FOS tells Pru to pay up in annuity battle

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’.


1 thought on “FOS tells Pru to pay up in annuity battle”

  1. george the first says:

    Quite right too. Why did the FOS fail to deal with this?

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