Guardianship/Payments to minor – insurer did not comply with own guideline – question regarding true guardianship
Background
- In 2009, a grandmother took out a single contribution investment for her granddaughter, at that stage about 6 years old. The aim of the policy was to provide for the minor’s educational needs. The minor was noted as policyholder and life assured and her father as beneficiary, in the event she passed away before the expiry of 5 years.
- However, when the complainant, the minor’s mother, approached the financial adviser who set up the policy, she discovered that funds were withdrawn by the minor’s father.
- The minor’s parents were divorced prior to the commencement of the policy and the minor has, allegedly, had limited contact with her father since the divorce.
- The insurer confirmed that the funds in question were withdrawn and provided a copy of the payment request form and a letter signed by the father, stating that he is the legal guardian of the minor. The insurer accordingly paid the funds into the banking account of the father’s new wife, as requested, as the policyholder was still a minor and her father noted as beneficiary.
- Accordingly, the insurer was of the view that it followed its process and that all required documents were received
Discussion
- Minors have only limited contractual capacity, and as such, their interests have to be protected, as they cannot protect it themselves.
- As the insurer relied on its process, we requested its guideline pertaining to payments in minor owned policies.
- However, when we received the guideline, we noted several deviations therefrom, notably that the funds were paid into a third party account and that both parents’ signatures were not obtained, nor were reasons provided why the minor’s mother’s signature was not obtained.
- Taking the above in consideration, the insurer made an offer, to the value of what the policy would have been had no withdrawals been made, in full and final settlement of the matter.
Result
- The complainant provided her daughter’s banking details and the complaint was resolved.