‘I’ve waited two years for Scottish Widows to pay out for my MS’

A disabled woman has been battling Scottish Widows for close to two years over a life insurance claim.

Karen Gibson, 36, from Glasgow, was diagnosed with multiple sclerosis in January 2022, but was denied an insurance payout despite buying critical illness cover with her husband, Mark, in 2019.

The couple referred their case to the Financial Ombudsman Service after Scottish Widows said it was not informed of information which could have indicated early signs of Ms Gibson’s condition.

The Lloyds Banking Group subsidiary pointed to an opticians letter from 2017 suggesting Ms Gibson had “blurred vision” which can indicate optic neuritis – an early sign of MS.

It also referenced one of her old doctor’s notes from when she was pregnant, saying a “swollen back” could indicate the condition.

However, an investigator at the Ombudsman has initially ruled Scottish Widows did not treat the couple fairly and should pay out around £115,000, as well as £300 in compensation.

The full amount was not awarded because the investigator found Ms Gibson had smoked in the 12 months before taking out the policy and so said the couple should have paid slightly higher premiums. The couple said they disclosed all this to their mortgage provider.

Scottish Widows has not paid out on the claim, but has now separately agreed to pay a settlement figure of £125,370.37 on a non-admission basis – acknowledging Ms Gibson’s vulnerability.

The provider has been given a chance to submit new evidence before a final ruling is made.

Despite this, the couple said the long-wait had left them struggling financially.

Mr Gibson, 37, said: “Due to Karen not being able to work and myself working part time to help care for Karen and our son, we haven’t been able to pay the debts we got into when we bought the house.

“Our credit rating is now ruined, so we can’t get another car with cheaper monthly repayments. We are hoping Scottish Widows pay out before the car gets repossessed.”

The couple rely on the car to transport Ms Gibson, who is now severely disabled, to her hospital appointments. At the moment, the two are using her Personal Independence Payments and Employment and Support Allowance to cover their mortgage, and have had to borrow money from their family.

Ms Gibson said: “Finding out I had MS was devastating. But what came after was worse.

“I’ve had to try and come to terms with it while constantly advocating for myself in a battle with Scottish Widows – a company which has made me feel like a fraud and a liar.

“I have been in one recurring flare up for a year now because of stress and sleepless nights.”

After it became clear Scottish Widows did not initially want to pay out, the two stopped paying the £55 monthly premiums. Mr Gibson said the provider offered them a new policy with a higher premium which didn’t include any illness linked with MS and didn’t cover any illness linked with back pain. The two declined.

Scottish Widows complaints to the Ombudsman have surged 63pc this year despite the company’s pledges to improve customer service, making it the most complained about pension provider on the Ombudsman’s database.

Stephen Timms, chair of the Work and Pensions Committee, met the firm’s chief operating officer – Donald MacKechnie – at the start of Parliament’s summer recess. He was told the provider had invested in more workplace training, increased the number of employees answering calls and reallocated experienced staff to more complex cases.

Mr Timms said: “It is disappointing to hear of cases like this, where the service would appear to be below what customers have a right to expect. I hope Scottish Widows will act to resolve them quickly.”

Anna Nicolaou, 57, is another customer who has experienced issues with the company. The former bond analyst is still trying to access half of a £44,000 pension held with Scottish Widows.

After contacting the provider in July 2022, she discovered a customer of Clerical Medical – part of Scottish Widows – had the same policy number as her. This led to severe delays in accessing her pot, with staff unable to locate her policy.

The provider released half her pension tax-free lump sum worth some £22,000 in April, after Ms Nicolaou also contacted the Ombudsman. She says she lost £5,000 to market movements due to the delays.

She was sent a cheque for £150 in compensation, which she said “bounced”. She said she has now had £300 transferred to her bank account with no explanation, but does not want to accept it.

She said: “It is insulting. I don’t want it. What about my losses? The fund management fees? These losses are because I couldn’t access my policy.”

Ms Nicolaou still hasn’t been able to access the other £22,000, despite sending paperwork to release it in September. 

Scottish Widows apologised in relation to both cases.

Mr MacKechnie said: “We are very sorry that some of our customers have not received the level of service they should have over recent months.

“We’ve been working hard behind the scenes and overall service levels are back to normal.

“We don’t want anyone to feel the need to complain and we know we don’t get everything right, however, our customer experience is improving and we’re committed to following through to give customers the level of consistent service they expect.”