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The FOS Approach to Awarding Interest in Insurance

Interest will normally be awarded if FOS accepts the consumer is owed a sum of money under the policy.

Interest will not likely be awarded when:

  • the FSP is liable to repair or replace the relevant item; or
  • FOS determines that the relevant sum to be paid is based on current rates.

Interest is payable from the date it was unreasonable for the FSP to have withheld payment of the amount it was liable to pay. This will usually be:

  • the date the claim was denied;
  • if there has been an unreasonable delay before the FSP denied the claim – an earlier date that is considered reasonable; or
  • the date when the benefit was due to be paid under the policy (for example after the expiry of a waiting period in an income protection policy).

FOS may also take into account other factors, such as whether a consumer has unreasonably failed to provide information reasonably requested by the FSP.