12 May 2020
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Mr J could have lost up to £370,000.
St James's Place has refused to compensate a man in declining health above the legal FOS compensation limit, according to the Financial Ombudsman Service (FOS).
The FOS said a couple it calls Mr and Ms J were sold whole life policies by the advice firm.
The pair initially complained the commission on the policies was "hidden and unfair", and their reviewable nature made them unsuitable. St James's Place offered to refund the premiums on the policies plus interest, which Ms J accepted. Due suffering ongoing health issues, however, Mr J took his complaint to the ombudsman.
Due to his worsening health, Mr J was unable to find appropriate, non-reviewable life cover, a chance denied him because of the débacle with St James's Place."
St James's Place was ultimately asked to compensate Mr J £150,000 - the maximum amount the FOS can request for complaints referred to it before the limit was increased in April 2019. However, Mr J could have lost up to £370,000, and when the company was asked to consider making a payment above the FOS limit, St James's Place refused.
Due to his worsening health, Mr J was unable to find appropriate, non-reviewable life cover, a chance denied him because of the débacle with St James's Place.
In its end of year results released in December 2019, St James's Place reported an operating profit of £952m.
‘Denied appropriate cover'
An adjudicator at the ombudsman felt the policy had been misrepresented as non-reviewable, and believed if Mr J had been given better information, he could have chosen other more expensive, but non-reviewable cover. The adjudicator pointed out the chance to do so had been "denied him", and due to his worsening health, he could not find such a premium and had lost out.
According to the ombudsman, the typical redress for such an issue would be for SJP to make a payment based on the extra premiums Mr J would now have to pay based on what non-reviewable cover he could have got at the time. However, due to the large sums of money involved in Mr J's case, the corresponding premiums took the compensation level over the legal limit of the FOS relevant to this case - £150,000.
In some cases, the FOS can recommend a business makes the payment above the FOS limit, but SJP had already made it clear they did not want to consider doing so, and would only pay up to the £150,000 limit.
The adjudicator then suggested both sides comment further, particularly SJP if they wished to reconsider their stance on paying above the award limit. However, SJP again said it would not pay more.
Mr J responded and suggested his loss was somewhere between £261,000 and £370,000.
The FOS adjudicator said he had no reason to doubt Mr J's figures, but acknowledged there was little point in trying to calculate the precise figure due to SJP's refusal to pay above the award limit.
The FOS ordered SJP to pay Mr J £150,000 plus interest at 8% from 25 June 2018 - when the complaint was first capable of settlement - to the date of payment, minus any amounts already paid.
The adjudiactor pointed out Mr J may not be able to take SJP to court for the perceived outstanding loss if he accepted the £150,000, and that he should take legal advice were he to consider doing so.
St James's Place has been contacted for comment.
