Search
Close this search box.

Financial Ombudsman Service toughens stance on unemployment insurance

 




 


 



 


Financial Ombudsman Service toughens stance on
unemployment insurance

The recent case
of Miss J indicates that the Financial Ombudsman Service (FOS) looks to be
taking a tough, pro-consumer, stance against insurers who try to
avoid liability for paying benefits under payment protection policies which pay
out should the person insured be made redundant.

Miss J worked
for a large high street retailer. At the same time as getting a new credit card
she took out payment protection insurance (PPI) to cover monthly
repayments on the card if she became unemployed because of sickness,
disability or redundancy. At that time there had been media comment about her
employer facing a difficult period but she had no reason to think she
would lose her job.  

A few weeks
later her employer announced that it would be consulting about possible job
losses and in the event Miss J was selected for redundancy. The PPI
underwriters turned down her claim on the grounds that the PPI terms
excluded unemployment claims if the policyholder became ‘aware of any increase
in the risk of unemployment’  within 90 days of the policy’s start date.
She complained to the FOS.

The FOS upheld
her complaint. When Miss J took out the policy, she had no reason to believe
she was at risk of redundancy. At the time there was merely media
speculation about her employer’s future business prospects. No information was
available to suggest that Miss J as an individual may be at risk of losing her
job.

If an insurer wants to exclude cover because a
policyholder’s knowledge or circumstances changed within the first three months
of a policy, then such an exclusion and the terms for it to apply, must be set
out very clearly. This had not happened in this case. The exclusion in this
policy was so broad that it was unfair

Read more

Latest News

Read More

Prioritising employee wellbeing in the era of rising business travel

24 May 2024

Newsletter

Receive the latest HR news and strategic content

Please note, as per the GDPR Legislation, we need to ensure you are ‘Opted In’ to receive updates from ‘theHRDIRECTOR’. We will NEVER sell, rent, share or give away your data to third parties. We only use it to send information about our products and updates within the HR space To see our Privacy Policy – click here

Latest HR Jobs

Develop & implement HR strategies that align with the company’s and division’s objectives, with particular focus on growth through strategic people planning.From JamesFisher – Fri,

Chair the Independent Remuneration Review Group (IRRG), responsible for the annual review of the remuneration for non-executive directors, including the chair… £58,972 – £68,525 a

You will balance the long term strategy with a deep relationship with our schools, supporting schools to mitigate risk and bring about transformational impact. £49,498

London with travel to group offices. The Head of Talent Management is responsible for designing, leading, and implementing an integrated talent strategy that…From JamesFisher –

Read the latest digital issue of theHRDIRECTOR for FREE

Read the latest digital issue of theHRDIRECTOR for FREE