we asked the loan company about this, they insisted that they hadn't told Mrs T to change any specific figures. So, to check what had happened, we asked the loan company for recordings of their phone calls with Mrs T.

It seemed that Mrs T hadn't initially qualified to be a guarantor. The adviser had then asked her if she'd "overestimated" any of her outgoings. He'd then gone through every one of Mrs T's expenses and asked her whether it was too high. He specifically asked about her credit card repayments, which - after hesitating - Mrs T agreed to reduce by half.

During the call, Mrs T had also offered to send in payslips to prove her income. But the adviser had told her this wouldn't be necessary.

From the phone calls we listened to, it wasn't the case that Mrs T had been desperate to qualify and willing to change any figures necessary to do so. In fact, she'd clearly said at the beginning of the call that if the loan was unaffordable, then she wouldn't go ahead.

Given everything we'd seen, we decided the loan company hadn't properly assessed whether the loan was affordable. And we decided they'd pressured Mrs T into changing her outgoings to qualify as a guarantor.

We were particularly concerned that the loan company had suggested Mrs T reduce her credit card repayments - meaning she was now making minimum repayments while up to the spending limit.

And there was no evidence that they'd responded sympathetically - or discussed other options - when she'd explained she couldn't get out to make the payment because she was currently housebound.

We told the loan company to remove Mrs T as the guarantor for her son's loan and to pay £250 compensation for the upset they'd caused her. We also told them to make sure that no adverse information was recorded on her credit file as a result of their actions.

consumer complains pension provider's mistake left him out of pocket

When Mr U and his wife divorced, they split their pensions equally. Because Mr U had a larger pension pot, he transferred some of his pension policies to his ex-wife.

A few months later, Mr U got a letter from his pension provider saying they'd made an error in valuing his pension policies, meaning he'd been underpaid. They sent him a cheque for £300 to correct the mistake.

Mr U asked the pension provider to pay the money directly into his bank account instead. The pension provider agreed - but before they'd paid Mr U, they told him the money actually related to the pension policies transferred to his wife. They said they'd be paying the money to her instead.

Mr U complained. He said he'd already spent the money, so he'd lost out because of the mistake. The pension provider apologised for the error. But they pointed out that the money hadn't been his to spend in the first place.

Mr U felt he'd been treated unfairly, so he brought his complaint to us.

complaint upheld

We asked the pension provider to explain how the problem had arisen. They told us they'd incorrectly calculated the value of some of the units in Mr U's pension. They said all of these units had been transferred to his ex-wife in their divorce settlement - meaning she was the one who was now owed the difference.

Mr U sent us paperwork from his divorce, showing how his pension had been divided. This confirmed he'd transferred all the units that had been priced incorrectly to his ex-wife.

But as part of the settlement, Mr U had had to pay his ex-wife a specified extra cash amount to "equalise the pension provision". This amount was based on the total value of his pensions.

So it was true that the mistake related to parts of Mr U's pensions that had been transferred to his ex-wife - to the value of £300. But the total value of Mr U's pension had been split with his ex-wife - meaning the cash he paid her should have been half the £300 in question. So he'd lost out by £150.

We explained to Mr U that it wasn't fair to ask the pension provider to repay the money he'd already spent - since he'd used and enjoyed the things he'd bought.

But we did think it was fair that he was put in the position he would have been in if the policy units had been priced correctly in the first place. So we told the pension provider to pay Mr U £150.

We also told them to pay him £100 to recognise the upset and inconvenience their mistake had caused.


ombudsman news

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.