Liverpool Victoria Financial Services · DRN-6215367

The complaint Mr M is unhappy with how Liverpool Victoria Financial Services (LV) handled his policy with them. What happened In 2021 Mr M was sold an income protection policy underwritten by LV. When he bought his first property Mr M made a request to LV to increase his cover amount, through the policy’s Guaranteed Increase Options (‘GIO’). Initially LV indicated this would be possible, however they then said he wasn’t eligible for the increase because it didn’t apply to first time mortgages. Mr M says LV also unfairly assessed his GIO requests in relation to his salary increases. And he’s also unhappy with the way they obtained his medical information. The matter was referred to this service. Our investigator looked into what had happened and said LV’s application of the GIO terms of the policy was reasonable based on Mr M’s circumstances, and she thought the £500 compensation they had paid for the poor level of customer service was fair. Mr M disagreed. In summary he said: • The policy wording under the mortgage GIO does not explicitly exclude first-time mortgages • Once LV determined his January 2024 salary increase was out of scope for GIO purposes, they shouldn’t have then used that salary amount to consider his second request • He is concerned LV retained and relied upon salary data they had already confirmed wasn’t eligible under the policy terms • LV deleting the medical information they obtained doesn’t go far enough to acknowledge their misleading process. He believed his request for higher cover was progressing, so the eventual refusal means he was deprived of fair opportunity to secure increased protection elsewhere • SAR evidence shows that in the past LV has allowed GIO increases for other customers who moved from renting to owning • £500 compensation isn’t enough to recognise the impact of the distress caused to him by LV’s failures across multiple stages of policy administration So the case has been passed to me to decide. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and

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reasonable in the circumstances of this complaint. I may not respond to every point that has been raised, but I want to reassure both parties that I’ve considered everything that’s been submitted. The informal nature of this service enables me to do that so I can resolve complaints with minimal formality. The relevant industry rules say a firm must act honestly, fairly, and in the accordance with the best interests of its customer. The policy documentation explains: ‘D2 – Guaranteed Increase Options You can increase your amount of cover without having to complete a full application form, if certain events happen. The event must happen to the person insured and you can only do this within three months of the event happening.’ Mortgage GIO Mr M spoke to LV in September 2024 as he wanted to update his policy after taking out a new mortgage. LV told Mr M he could apply for the following GIO related to mortgage increase: ‘Mortgage increase as a result of moving house or home improvement – You can use this option if you increase the amount of your mortgage because you're moving home or if you are planning home improvements.’ However, LV then said this doesn’t apply for a first mortgage. Mr M disagrees with this, but I think the above term clearly explains this option is for when a mortgage amount is increased. It follows that an increase can only apply to an existing mortgage, so I don’t think it’s unreasonable for LV to conclude that an increase doesn’t apply here because it was Mr M’s first mortgage. However, it must’ve been frustrating for Mr M that LV didn’t provide correct advice on this initially, so I’m thought about the impact of this below under the compensation heading. Salary GIO The policy also allows increase in cover for changs to salary: ‘Increase in basic salary received from an employer – You can use this option if you are employed and have an increase in salary of at least 10%. Your basic salary must have increased because of a promotion, the award of a recognised professional qualification or both a change of employment and employer. You must be employed immediately before and after the increase in your basic salary. You can increase the amount of your cover by up to 50% of the original amount of cover shown in your Policy Schedule.’ LV explored if cover could be increased under this as Mr M had received an increase of over 10% in his salary, but as this was in January 2024 he was well outside the three month notification window, so I don’t think it was unreasonable for LV to conclude this wouldn’t be possible. I also think it was fair for LV to record this change in salary even though they were unable to increase Mr M’s cover. And it was reasonable for LV to then use this information for future policy updates. Mr M made a request for an increase following another increase in his salary. This request was made to LV within the relevant three month timeframe, but it was declined because the new increase wasn’t an uplift of over 10%. I understand why Mr M is frustrated by this, because he wasn’t able to benefit from increased cover with his previous 10% salary uplift. But for the reasons I’ve explained above, I don’t think it was unfair for LV to say they had been notified of the first salary change too late. And I don’t think it was unreasonable for

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them to still take account of this salary increase and rely on that amount when reviewing his second salary increase. Obtaining medical information LV requested medical information from Mr M to continue to review if they could offer him an increase in cover. I can understand why they progressed things in this way, and on balance, I don’t think this was unreasonable in the circumstances. Mr M feels strongly that his medical evidence was collected under misleading circumstances, but I don’t agree. LV has explained the information was collected with the intention of trying to accommodate Mr M’s request for increase to cover - and I’m persuaded that is the case. However, it’s not in dispute LV should have explained things more clearly to Mr M. LV accept they didn’t tell M that as the GIO wasn’t available, his increase in cover request was now being progressed as a medically underwritten policy amendment. Compensation LV paid £500 compensation to recognise they should have been clearer to Mr M when they obtained his medical records. They also confirmed the medical information they obtained didn’t affect the terms of Mr M’s existing cover. LV’s data protection officer confirmed the medical data had been securely deleted and wouldn’t be used in any future policy decisions. They also explained improvements they had put in place to prevent poor communication on this matter in the future. I’ve carefully considered if this compensation and remedy goes far enough to put thing right. I appreciate LV made more than one error, so I’ve thought about the impact of each of them. LV initially indicated to Mr M that he could use the mortgage GIO and emailed him the quote for this on 24 September 2024. However, this was quickly rectified two days later when Mr M confirmed it was his first mortgage and LV explained the GIO for mortgage increase wouldn’t be possible. So I’ve taken this timescale into account when considering the compensation that has been paid. LV acknowledged they also should have been clearer in what they explained to Mr M so he understood how his request for an increase in cover was being progressed. Their poor communication at this stage caused misunderstanding, and distress and inconvenience to Mr M which could have been avoided. Taking everything into account, and the steps taken by LV’s data team, I think this was a reasonable way to put things right. I’m satisfied the £500 compensation is fair to recognise the overall impact LV’s poor communication had on Mr M so I don’t think they need to do anything further. Mr M has said he believed his request for increase cover was progressing, so the refusal means he lost out on opportunity to seek the relevant cover he needed elsewhere and he was left underinsured. But for the reasons I’ve explained, I think LV applied the terms of the policy fairly when Mr M’s requests were denied. And I think the £500 fairly reflects the distress and inconvenience caused by LV not being clearer about the progression of his request. Mr M was aware his current benefit wasn’t enough to cover his change in circumstances, and LV hadn’t officially confirmed any increase in his cover, so he still had an opportunity to look for alternative cover that suited his needs elsewhere. I understand why Mr M is unhappy he is unable to obtain the increase he cover he needs now his circumstances have changed. He argues that because LV made errors in their communication, his request should be assessed under the GIO. But I don’t think that’s fair, for the reasons already explained above, I’m satisfied the steps already taken by LV are enough to recognise the impact caused by their error.

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Final points Mr M has raised concerns that he has been treated differently to other claimants following the results of a subject access request he made. I know Mr M feels strongly about this so I thought it would be helpful to advise, that, for the reasons explained above, I’m satisfied LV have applied the terms of his policy fairly against his individual circumstances, and I wouldn’t consider the service LV provided to other claimants as part of this complaint in any event. Mr M has also referred to an internal communication that shows LV did suggest letting him do the GIO on mortgage. But this doesn’t make a difference to my outcome. LV told Mr M that they’d considered multiple different ways to try and accommodate the cover increase he needs, and that his case was considered at the highest level of LV. So I don’t think it’s unusual to see LV discussed and explored different options for Mr M. It’s unfortunate that ultimately LV were unable to give Mr M what he wanted. But as explained, I’m persuaded they fairly applied the terms on his policy in this individual case. My final decision For the reasons set out above I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 27 April 2026. Georgina Gill Ombudsman

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