The High Court has rejected Caledonian Life’s appeal against a Financial Services Ombudsman finding over the cancellation of a joint life assurance policy, but ordered that references to a Companies Act record-retention provision be removed from the finding.
Mr Justice Hanna said the Ombudsman was entitled to investigate the absence of documentation confirming the cancellation. The company had appealed the finding dated 9 January 2009, which partially substantiated the complaint by Noel Tobin and his late brother Darren’s estate and imposed a €30,000 penalty.
The policy began on 12 December 2002, covering Noel and Darren Tobin for €70,000 on the death of either, at a monthly premium of €17.49. The judgment says Caledonian Life maintained that both brothers had instructed it to cancel the policy in January 2003. The notice parties denied giving that instruction and said they had not been notified of the cancellation. The Ombudsman found that a standard-form letter and a premium refund cheque had been sent only to Darren. The company had not retained the alleged cancellation record.
Darren died in a motorcycle accident in January 2006. When Noel later sought claim forms, the company told him the policy had been cancelled in January 2003 and no cover remained in force.
Caledonian Life argued that the Ombudsman could not award compensation to the estate, that issues about notice and record-keeping had not been properly raised during the investigation, and that mediation should have been offered. It also challenged the reasoning for the award and the use of section 202(9) of the Companies Act 1990, which concerns record retention and carries criminal sanctions.
The judge concluded that the missing cancellation documentation was a live issue in the complaint and related correspondence. He said the award to the estate was permissible in the circumstances, as the estate’s beneficiaries were the complainants. The award was less than half the policy’s value, and the Ombudsman had taken into account the policy’s cancellation, the records issue and the notice parties’ responsibility to check their bank account outgoings.
The judge also held that the Ombudsman had discretion to proceed without mediation. However, he found it was a significant error to link the Companies Act provision to the company’s failure to retain cancellation documents: the provision was irrelevant to the case and carried criminal sanctions. He denied Caledonian Life’s application to set aside the finding and ordered that all references to section 202(9) be struck from it.