First Central Underwriting Limited · DRN-6228088

The complaint Mr T has complained that his motor insurer, First Central Underwriting Limited, tried to charge him an additional premium after it said he failed to disclose previous claims when taking out a policy with it. What happened In May 2025 Mr T took out a motor insurance policy with First Central and a few days later, it asked him to provide evidence of his no claims discount (NCD). After reviewing the NCD certificate, First Central said it would have to charge Mr T an additional premium of £179.16 because there were two claims on his record which he hadn’t disclosed to it. It said if he had, his premium would have been higher. Mr T didn’t agree and said that the claims had been disclosed. He didn’t agree to pay an additional premium and asked First Central to cancel the policy. Mr T then raised a complaint and said that the quote that he eventually proceeded with was completed by a friend who was with him at the time, and that his friend had declared the two claims. Mr T was also unhappy because he was charged £120.89 for less than one month’s cover, especially as the full year’s premium cost £413.14. First Central considered Mr T’s complaint but it didn’t uphold it. It said that once it became aware of the two claims, an additional premium was generated as they indicated a higher risk. It said though Mr T had help from his friend in purchasing the policy, it was ultimately his responsibility to ensure all the information provided was accurate. It added that Mr T had generated 25 separate quotes before purchasing the policy and that the one he proceeded with, which was through a price comparison site (Q), did not include previous claims. It said it followed the correct process and that under its policy terms, it is entitled to request additional information at any point during the policy term. Unhappy with First Central’s response, Mr T brought his complaint to our service. He said he wanted an apology and a refund of the £120.89 he was charged. One of our investigators reviewed the complaint and initially said First Central shouldn’t take any action but ultimately said that he was upholding the complaint as First Central should not have included a £50 cancellation fee in what it charged Mr T. Mr T insisted that the claims had been declared but accepted our investigator’s view. First Central didn’t agree and said there is nothing in the relevant legislation which prevents it from charging a cancellation fee when the policy is cancelled by its insured.

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As there was no resolution, the matter was passed to me to decide. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. The relevant law in this case is The Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA). This requires consumers to take reasonable care not to make a misrepresentation when taking out a consumer insurance contract (a policy). The standard of care is that of a reasonable consumer. And if a consumer fails to do this, the insurer has certain remedies provided the misrepresentation is - what CIDRA describes as - a qualifying misrepresentation. For it to be a qualifying misrepresentation the insurer has to show it would have offered the policy on different terms or not at all if the consumer hadn’t made the misrepresentation. CIDRA sets out a number of considerations for deciding whether the consumer failed to take reasonable care. And the remedy available to the insurer under CIDRA depends on whether the qualifying misrepresentation was deliberate or reckless, or careless. First Central thinks Mr T failed to take reasonable care not to make a misrepresentation when he failed to declare two claims that he had in the five years prior to taking the policy out. Mr T said that he purchased his policy through First Central’s website though he had also obtained quotes through Q. First Central has been able to provide evidence that shows that the quote Mr T eventually proceeded with was obtained through Q. So, on balance, I think the policy was purchased through Q. I’ve looked at the question Mr T was likely asked when he took the policy out as well as some of the policy documents he was sent after taking the policy out. The relevant question currently on Q’s website is: “Have you had any motor accidents, claims or losses in the past 5 years, no matter who was at fault or if a claim was made? Insurers need to know about all claims and incidents in the last 5 years, even if it wasn’t your fault or if you were driving another vehicle”. The options are “yes” or “no”. Though this is the question currently on Q’s website I think it is unlikely that it would have been very different if at all at the time Mr T took the policy out. I say this because it is a standard question asked by most insurance websites. I think it is a clear question. According to Mr T’s NCD he had a non-fault claim in May 2024 and a fault claim in December 2023. So they both had to be declared, which First Central says wasn’t the case. Mr T said that the two claims were declared and that if First Central had located the relevant quote it would have seen that this was the case. First Central provided a list of the quotes it says were ran by Mr T through various websites including Q. I understand a list of the quotes

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was also shared with Mr T. None of the quotes generated on the date the policy was taken out, through Q or other websites, included the two claims. So, on balance, I don’t think Mr T declared any past claims in the quote he proceeded with. Furthermore, the Statement of Fact document which was sent to Mr T once the policy was taken out, states the following: “Has any driver had any accidents, claims, thefts, incidents or losses regardless of fault or blame in the last five years?”. The answer recorded was “no”. The Statement of Fact also requests that the insured reads the information it contains carefully and contacts First Central immediately if the information is not correct. It also warns that if the information is incorrect, this could invalidate the policy or result in a claim not being paid. Based on this document, there were no claims recorded and as far as I am aware, Mr T didn’t contact First Central upon receipt of this document to let it know this was incorrect. For the reasons above, I don’t think Mr T took reasonable care not to make a misrepresentation. First Central provided evidence comprising of its underwriting criteria and an explanation from its underwriters which shows that had it been aware of the presence of the claims it would have charged a higher premium. This means I’m satisfied Mr T’s misrepresentation was a qualifying one. First Central didn’t say what type of misrepresentation it considered this to be but the actions it took suggest that it thought it was careless. And I say this because if it considered it to be reckless or deliberate, it would have taken different action including avoiding the policy. I agree that Mr T’s misrepresentation was careless as I am not persuaded that he intentionally tried to mislead First Central or that he didn’t care whether the information he provided was accurate or not. I say this because he readily provided his NCD when requested, which clearly indicated there were two claims on his record in the relevant period. As I’m satisfied Mr T’s misrepresentation should be treated as careless, I’ve looked at the actions First Central can take in accordance with CIDRA. Where the qualifying misrepresentation is careless and there hasn’t been a claim and the policy would have still been offered but on different terms, First Central may change the terms of the policy or reduce proportionately the amount to be paid on any future claim. Alternatively, it can give notice to cancel the policy. The consumer can also choose to cancel the policy themselves as was the case here. But importantly, the insurer cannot insist on the insured paying an additional premium if they are not happy to pay it. In this case, Mr T made it clear he was not happy to pay the additional premium and proceeded to cancel the policy himself. On the whole, I don’t think First Central acted inappropriately in this regard. When Mr T requested to cancel the policy, First Central charged him for time on cover and some additional fees including a £50 cancellation fee. As our investigator said, CIDRA says that when a policy is cancelled by either party, the insurer must return the unused premium. Our view is that this should not include any cancellation fee, regardless of who the policy was cancelled by. First Central says that if it is cancelled by the insured, then the

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cancellation fee should apply. But this isn’t our view and we also don’t think it is fair and reasonable. So I think First Central must now refund the cancellation fee plus interest. My final decision For the reasons above I have decided to uphold this complaint. First Central Underwriting Limited must refund Mr T the £50 cancellation fee it charged him. It must also pay 8% simple interest per year on this amount from the date it was charged to the date it pays him. If First Central Underwriting Limited considers that it’s required by HM Revenue & Customs to deduct income tax from that interest, it should tell Mr T how much it’s taken off. It should also give Mr T a tax deduction certificate if he asks for one so he can reclaim the tax from HM Revenue & Customs if appropriate. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr T to accept or reject my decision before 14 April 2026. Anastasia Serdari Ombudsman

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