ActiveQuote Limited · DRN-6167448

The complaint Mrs D is unhappy with the sale of her income protection policy by ActiveQuote Limited. What happened Mrs D was sold an income protection policy through ActiveQuote in 2021 that she says was unsuitable for her needs . She has explained she asked for a policy that would specifically pay £600 benefit a month. She checked with the advisor that her pension income wouldn’t impact the amount she received because the policy documents stated 60% of pension would be considered. ActiveQuote reassured her that her pension wouldn’t be taken into account and she would receive 100% of the benefit amount she had requested. So Mrs D accepted their recommendation and went ahead with the sale of the policy on that basis. However, when Mrs D tried to make a claim on her income protection policy, she said she was told by the insurer that she couldn’t claim because she was receiving income in the form of her pension. Unhappy with this, Mrs D made a complaint that the policy had been mis-sold. ActiveQuote agreed that their advisor had given incorrect advice about her pension income and the benefit amount she would receive, so they offered a partial refund of premiums. Mrs D didn’t accept. She said she’d been provided with misleading information during the sale and was advised to take out a policy that didn’t meet her needs. She said she wouldn’t have taken out the policy if she’d known her pension income would be deducted. Our investigator looked into what had happened. She said the policy had been mis-sold because it didn’t meet Mrs D’s requirements and she told ActiveQuote to refund all the premiums Mrs D has paid, plus 8% interest. ActiveQuote disagreed. In summary they said: • They accept their advisor hadn’t considered Mrs D’s pension income during the sale and this meant she would’ve received a reduced benefit, so they think a proportionate refund of premiums is fair. • They didn’t offer to refund the full premiums from inception because Mrs D can still receive a reduced benefit under the policy. • Mrs D changed employment after purchasing the policy. Her new role provided six months full sick pay and six months half pay which would’ve impacted her ability to claim. This change of circumstances was outside of their knowledge or control so they don’t think they should be held liable for a full refund of premiums. The case has now been passed to me to make a decision.

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What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. The relevant rules and industry guidelines say that those selling insurance on an advised basis are required to take reasonable care to ensure the suitability of their advice. And they are required to provide clear, fair and not misleading information about the policy. This includes drawing a policyholder’s attention to the significant exclusions and limitations of the policy. It’s not in dispute that Mrs D asked the adviser whether her pension income would affect her benefit amount, and she was told it wouldn’t and was reassured she would receive the full benefit amount she had asked for – which was £600. So Mrs D was led to believe in the event of a successful claim, she would receive the full £600 benefit, in addition to her pension income every month. And this was incorrect advice. ActiveQuote made an offer to refund the difference in premiums Mrs D overpaid for the percentage of benefit she would have received, after the pension income had been deducted. But I don’t think that is a fair way to resolve things here. I’ll explain why: Mrs D isn’t complaining that she was over insured. Her complaint is specifically that in the event of a claim, she would never have been able to receive the benefit she was promised. So I’ve thought carefully about what Mrs D would have done differently if she had been given the correct information about not receiving the full £600 benefit she was expecting. ActiveQuote have argued that although Mrs D wouldn’t have received the full benefit she wanted, she still would’ve received a percentage of benefit. But I still think the policy was unsuitable for Mrs D’s specific needs, and I’m not persuaded Mrs D would’ve still gone ahead with the purchase of this policy had she been told the correct information by the advisor. Mrs D has provided persuasive submissions to explain she wouldn’t have taken out the policy at all if she’d known she wouldn’t receive the full £600 monthly benefit she told the advisor she needed. She has explained this exact amount was to cover her mortgage payments if she was unable to work, so I don’t think a lower benefit would’ve been suitable for her needs. Mrs D asked a specific question during the sale about whether or not her pension income would impact her benefit. So I’m persuaded this was an important requirement for her and the answer given by the advisor would’ve made a significant difference. Taking everything into account, I don’t think Mrs D would’ve taken out this policy if she’d received correct advice about the reduced monthly benefit she would actually receive in her circumstances. So I find this policy to be wholly unsuitable for Mrs D’s specific requirements. ActiveQuote have pointed out that Mrs D’s sick pay entitlement changed in 2024 and this also would’ve impacted her ability to claim. Our investigator explained that even if Mrs D’s sick pay entitlement hadn’t changed, her pension income would still be deducted from whatever benefit she was eligible for, so in the circumstances of this particular case, that makes the policy unsuitable throughout the full period. Whilst I agree with this view, I don’t think Mrs D change in sick pay in 2024 makes a difference here. I say that because if Active Quote had got things right in the first place during the sale, Mrs D would never have gone ahead with the purchase of this policy in the first place. So a full refund of premiums is fair here.

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I note ActiveQuote’s comments regarding the interest awarded by our investigator and the timescales involved, but I think its reasonable 8% interest is awarded from the date of each premium payment up until the date of settlement. Putting things right ActiveQuote Limited need to put things right by: • Refunding all the premiums Mrs D has paid • Adding 8% simple interest from the date of each payment up until the date settlement is made *If ActiveQuote considers that it’s required by HM Revenue & Customs to deduct income tax from that interest, it should tell Mrs D how much it’s taken off. It should also give her a tax deduction certificate if she asks, so she can reclaim the tax from HM Revenue & Customs if appropriate. My final decision I uphold this complaint against ActiveQuote and direct them to put things right in the way I’ve outlined above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs D to accept or reject my decision before 17 April 2026. Georgina Gill Ombudsman

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