Misrepresentation, Non-Disclosure and Breach ... - Law Commission

9.123 The complainant has the right to raise a new complaint against the adviser rather
than the insurer. Now that the FOS jurisdiction has been extended, the harshness
of the rule has been reduced. 81 However, the complainant will need to return to
the very start of the complaints process and contact the adviser. This does not
make redress easy or accessible. In the case to which we refer above, this was
the advice given to the complainant by the ombudsman:
If the complainant feels that the adviser negligently completed the
application on her behalf…, or failed to record material information,
then she must complain to the financial adviser.
9.124 Although FOS procedures are outside the scope of our current review, we would
hope that more could be done to assist consumers to bring complaints against
the correct organisation, if necessary considering complaints in tandem where
the status of an agent is disputed.
9.125 The position with agents offering the products of a single insurer is more
complex. The FOS told us that they will often consider such agents to be acting
as the insurer’s agents in completing the form, and that insurers will on occasion
agree with this analysis. This appeared to be borne out by the cases we saw.
Often insurers were prepared to take responsibility for the intermediary’s actions,
but without disclosing the full nature of their agency agreement with them. 82 This
makes it difficult to be specific about the exact nature of the relationships
involved.
COMPLETION OF PROPOSAL FORMS
9.126 Perhaps the most interesting findings in our survey relate to the manner in which
the FOS tackles cases where the policyholder signed a proposal form that had
been completed by an intermediary and which contained incorrect or incomplete
information.
9.127 Where it considers it appropriate the FOS will treat the policyholder as liable for
errors in a signed form. For example, we reviewed a case where an independent
financial adviser had completed the proposal form. In a complaint against the
adviser, it was alleged by the policyholder that medical information he had
disclosed had been omitted. The ombudsman rejected the complaint as
unproven:
81 The most notable change being the extension of the scheme to cover general insurance
intermediaries with effect from 15 January 2005.
82 We did not see any cases in which the insurer had provided copies of their agency
agreement with the intermediary. We have been told that these agreements are
commercially sensitive, and that insurers would not disclose them lightly.
246