6th November 2015
The Financial Ombudsman Service (FOS) has ruled that insurer Prudential was wrong to backtrack on an annuity quotation it has offered a customer.
The complainant, known as Mr C, had a pension with Prudential and asked for an annuity quote – an annuity is an insurance contract that pays out a set income for life.
Mr C received a quote back from the insurer, saying his pension was worth £61,638 as of 12 February 2014 and that he could receive an annuity of £3,699.60 a year after the 25% tax-free cash was taken, including provision for his spouse when he died.
The quote was guaranteed for 30 days from 21 January 2014 and Mr C accepted the quote within the guaranteed period.
However, Prudential then wrote to Mr C saying it had made a mistake and offered a lower annuity amount – the insurer also offered £200 in compensation.
But Mr C tore up the cheque and took Prudential to the FOS .
The FOS investigated and said the compensation was not enough as Prudential has failed to explain the error but the FOS adjudicator rejected the idea that Mr C should be entitled to the original annuity quote.
Mr C then disputed the findings and took the case to another ombudsman, Roy Milne, who agreed that Mr C was entitled to the wrongly-quoted annuity.
Milne said: ‘The quotation was an offer by Prudential. Mr C’s acceptance of it made it a binding contract.’
Prudential must now pay the original quoted amount and the difference between the original quotation and the new quotation that Mr C has far missed out on. Since July 2014, Prudential has been paying just £3,425.04 a year to Mr C rather than the £3,699.60 he was originally quoted.
The insurer must also pay him £500 for the trouble and inconvenience it has caused.
A Prudential spokesman said the matter had been resolved ‘to the customer’s satisfaction’.