Sunday 25 September 2016

64 complaints to Ombudsman over 'whole-of-life' policies in 2015

Six-year limit means Ombudsman has never found any mis-selling despite 900 complaints, says Sarah McCabe

Published 24/01/2016 | 02:30

Anecdotal reports suggest many of these life insurance policies, widely sold in the 1990s and early 2000, are now causing problems for policy holders as they reach old age. (stock image)
Anecdotal reports suggest many of these life insurance policies, widely sold in the 1990s and early 2000, are now causing problems for policy holders as they reach old age. (stock image)

The Financial Services Ombudsman received 64 new complaints about controversial "whole-of-life" insurance policies last year. This brings the total number of complaints made about these policies to 900 since 2010.

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None of these complaints have ever resulted in a finding of mis-selling by the Ombudsman.

Anecdotal reports suggest many of these life insurance policies, widely sold in the 1990s and early 2000, are now causing problems for policy holders as they reach old age.

The policies are reviewable, usually set up for review after an initial 10-year period, then every five years for a period, and then every year. The premium is often hiked at every review once people move more into their 60s and 70s. After a certain point, the premium becomes so steep that the holder is forced to cancel the policy, despite having paid up in full for decades.

The Financial Services Ombudsman - which is currently led by former taxi regulator Ger Deering - received 64 complaints about these policies in 2015; 105 complaints in 2014; 193 complaints in 2013; 218 complaints in 2012; 152 in 2011; and 168 complaints in 2010.

A spokesman for the Ombudsman office said the reason no cases of mis-selling had been found for any of these was because of legally-binding time limits.

The Central Bank and Financial Services Authority of Ireland Act 2004 prevents the Ombudsman from investigating complaints about conduct which occurred more than six years ago. Most of the whole-of-life policies causing problems today were sold more than six years ago.

There is some hope that this time limit could be relaxed as part of the merger of the Financial Services Ombudsman with the Pensions Ombudsman. The time limit for issues brought to the Pensions Ombudsman is three years from when the complainant first became aware of the act giving rise to the complaint, even if it concerns a product sold more than six years ago. The Pensions Ombudsman also has additional leeway beyond that time limit if it deems it appropriate.

The Department of Finance has said the matter is under consideration - but no progress has been made since the merger of the two Ombudsman offices was announced in 2013.

"The question of the timeframe under which complaints can be reviewed is a policy matter and this will be considered in the course of the drafting of the legislation which will give effect to proposed amalgamation of these offices.

"The issues here are complex and involve a range of considerations including the interface with the Statute of Limitations, existing consumer protection laws, complaints mechanisms and the availability of records.

"The Department is considering these issues and how they impact the consumer as part of the amalgamation process," said a spokesman for the Department of Finance.

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