CH-2025-000032 - [2025] EWHC 2988 (Ch)

In about 2010, the Plan was the subject of review in accordance with the policy terms and conditions. During the preceding 10 years Mr Dewji had taken advantage of a term in the policy conditions by which he could automatically increase the sum assured by the greater of 7.5% and the prevailing rate of increase in the UK Average Earnings index without medical evidence. As at September 2012 the life assurance sum assured was some £2,381,779.66 and the critical illness sum assured was £545,444.91, sustained by an annual premium of £18,613.91. The surrender value was just under £9,000.

Mr Dewji had engaged in correspondence with Prudential complaining about what he regarded as a “huge hike” in premium level and the low surrender value of his policy compared with the position of his two brothers who, he said, had taken out similar Plans with Prudential. Their plans too had had a review but the premia they were respectively to pay were much lower and the surrender values much higher than in the case of Mr Dewji.

By letter dated 23 March 2012 he escalated his complaints to the Financial Services Ombudsman in the Republic of Ireland (the “Ombudsman”) and enclosed a completed complaints form.

One issue that the Ombudsman had to deal with was that The Plan was governed by English law. There is a letter dated 1 May 2012 in evidence from the Ombudsman to Prudential making this point as follows:

“I note that the clause in the contract documentation between two parties of this dispute confirms that the policy is governed by and construed in accordance with the laws of England. Therefore, in these circumstances the Financial Services Ombudsman would not be the appropriate forum to adjudicate the complaint and this office would decline jurisdiction on that grounds.

However, should Irish law govern the contract, the circumstances would be otherwise. I have written today to the Complainant in that regard seeking the required written confirmation that it is willing to elect Irish law as the governing law of the contract. I would be grateful if you could also let me have confirmation in writing from you that:

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the applicable laws pursuit which the complaint will be examined and adjudicated upon, will be the laws of Ireland.

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Upon receipt of the said confirmation in writing from you and in addition, from the Complainant, the investigation of this matter can proceed.”

The entirety of the correspondence between the Ombudsman and Mr Dewji/Prudential is not in the appeal bundle.

I consider that both Mr Dewji and Prudential must have agreed that the complaint be examined and adjudicated upon under Irish law, otherwise the ombudsman would not have proceeded to a determination.

By letter dated 15 May 2012, Prudential set out its response to Mr Dewji’s complaint to the Ombudsman by way of “final response” as directed by the Ombudsman. Under the heading “2. Comparison with your brother’s Plans”, the point was made that Mr Dewji’s policy was rated (or loaded):

“ As explained to your financial adviser in our letter to him dated 8 July 2012 it is not appropriate to make direct comparisons between different Plans where the lives assured have different ages and medical conditions_ In particular, there are different charges deducted. Full breakdowns of the charges made in respect of your Plan and your brother's Plans have been sent to your financial adviser. They show, quite clearly, the difference in the charges deducted each year since inception. For your Plan the charges made to sustain the life cover and critical illness cover are significantly greater than the charges deducted from your brother's Plans because your Plan was rated at the time of application. As you will recall, you signed a Special Terms letter on 16 August 2000 following the underwriting of your Plan. A copy of the signed Special Terms letter is attached for your information.”

Mr Dewji denied that his policy was rated by letter dated 13 July 2012 sent to the Ombudsman.

By letter dated 15 August 2012, Prudential wrote to Mr Dewji referring to the “2 per mille rating” which applied to his Plan.

What is clear is that Prudential referred to the rating (in fact set out in the Special Provisions (of £2 per mille)) as being a key explanation for the difference between the financial position of Mr Dewji’s plan and those of his brothers under their respective Plans. However, the explanation did not in terms refer to the Special Provisions themselves but to the special terms letter of 16 August 2000 signed by Mr Dewji. The latter included a larger premium figure but did not in terms set out what the rating was nor that it would apply throughout the policy. The letter was, on its face, more directed at an acceptance that there would be no waiver of premium cover. Further, the reason given for the rating to Mr Dewji and the Ombudsman in 2012/2013 was, it appears, erroneously given as being medical grounds whereas, as the evidence shows, in 2000 the rating had been applied because of travel reasons. This is shown most clearly by three letters.

By letter dated 5 November 2012, Prudential set out its case on Mr Dewji’s complaint to the Ombudsman. The letter explained that the reason for the differences between Mr Dewji’s policy and that of his brothers was that he had paid higher charges as a result of the rating applied to his policy:

“ 6…..Therefore, the only difference is as a result of the rating applied to Mr Dewji's Plan. As he is paying a higher level of charges compared to his two brothers, in tum, their Plans have at all times had greater amounts Invested. These higher sums invested have over time produced a better return than Mr Dewji's Plan.

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As stated above due to a medical condition Mr Dewji's application for a Plan could not be accepted at standard rates. It was medically rated. A counter-offer by PIA was accepted by Mr Dewji and, as a result, the Plan came into force on the terms set out in the Special Terms Letter signed by Mr Dewji on 16 August 2000.”

By letter dated 29 January 2013, from Prudential to the Ombudsman, it was said:

“With regard to the rating applied at outset I would refer you to my letter dated 15 Aug 2012 when I attempted to explain why Mr Dewji’s Plan charges are different to those paid by his two brothers. At the time of application [Prudential’s] underwriters concluded that Mr Dewji could not be accepted at standard rates. A counter-offer in the form of a special terms letter was sent to Mr Dewji which he accepted when he signed the special terms letter on the 16 August 2000 . The initial annual premium was £4883.40 which sustained an initial life cover sum assured of £1 million and an initial critical illness cover sum assured of £250,000. This rating has applied since the plan came into force.”

By letter dated 19 February 2013 various valuations of Mr Dewji’s policy and those of his brothers were provided by Prudential to the Ombudsman. With regard to the rating it was said as follows:

“Mr Dewji’s medical condition

Mr Dewji’s rating was based upon the medical information listed on the application form he submitted when he originally applied for his Plan. A copy of the application form was included in the bundle of paperwork sent under cover of my letter to the Bureau dated 5 November 2012.

If Mr Dewji wishes to discuss his medical condition he should take this up with his GP”.

The eventual findings of the Ombudsman were sent under cover of a letter dated 9 April 2013 from the Ombudsman to the legal manager at Prudential. They include the following:

“[having referred to section 57BX of the Central Bank and Financial Services Authority of Ireland Act 2004, under which a consumer cannot make a complaint if the conduct complained of occurred more than 6 years before the complaint is made]

This complaint was made on 23 March 2012 and in light of the above I can only comment on matters that may be in dispute which occurred after 23 March 2006.

The Complainant’s Case

the Complainant says that he received a letter from the company in September 2010 advising him that (following a policy review) that the premium on the policy needed to be increased from £13,856.22 to £22,423.08.

The Complainant says that the premium increase was excessive and also says that the policy value was low (at about £9,000). The Complainant says that this policy was affected around the same time to other similar policies which were affected by his brothers with the Company. He says that following policy reviews on those policies that the increase in premium were minimal and that the policy values are £67,000 and £53,000.

The Complainant says that his policy was not accepted on special terms (was rated) as the Company allege. He says that he did not agree to a rating when the policy was effected and says that he was not advised by the Company that the policy was accepted on special terms.

The Complainant is unhappy with the increase in premium on his policy (following the policy review). He also complains of poor service and slow replies to correspondence.

The Complainant asks that the Company charge a premium on his policy similar to his brothers’ policies and that the Company allow a similar value on his policy to his brother’s policies.”

I need not set out Prudential’s case as summarised by the Ombudsman save to note that Prudential referred to the policy documentation, the fact that they had provided fund performance details as requested and comparative details of the policies, premia, charges and benefits for the complainant’s and for his brother’s policies (and had obtained the required consents from the other policyholders to do so) and they asserted that the policy had been correctly administered in accordance with the Plan Contract Terms.

Having referred to the process followed by the Ombudsman and the evidence and submissions made to him, the Ombudsman confirmed that he did not consider that a conflict of fact such as would require the holding of an oral hearing was disclosed on the material before him and that that material enabled him to make a finding without the need for an oral hearing.

The Ombudsman noted that the Complainant did not deny a number of assertions made by Prudential. Among others, these included an assertion that Prudential had issued a Key Features Document, a policy brochure and policy documentation to the Complainant when the policy was effected and that he had been advised of the policy benefits and the (assumed) growth rates. They had also said that the Complainant was afforded a 14 day cooling off period, which enabled him to cancel the policy within that period if he so wished.

The Ombudsman found that there was no evidence that Prudential had incorrectly implemented policy reviews or conducted reviews contrary to the Terms and Conditions of the contract. He consequently accepted that the policy was subject to review and that the reviews were appropriately conducted, as argued by Prudential.

He noted that the Complainant said that the policy was not accepted on special terms, but referred to the letter sent to Mr Dewji on 14 August 2000 including the Special Terms document.

The Finding then referred to Mr Dewji having signed the letter of 16 August headed “Special Terms”, confirming that he wished to proceed with the policy on “the terms set out in this letter”:

“Consequently I find that the policy was accepted on special terms. I accept that this letter showed that the policy was not accepted on standard terms and that the policy was subject to a “rating/a loading” no evidence has been presented to show that the charges applied to the policy by [Prudential] were incorrect or contrary to the policy Terms and Conditions.”

As regards the underlying complaint, based on a comparison between Mr Dewji’s plan and those taken out by his brothers, the Ombudsman found:

“I note that the Complainant is unhappy with the current policy fund value (and suggest that “an element of theft” may be involved). I can understand why the Complainant may feel that the policy value is low relative to his brothers’ policies (and that the premium is relatively high). The policy was accepted on special terms in this and the increasing age of the Complainant and the impact of these factors on the cost of cover together with the impact of the increased cost of critical illness cover and the poor fund performance have all negatively impacted the policy fund value.

No evidence has been provided by the Complainant (other than suggested comparisons with the values of the Complainant’s brothers’ policies) to show that [Prudential] have not valued the policy correctly and in accordance with the contract Terms and Conditions.

I find that a comparison of the value of this policy with valuations on the Complainant’s brothers’ policies, and comparison with the respective premiums, is not necessarily an appropriate comparison because of the differences in the contracts (agents, inception dates, charges, acceptance terms, etc.) and as has been outlined in correspondence to the Complainant by [Prudential], and as detailed above. In the absence of evidence to show that the policy has not been correctly valued (or that the administration of the policy by [Prudential] insofar as it effects the policy value was inappropriate), or that the charges that have been applied or incorrect, I cannot uphold the complaint.

I note that there have been some delays in providing responses to correspondence but note the requests for detailed information and the volume of supporting documentation involved. I also note that [Prudential] have made a number of errors in corresponding with the Complainant and these may have caused some inconvenience to the Complainant. I find that {Prudential] should pay compensation of £150 to the Complainant in this respect.”

The Finding ended as follows:

“The above finding is legally binding on the parties, subject only to an appeal to the High Court within 21 calendar days”.

This set out the then statutory position under Irish law. Section 57CL of the Central Bank Act 1942 (as amended by the Central Bank and Financial Service Authority of Ireland Act 2004) (the “1942 Irish Act”) provided for a right of appeal by a complainant or the regulated financial service provider to the High Court if dissatisfied with a finding of the Financial Services Ombudsman. However, by section 57CL(3), such an appeal must be made within the period laid down by the rules of court or within such further period as that court may allow. Under the relevant rules of court the period to appeal was 21 calendar days.

Following the Ombudsman’s determination, Prudential sent a cheque to Mr Dewji for £150 “in full and final settlement of this matter”. Thereafter Mr Dewji paid the premia set from time to time by Prudential.