IFAs selling whole-of-life products are being told to make it clear to clients the policy will be reviewed in the future, as the Financial Ombudsman Service is upholding WOL complaints.
Details of the latest Ombudsman news reveals the FOS is seeing increasing numbers of complaints about the review of WOL policies because clients were not aware the benefits could be altered in the future.
A series of examples offered by the FOS suggests some clients are not given an indication at the time of WOL purchase they may later either have to reduce benefits on the investment-led policies or increase contributions.
The FOS says it is also going one step further to assess whether the risk associated with the fund in which assets are invested was suitable for the client.
One example of an upheld complaint – in which the client was not aware the plan would have to be reviewed or altered - reveals the IFA was asked to pay compensation because they rejected the client’s complaint, telling him the plan review was “outlined in the plan’s terms and conditions” rather than mentioning the review at the time of sale.
In another case, however, the complaint was rejected because the review was mentioned in a letter to the client, not just in the terms and conditions.
A third case detailed by the FOS was also upheld as the couple seeking life assurance for the remainder of the family, in the event of the death of one parent, could have been "met more appropriately and cheaply if the firm had sold them a simple ‘term’ assurance policy ending at their anticipated retirement dates", says the FOS.
The firm was then asked to provide Mr and Mrs A with non-medical evidence term assurance as the same premium as they should originally have been sold, and ordered to pay the difference to date between what they would have paid if sold a sum assured term policy and the WOL policy they were actually sold.IFAonline
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