Direction requiring insurer to admit claim under income protection scheme set aside due to serious errors in Ombudsman decision

The Court of Appeal dismissed the Financial Services and Pensions Ombudsman’s appeal and affirmed the High Court’s decision to set aside the Ombudsman’s direction requiring an insurer to admit a claim under a group income protection scheme. The court held that while the Ombudsman must have due regard to the Consumer Protection Code when assessing the reasonableness of a financial service provider’s conduct, there is no requirement to specifically analyse the Code in every instance unless it is raised or directly relevant. The court concluded that the Ombudsman had made serious and significant errors by drawing unjustified inferences from correspondence and by ordering a disproportionate remedy disconnected from the established findings. As a result, the matter was remitted for fresh consideration, and the original direction was set aside.