Couple lose appeal over sale of life assurance policy that excluded MS cover

High Court reporters

A couple who claimed they were not properly informed that the life assurance policy they signed explicitly excluded cover for Multiple Sclerosis (MS) have lost their High Court appeal against a ruling of the Financial Services and Pensions Ombudsman (FSPO).

The FSPO awarded Caroline and Hugh Friel, of Termon, Letterkenny, Co Donegal, €15,000 in substantially upholding their complaint alleging they were mis-sold a Bank of Ireland Life assurance policy in 2013. The ombudsman found the sale process was seriously flawed.

Mr Justice Alexander Owens dismissed the High Court appeal on Thursday after hearing submissions from the Friels and the FSPO.

Giving an oral ruling, the judge said the Friels did not demonstrate there was a “serious and significant” error undermining the decision, which is the legal test for overturning an FSPO ruling.

The husband and wife had appealed to the High Court, submitting their claim was for €157,000 and the sum awarded was “grossly inadequate”.

They alleged they were never told the policy excluded cover for MS, which Ms Friel’s mother had been diagnosed with at the age of 37.

They only discovered this omission when they tried to claim benefits after Ms Friel was diagnosed with MS in January 2016.

The insurer declined to pay out and the Friels appealed the matter to the FSPO, who substantially upheld their complaint in April 2021.

The ombudsman found that any discussion of the exclusion of MS from the policy was limited and recorded various breaches of the Consumer Protection Code of 2012 in how information about the provision of information about the life assurance proposal and the policy, according to submissions.

However, the ombudsman ruled the couple were not deliberately misled.

Family history

At the High Court on Thursday, David Geoghegan, for the Friels, said the couple met with a representative of the insurer in 2012 to discuss a life insurance policy and stressedit was of some concern that Ms Friel would be covered for MS, given her mother’s history.

The Friels later dealt with a mortgage advisor when they signed the document on February 5th, 2013, counsel said.

Mr Geoghegan added the Friels and the advisor were discussing banking and farming when the advisor went to get the document, which he then “shoved” in front of them to sign.

His clients signed the policy document, which provided for a lump sum death benefit and specific illness benefit of €157,000 but specifically excluded MS.

Counsel for the FSPO, Neasa Bird, said her client does not accept that the €15,000 award is an insignificant figure. She submitted that the insurer was never willing to provide MS cover to Ms Friel.

The ombudsman found the Friels had an obligation to carefully read the document they signed and to raise questions if they did not understand, counsel added. They bear some responsibility for their situation in this regard, she said.

Mr Justice Owens said the insurer in this case was never willing to provide MS cover for Ms Friel and, in light of her family history, it is “most unlikely” she could have got this cover from another provider.

The Friels would have been obliged to disclose to another insurer that Bank of Ireland Life had refused to cover her for the condition, he added.

This should all have been explained to the Friels before they signed the policy document at a bank branch in Letterkenny, he said. They were mis-sold the policy in that it was not explained to them clearly that MS cover was omitted, he added.

However, he said, had the process been conducted correctly, they would likely be in “exactly the same position” as they are now.

The ombudsman was entitled to come to the view that she should not award the €157,000 being sought by the Friels, Mr Justice Owen said, adding that the ombudsman made an award which was proportionate to the “mischief” that occurred at the Letterkenny branch in 2013.