Jurisdiction – if an investment product is “wrapped” in a life assurance policy any complaint would fall within the Ombudsman’s terms of reference
Most major life assurance companies have associate organisations which are “in house” linked investment companies. This is an area where the Ombudsman’s jurisdiction is questionable but if a life assurance contract forms part of the financial package, if the linked investment product is “wrapped” in a life assurance policy, then the complaint would usually fall within the Ombudsman’s terms of reference. This can lead to complications because the two financial organisations, the life assurance company and the associated LISP do not always speak with the same voice.
In the case under review the complaint was governed by the Policyholder Protection Rules and the complaint revolved around the cancellation of the contract within the thirty-day cooling off period.
The LISP who was responsible for the packaging and marketing of the product incorrectly took the view that the Policyholder Protection Rules did not apply. The Ombudsman stated that this was a matter which the life assurance company and its associate had to resolve between themselves but the Ombudsman’s position was quite clear. The rules which catered for policy cancellations did apply.
As a life assurance product was involved the Ombudsman adjudicated the complaint from this perspective. The outcome was a decision in favour of the complainant and as the request to cancel the contract was made within the thirty day period the complaint was upheld. This resulted in a refund of premiums paid together with interest. This decision in favour of the complainant was accepted by the insurance company. The difference of view with the LISP was up to them to resolve.