Halifax rebuked over pet insurance
Wednesday 28 March 2012
The ombudsman has rebuked Halifax after it made a potentially "misleading" claim promising life-long insurance to pet owners.
The landmark decision by the Financial Ombudsman Service (FOS) could pave the way for thousands more customers who may have believed the cover lasted indefinitely.
Halifax, which is part of Lloyds Banking Group, previously advertised "life-long" pet insurance cover, but last autumn it withdrew from the pet insurance market. It said it is "urgently" working on a solution and will contact customers in the coming weeks.
The ombudsman considered the case of a dog named Lucky which developed a skin condition estimated to cost around £720 a year for the rest of her life.
In a provisional decision, the ombudsman said Halifax should pay Lucky's owner £200 for distress and inconvenience, as well as "top up" cover for any pre-existing condition not covered by Lucky's new insurer for the next three years.
Lucky's retired owner had taken out a Halifax pet insurance policy on her in 2005 when she was two months old and remained a "loyal customer" over the next six years, paying a monthly collected premium initially of about £6 rising over the years to £10, the ombudsman said.
However last year Halifax wrote to Lucky's owner a month before the policy was due to renew, to tell her it was withdrawing from the pet insurance market.
The ombudsman said that if Lucky's owner made alternative arrangements with another insurer, Lucky's pre-existing medical conditions would not be included in the cover, meaning Halifax's decision to withdraw from the market has left Lucky's owner footing the vet bills herself.
Lucky's owner complained to the ombudsman service, arguing that if Halifax cannot continue to supply insurance cover then it should compensate her for future bills and for "significant distress" and anxiety.
The ombudsman partially upheld the complaint in its provisional findings, noting that when Lucky's owner first purchased the policy, it was described on the Halifax insurance website as "life-long cover from as little as £3.50 a month".
The ombudsman said the description of the policy as "life-long" seemed "a significant error by Halifax.
"The policy was not life-long... And it was clearly misleading to suggest that it was - regardless of the fact that this is a common term in similar pet insurance policies," the ombudsman said.
The watchdog said that Halifax was acting within its rights to withdraw from the market and was under no legal obligation to renew the policy at the end of each period of cover.
However it said that had Halifax been clearer in its statements, Lucky's owner would have been able to consider other arrangements.
The watchdog said Halifax could have given customers more notice of its decision to withdraw from the market and had shown "poor communication".
It said Halifax's actions "will have caused unnecessary inconvenience and distress to customers".
Lloyds and the Halifax had around 25,000 to 30,000 pet insurance customers between them and it is thought that between 3,000 and 4,000 of them have pets with pre-existing conditions which could cause them problems getting full cover with a new insurer.
A Lloyds Banking Group spokesman said: "Lloyds Banking Group withdrew from the pet insurance market last year.
"We acknowledge that this decision has caused concern among some customers whose pets have pre-existing medical conditions and are having difficulty finding a new insurer.
"We are urgently working on a solution for customers with pets who have pre-existing conditions and will be contacting them in the next few weeks with our proposals.
"If any customer wants to check if they are affected, they can contact us. We are committed to continuing to support our customers and are sorry for the inconvenience we may have caused."
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