Allegations of mis-selling could not be considered by Financial Services Ombudsman when they occurred more than six years previously

In Geoghegan v Financial Services Ombudsman & ors [2015] IEHC 217, Kearns P in the High Court rejected an appeal of a decision of the Financial Services Ombudsman (FSO). The decision once again makes it clear that the limitation period for dealing with claims of mis-selling of financial products runs from the time of the sale of those products.

In 1998 the appellant and her husband took out a life assurance policy. The following year they enhanced their cover to include critical illness benefit and thereafter received annual ‘indexation notices’ which provided details of the sum assured and the amount of critical illness cover. In 2006, the critical illness cover began to be described on those notices as ‘Accelerated Specified Illness Cover’.

Mr Geoghegan became unwell in 2008 and was unable to continue working. He was diagnosed as suffering from cardiomyopathy and in March 2009 a claim was made under the critical illness policy. The insurance company declined cover stating that Mr Geoghegan's illness did not come within the definition of heart attack as outlined in the policy. 

A complaint was made to the FSO on the basis that Mr and Mrs Geoghegan at all times believed that they were covered for all serious illnesses under the policy rather than being limited to certain specified illnesses. Mrs Geoghegan stated that at the time of signing the proposal forms she was not aware that only specified illnesses were covered. In December, 2012 the Ombudsman indicated that a full investigation would take place but that he could not examine the circumstances of the sale of the policy or the nature of the information provided to Mr and Mrs Geoghegan in relation to the policy as this had occurred more than six years previously.

The Ombudsman issued his decision in July 2013 noting that the only issue for consideration by him was whether the provider had assessed the claim correctly and in accordance with the terms and conditions of the policy. The Ombudsman found it had and rejected the complaint.

Mrs Geoghegan appealed claiming that she and her husband always understood that all major illness would be covered by the critical illness policy and that, owing to the high monthly premium, they would not have taken out the cover had they known it covered only specified illnesses. Additional material was submitted which showed that in 2006 the description of the critical illness cover changed and it began to be described as ‘accelerated specific illness cover’. It was further submitted that the notice party had upheld claims in respect of cardiomyopathy from claimants whose policies were commenced at the same time as that of Mr and Mrs Geoghegan.

The judge was particularly sympathetic toward the complainants noting that they had paid considerable monthly premia to the insurer. However, he went on to note that his role was limited to considering whether or not the Financial Service Ombudsman erred in his decision. He pointed out that the relevant test was that set out in Ulster Bank v. Financial Services Ombudsman; namely, was the decision reached by the Ombudsman vitiated by a serious and significant error or series of errors. Having carefully considered all of the materials which were before the Ombudsman and having regard to the deferential stance required to be adopted by the Court to the decision of the Ombudsman he was satisfied that the Ombudsman did not err in its decision.

The judge acknowledged that the Ombudsman was precluded from considering the alleged mis-selling of the policy as it had occurred more than six years previously. 

He also noted that the name of the illness cover changed in 2006 which could lead the court to draw an inference that there was some confusion amongst policy holders in relation to the nature of the policy however, this did not alter the fact that the complainants had signed a proposal document at the time of taking out the cover which expressly stated which illnesses the policy was limited to.

The judge also noted the indications that the insurer had upheld claims from other policy holders who suffered from cardiomyopathy but stated that it was clear from the case law that the court could not compel the notice party to deviate from the stance it had adopted and accordingly the appeal was dismissed.

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Date published: 28 April 2015