ICOBS 7.1 The right to cancel

The right to cancel

ICOBS 7.1.1 R

1A consumer has a right to cancel, without penalty and without giving any reason, within:

  1. (1)

    30 days for a contract of insurance which is, or has elements of, a pure protection contract or payment protection contract; or

  2. (2)

    14 days for any other contract of insurance or distance contract.

[Note: article 6(1) of the Distance Marketing Directive in relation to a distance contract and article 186 of the Solvency II Directive2 in relation to a pure protection contract]

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ICOBS 7.1.2 G

A firm may provide longer or additional cancellation rights voluntarily, but if it does these should be on terms at least as favourable to the consumer as those in this chapter, unless the differences are clearly explained.

Exceptions to the right to cancel

ICOBS 7.1.3 R

The right to cancel does not apply to:

  1. (1)

    a travel and baggage policy or similar short-term policy of less than one month's duration;

  2. (2)

    a policy the performance of which has been fully completed by both parties at the consumer's express request before the consumer exercises his right to cancel;

  3. (3)

    a pure protection contract of six months' duration or less which is not a distance contract;

  4. (4)

    a pure protection contract effected by the trustees of an occupational pension scheme, an employer or a partnership to secure benefits for the employees or the partners in the partnership;

  5. (5)

    a general insurance contract which is neither a distance contract nor a payment protection contract, sold by an intermediary who is an unauthorised person (other than an appointed representative); and

  6. (6)

    a connected contract which is not a distance contract.

[Note: articles 6(2)(b) and (c) of the Distance Marketing Directive and article 186(2) of the Solvency II Directive2]

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ICOBS 7.1.4 G

A 'similar short-term policy' is any policy where the event or activity being insured is less than one month's duration. 'Duration' refers to the period of cover rather than the period of the contract.

Start of the cancellation period

ICOBS 7.1.5 R

The cancellation period begins either:

  1. (1)

    from the day of the conclusion of the contract, except in respect of a pure protection contract where the time limit begins when the customer is informed that the contract has been concluded; or

  2. (2)

    from the day on which the consumer receives the contractual terms and conditions and any other pre-contractual information required under this sourcebook, if that is later than the date referred to above.

[Note: article 186(1) of the Solvency II Directive2 and article 6(1) of the Distance Marketing Directive]

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Exercising a right to cancel

ICOBS 7.1.6 R

If a consumer exercises the right to cancel he must, before the expiry of the relevant deadline, notify this following the practical instructions given to him. The deadline shall be deemed to have been observed if the notification, if on paper or another durable medium, is dispatched before the deadline expires.

[Note: article 6(1) and (6) of the Distance Marketing Directive]