The Court of Appeal has upheld the setting aside of a Financial Services and Pensions Ombudsman decision concerning a civil servant’s claim for group income protection, finding that the Ombudsman drew unsupported inferences from correspondence between the insurer and its medical advisers.
The judgment, delivered by Mr Justice Binchy on 30 March 2022, arose from an appeal by the FSPO against a High Court ruling. The High Court had set aside the Ombudsman’s 2019 decision upholding the notice party’s complaint against Utmost PanEurope DAC and directing it to admit her claim from the end of the policy’s deferred period.
The notice party’s scheme excluded claims attributable to specified spinal conditions and chronic fatigue or mental or functional nervous disorders. The judgment says it was common case that the exclusions had the effect of excluding fibromyalgia. Utmost declined the claim in 2016, relying on those exclusions, and rejected an internal appeal after obtaining an independent rheumatologist’s assessment. That doctor considered fibromyalgia the main contributor to her symptoms and rheumatoid arthritis mild and insufficient on its own to prevent her working.
The FSPO upheld the complaint in 2019, finding that Utmost had overemphasised the excluded condition when assessing the claim. On appeal, the High Court set the decision aside and sent the matter back to a different decision-maker. The Court of Appeal agreed that the High Court was entitled to draw different inferences from the documents. It considered the internal email and the insurer’s question to its medical adviser legitimate in context, and found no basis for the Ombudsman’s criticism of them.
The Court of Appeal rejected the High Court’s view that the FSPO’s treatment of the Consumer Protection Code was an error: it said the Ombudsman had referred to the insurer’s duty to verify claims, and nothing more needed to be said about that duty in this case. It also ruled that the FSPO can, in principle, direct an insurer to admit a claim without finding a breach of contract. Such a remedy must be proportionate and logically related to the conduct complained of. Here, directing payment of benefits was disproportionate and unconnected to the alleged mishandling.
The Court affirmed the order setting aside the FSPO decision. It noted that the complaint contained four elements, while the FSPO had decided only that Utmost mishandled it. The remaining issues included whether the initial refusal and appeal decision were wrong, and whether the policy was unsuitable. The Court invited submissions on the orders to follow and on costs; the judgment does not record a final costs order.