Distress and inconvenience
The FOS is prepared in appropriate cases to award sums for distress and inconvenience. It is not necessary for the policyholder to have suffered a financial loss: a stand-alone award for distress and inconvenience may be made.
For this purpose “distress” and “inconvenience” are given wide definitions. “Distress” includes embarrassment, anxiety, disappointment and loss of expectation. It can be a relatively minor annoyance or something that causes serious worry, loss of sleep or prolonged ill health. “Inconvenience” includes any expenditure of the policyholder's time and effort. Again this may range from something quite minor to severe disruption.
Within the overall limit for any award of £100,000, there is no restriction on what the FOS may instruct a firm to pay for distress and inconvenience. However, the FOS has indicated that most awards for distress and inconvenience are less than £300 and in only a small number of exceptional cases has an award exceeding £1,000 been made.
A fuller briefing note on distress and inconvenience is available from the FOS's website and Ombudsman News 71 contains some useful case studies split into three bands of awards:
- Modest - less than £300. Following a fire at their home, Mr and Mrs N and their young family had to stay in alternative accommodation for weeks longer than should have been necessary. The delay resulted from inaccurate instructions given by the insurer to contractors carrying out the repair and redecoration work.
- Significant - £300 to £999. Mr D died shortly after making a flood damage claim. His widow advised the insurer of his death but was caused significant distress when the insurer persisted in addressing correspondence to him.
- Exceptional - £1,000 or more. Although no general insurance example is given, such an award has been made in a pensions case. Mr T retired but quickly had to consider starting work again when it became clear that there would be a shortfall in his pension provision caused by the investment firm concerned.