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

Unfortunately, the firm has contemporaneous documentary evidence
in the form of a signed declaration from you in which you state that
the answers recorded were true and complete to the best of your
knowledge and belief. Moreover, you confirmed that you had read
and understood the application. That declaration also specifically
states the following:
If this application form has been filled in by someone else on
your behalf you must read all of the answers to the questions
on the form carefully before signing this declaration.
9.128 However, it is clear that in many cases the FOS will not regard signed forms as
conclusive. Furthermore, where tied agents were involved we did not find any
specific mention of Newsholme and there was evidence that the FOS regularly
departs from that decision.
9.129 For example, one case in our survey involved a life and critical illness policy
effected jointly by a husband and wife. When the wife died, a claim was made.
The insurer avoided the policy on the ground of misrepresentation and rejected
the claim. One of the questions in the application form required disclosure of any
visit to a doctor. The answer given did not include details of various medical
appointments made by the wife. Although the form was completed by the
insurer’s tied agent, it had been signed by both the husband and the wife.
9.130 In an initial assessment, an adjudicator at the FOS supported the insurer.
However the husband appealed to an ombudsman. The ombudsman pointed out
that the tied agent had made other mistakes in completing the form and
concluded that some of the questions simply had not been put to the couple:
In view of the large number of what would seem obvious errors on the
application form and the fact that several questions which appear to
require a “yes” or “no” answer where either “N/A” or no answer is
shown, I consider it most likely that [the tied agent] did fail to ask all
the questions...and that this resulted in the complainant’s late wife’s
failure to disclose her investigations.
9.131 Under Newsholme such errors would have been made when the intermediary
switched from being a tied agent to being the agent of the applicants for the
completion of the form. Nevertheless, the ombudsman found grounds for
deciding against the insurer:
I accept that the complainant and his late wife should have read the
application form before signing it, but consider it most likely that they
did not do so because [the tied agent] did not make the importance of
this clear to them.
9.132 The reasoning appears to be that there is a duty on an insurer’s agent to explain
the importance of thoroughly checking the form.
9.133 We were also interested to note the following case where the ombudsman was
given the full tape of a telephone interview in which a sales representative took a
consumer through the health questions in a critical illness application.
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