In Aviva Life & Pensions (UK) Limited v Financial Ombudsman Services, the High Court recently upheld Aviva’s application for judicial review of a decision of the Financial Ombudsman Service (FOS). The court reiterated that, although the FOS may depart from the relevant law, if it does so it must explain why. Interestingly, the FOS had already conceded that its decision should be quashed on the basis that it was inadequately reasoned but Aviva argued that its application should be heard to a conclusion and judgment given.


In July 2006, Mr and Mrs McCulloch took out a joint life insurance policy including terminal illness benefits. In August 2013, following the breakdown of their marriage due to changes in Mr McCulloch’s personality, Mr McCulloch cancelled the joint life policy. Aviva obtained Mrs McCulloch’s written consent to the cancellation and the policy was duly cancelled.

At around the same time, Mr McCulloch was referred for psychiatric analysis and a CT scan due to the changes in his behaviour.

In November 2013, Mr McCulloch took out a single life policy with terminal illness benefit with Aviva. Mr McCulloch failed to disclose on the proposal form that he had been consulting his GP in relation to possible mental health issues since September 2013, that he had been referred for psychiatric assessment or that he was awaiting a CT scan.

Very shortly after the single life policy commenced, Mr McCulloch was diagnosed with an aggressive, terminal form of dementia. A claim was notified to Aviva for terminal illness benefit.

In April 2014, Aviva declined the claim on the basis that Mr McCulloch had misrepresented the position and avoided the policy. Following the declinature, a complaint was made to the FOS on behalf of Mr and Mrs McCulloch in relation to Aviva’s handling of both the joint life and the single life policies.

The FOS decision

In November 2014, the FOS rejected the complaint in respect of the joint life policies but upheld it in respect of the single life policy.

The reasons for this were:

1) As regards the joint life policy, while Mr McCulloch was experiencing symptoms at the time of cancellation and may not have appreciated what the consequences of cancelling were, Aviva had followed the right process in obtaining Mrs McCulloch’s consent.

2) As regards the single life policy, the Ombudsman considered that Aviva should have been advised of the referral to the psychiatrist and for a CT scan but found that Mr McCulloch’s misrepresentation was innocent because he would not have thought that the referrals were relevant to Aviva. While the Ombudsman took into account Aviva’s contentions that the relevant question on the proposal form was clear and did not ask whether it was serious or not, she felt that special consideration should be given the illness that Mr McCulloch was suffering at the time, i.e. he could not be expected to make the same disclosures that a reasonable person could be expected to make.

The Judicial Review proceedings

Aviva applied for judicial review and an order to quash the FOS’ decision concerning the single life policy, contending that the FOS had failed to take into account s.2, s.3 and schedule 1 of the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA) pursuant to the requirement under DISP Rule 3.6.4 R or provided any explanation for her reasons for diverting from CIDRA.

Under CIDRA, an insurer is entitled to avoid a policy where, as was the case here, it can show that it would not have written the risk at all if the misrepresentation had not been made (schedule 1 paragraphs 3 and 4). The standard of care required in not making a misrepresentation is that of a reasonable consumer (section 3(3)) although, if the insurer was, or ought to have been, aware of any particular characteristics or circumstances relating to the actual consumer, those should be taken into account in accessing what was reasonable (section 3(4)).

The Court concluded that the FOS was right to concede that its decision was flawed for inadequacy of reasons as the Ombudsman did not follow relevant law, guidance and practice. While the Ombudsman was not required to follow the relevant law, it was incumbent on her to explain why she had not.


There is no doubt that this will be a welcome decision to the insurance market concerned about an apparent lack of clarity around the decision making policies adopted by the FOS and seeming inconsistencies between similar decisions. Notably, the Judge, recognising the uncertainty in this case as to how the FOS had arrived at its decision, commented that, in due course, the FOS may have to explain its broader rationale. He added that the FOS is not absolved from consistency in decision making.

Also of note is that the Judge accepted that insurers require proposal forms to be completed accurately to enable them to assess the risk properly and value the premium accordingly. Adding that “…some weight must be given to the argument that fairness and reasonableness is not just about the interests of the insured, but must also accommodate the commercial interests of the insurer”.

Although this decision reaffirms the FOS’s discretion in departing from laws and regulations, it suggests that the courts may be more willing to impose limits on the FOS’s ability to rely on its right to depart from the general position in the interests of fairness and reasonableness; at least in cases where it has failed to evidence that it has taken proper account of the law.

Further reading: R (Aviva Life & Pensions (UK) Limited) v Financial Ombudsman Service [2017] EWHC 352 (Admin)