The Cirencester Friendly Society specialises in the provision of Income Protection Plans. In May 2007 a Mr Parkin took out one of their plans and then in August made a claim on the basis that he was too ill to work. As is normal, the Society requested a Medical Attendants Report (MAR). This indicated that there had been considerable non-disclosure in relation to existing conditions. Had Mr Parkin made full and honest disclosure of his conditions at the time of the application, the Society would not have offered him cover and therefore, very reasonably, it turned down his claim. Mr Parkin complained to the FOS who told the Cirencester to pay him as the non-disclosures (all of them) must have been the result of an ‘over sight’. He duly got paid £19,000. Emboldened by this success, in March 2008, Mr Parkin again made a claim. Again it was quite properly turned down but again the FOS supported him. This time the board of the Society decided that it had to make a stand, not least because, being a mutual, the money it was having to pay Mr Parkin as a result of his fraud came out of other members funds. In May this year, the case finally came to the High Court and resulted in a complete victory for the Society. The Court set aside and declared unenforceable the two judgements by FOS saying that it had been ‘deluded’ by the frauds of Mr Parkin and also awarded full costs to the Society.
This is the first time that the High Court has decided that it has the jurisdiction to set aside an FOS award obtained by fraud and full credit must go to the Cirencester Friendly Society for having the courage and commitment to take this the whole way. The Judgement will undoubtedly encourage others to challenge some of the more grotesque FOS decisions. We may even hope that the Ombudsman might ‘learn lessons’ and try to smarten up its’ act. That though could be a ‘bridge too far’.
The above is the lead article in our monthly News Notes. Please click here for information regarding these notes.