Onyx Gold with Lloyds

“Complaints” & “Whines”

Avoiding claims being excluded from cover


Even the most successful professional practices can receive formal complaints from clients or, to a lesser extent, communications including a suggestion of a problem having arose or potentially about to arise, which we will refer to as a “whine” for ease of reference. Deciphering the difference between the two phrases above, and taking the correct course of action, can sometimes be the difference between a swiftly resolved disagreement and a severely tested, or at worst terminated, client relationship followed by an ongoing dispute / claim. Beyond that, a failure to recognise the difference between the two could also have wider implications in relation to your company’s Professional Indemnity Insurance (“PII”). Specifically, a failure to make appropriate disclosure or notifications to Insurers could result in your company not being covered under its PII policy. Therefore, we have prepared this note to highlight some relevant issues which we hope is helpful.

Definitions of a Complaint

The Oxford English Dictionary definition of a complaint is “a statement that someone makes saying they are not satisfied”.


The Financial Conduct Authority (“FCA”) defines a complaint as an “expression of dissatisfaction (oral or written) about the provision of, or failure to provide, a financial service. It alleges how [a client has] suffered (or may suffer): financial loss; material distress; or material inconvenience”. Such complaints are required to be dealt with in accordance with a complaints procedure.


The Royal Institute of Chartered Surveyors state in their guidance note on complaints handling that “The definition of a complaint is any expression of dissatisfaction” and they give guidance as to how complaints should be handled including the need for that to be done “reasonably and consistently to minimise reputational and financial risk”.


Various other professional bodies / regulators have similar requirements in relation to complaints including the Royal Institute of British Architects and the Architects Registration Board.


Your company will have a complaints procedure which should align itself with your regulator’s / professional body’s requirements and expectations on the subject. In addition, your company’s PII policy could dictate that a notification of the complaint should be made to insurers whether as a “claim” or “circumstance”, otherwise the Policy may not respond. It is for this reason that it is essential that all staff are aware of the company’s PII requirements and its complaints procedure and that upon receipt of a complaint that the information is brought to the attention of your senior manager / complaints’ handler as soon as possible, so that they can decide, in conjunction with brokers, whether your PII Insurer should be notified. To that end, we give some general comments below, which we hope are helpful.


PII policies are written on a “claims made” basis. They will require a policyholder to notify any claim first made against them during the period of insurance. The question is, when is a “claim made” against a policyholder? Certain policies will define what is meant by a “claim” in which case that definition should be referred to and considered closely.

However, there are policies which do not include a definition of the word “claim”. In Robert Irving & Burns v Stone it was held that “the words ‘claims made’ indicate that there has been a communication by the client to the insured of some discontent which will, or may, result in a remedy expected from the insured”. This is very close to the FCA definition of a complaint.



Broadly speaking, a PII policy will provide that the policyholder is obliged to notify “circumstances” that arise during the period of insurance, which either are “likely” to give rise to a “claim” or “may” to give rise to a “claim”. If there is a failure to notify or disclose a circumstance to insurers, then any claim arising from that “circumstance” could be excluded from cover. It is, therefore, important to be able to identify whether such “circumstances” have arisen.

Circumstances that are likely to give rise to a claim:

This is a high threshold as explained by the Court of Appeal in Laker Vent Engineering Limited v Templeton Insurance Limited. In that case, it was agreed that it had to be demonstrated that the “circumstance” had to be “more probable than not” to give rise to the claim in order for it to be notifiable. The high threshold contrasts with the position in respect of circumstances that “may” give rise to a claim which we refer to opposite.

Circumstances that may give rise to a claim:

It is fair to say this is not a high threshold and one which may be crossed by a “whine”. However, it can be difficult to discern when the threshold has been crossed. To give one example of where the threshold was crossed, we would refer to the case of J Rothschild Assurance plc v Collyear. In that case, the policy required notification of “circumstances” which “may give rise to a claim or loss”. The policyholder’s regulator had sought a report from a firm of accountants as regards potential mis-selling of pensions by various different firms selling pensions. It is important to note that the report was not following a review of the policyholder’s own files. The regulator wrote to the policyholder (and various other firms) referring to the review whilst stating “there is a problem which needs to be tackled”. It is fair to say this could be construed as a “whine” as regards the selling of the particular pension product. The court found that the situation amounted to a “circumstance” which needed to be notified and stated: “the test of materiality is a weak one”.


We should say similar, but not the same, considerations will arise as regards what information needs to be disclosed to insurers prior to the inception of a new policy as part of the duty of fair presentation, although we do not deal with those considerations in this note. If advice is required in this respect, please contact one of the Onyx team.


If you have any queries and we are your PII Broker, please contact any of the Onyx team on:

Tel: 020 3841 5570
Email us on info@onyxinsurance.co.uk

Of course, if we are not your current PII Broker, it is harder for us to give guidance without sight of your current PII policy.


However, we are happy to see if we can assist, so feel free to contact us.


Given the generality of this note it should not be treated as specific advice in relation to a particular matter as other considerations may be relevant. Therefore, no liability is accepted for reliance on this note.