The Prudential Assurance Company Limited · DRN-6314842

The complaint Mr K complains that The Prudential Assurance Company Limited didn’t advise him of an add-on benefit to his Whole of Life (WOL) protection plan when it became available. He states this has meant he has overpaid premiums from when the feature became available due to not opting into the feature. What happened Whilst this complaint is from Mr K, his wife has also complained about the same issue which I have addressed under separate cover. In December 2012, Mr K was advised to take out a PruProtect plan by his financial adviser, who worked for a business that I shall call ‘Firm S’. The administration of the policy was taken over by Vitality in November 2014. In or around January 2018, Vitality introduced a new ‘Optimiser’ feature where, if plan holders opted in and undertook certain activities, it could then reduce their premiums. On 14 September 2023 and 27 October 2023, Mr K’s partner telephoned Vitality about the Optimiser feature on both of their plans. During that conversation, she was informed that engaging in the Vitality Programme would not earn her points or increase their Vitality Status, thus making them ineligible for a premium discount. This was attributed to them not having the Optimiser on their respective plans. Mr K raised a complaint in February 2025, requesting that his historical steps data be applied to his plan, to retrospectively adjust his premiums. In addition, he also wanted the ‘Optimiser’ feature adding to his plan and backdating to 2018. After looking into his concerns, Vitality responded to Mr K’s complaint on 19 May 2025. In summary, they said that: • The information provided on 14 September and 27 October 2023 about points, Vitality status and the Optimiser were incorrect. • With his Vitality Plan, he did not need the Optimiser to increase his points and earn a premium discount at the plan anniversary. • Engaging in the programme and earning points would indeed increase his Vitality status, leading to a premium discount based on his status (ranging from 0% for Bronze to 3% for Platinum). • They had also misinformed his wife about adding the Optimiser to his plan. Vitality said that he could’ve added the Optimiser to his plan. • After adding the Optimiser and applying the upfront discount, their Anniversaries Team

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confirmed that moving Mr K to Gold status would increase his premium by 0.5%. Therefore, no adjustment was made. • Vitality explained that they had backdated the addition of the Optimiser to January 2023 and refunded £1,250.13 in premiums plus £125.64 in interest to his bank account. • To apologise for the trouble caused, they were paying £300 to his bank account. Mr K remained unhappy with what Vitality had to say as he felt the Optimiser benefit should’ve been backdated to when it was made available to all plan holders. After looking at his concerns afresh, Vitality issued a further complaint resolution letter on 16 July 2025. However, this was addressed to his wife who had raised the same concerns about her plan with Vitality too. They said, in summary: • Having listened to the phone call of 27 October 2023 again, at no point during the discussion did they advise that the Optimiser couldn’t be added and at no point were they asked if this could be done. • Without the context of the later complaint, it was not clear that the customer believed the Optimiser could not be added so the agent did not clarify this information. • They acknowledged that during the complaint process, they were incorrectly advised that the Optimiser could not be added to a Whole of Life plan, however, this was corrected during their call with his wife on 25 April 2025. • During the call on 27 October 2023, she was incorrectly advised that their Vitality Status would not affect their premiums as she did not have the Optimiser. However, as she was on a Vitality Life plan, she did receive an annual premium discount depending on her Vitality Status; this was confirmed in her anniversary letter. • In summary, Vitality found that incorrect information was provided by both the agents and the previous complaint handler which resulted in significant confusion with the case. • As the previous complaints handler provided £300 in compensation as well as £1,250.08 in premium refunds, they felt that the compensation and refunds issued were significantly higher than they should have been. • Vitality said that they would not look to offer any additional monies in response to the request for a complaint review. Mr K was unhappy with the outcome, so he referred his complaint to this service. In summary, he said to resolve matters, he wanted Vitality to: • Reimburse him the overpaid portion of his annual premium between November 2020 and December 2022 (as they’d already reimbursed him from 2023). • Provide compensation for the value of any lost rewards due to not being on the Optimiser during this period. • Compensate him for the distress and inconvenience incurred. The complaint was then considered by one of our Investigators. He concluded that Vitality hadn’t treated Mr K fairly. He also said, in summary: • The main issue to determine was whether Vitality should have proactively reached out to

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existing customers such as Mr K, to notify them that their plans could have the Optimiser added. • Based on what he’d seen, he was unable to determine the Optimiser was a standalone product, so he considered the ability to add it to Mr K’s plan was a significant change to his plan terms. • He felt that Vitality should have made Mr K aware of this significant change to his plan terms prior to it taking effect. • He was persuaded that had Mr K been made aware that by including the Optimiser (which would have cost around £5 a month) and then engaging in the Vitality rewards programme, he could reduce his premiums by up to 40% - he would have taken steps to secure this discount. • Whilst Vitality highlighted that Mr K didn’t start engaging with the Vitality programme until 2022, our Investigator was satisfied that this was because there wasn’t much discount to be gained from engaging in it. All the statements sent to Mr K between 2012 and 2022 indicated he could only obtain a one to three percent discount, which is a considerably less attractive prospect than up to 40%. • Mr K had proven that he was very capable of achieving a Silver status; as soon as he was given clarity that he could obtain a significant discount he took the required steps to acquire the required status. • Our Investigator was persuaded that had Mr K been provided with the information he should have been, he would have simply acted as he had since 2023 when it was made clear to him that engaging with the programme would secure significant discounts – not just up to three percent, i.e. taken the steps required to obtain and maintain a higher status. Vitality, however, disagreed with our Investigator’s findings. In summary, they said: “There remains obligation on Mr K’s Financial Adviser (FA) to provide ongoing advice (Duty to Review). The conversation sits firmly with the FA to check on Mr K’s circumstances and if the plan and financial protection remained suitable. The FA’s role is informing their client of beneficial changes and or new options to consider, thereby ensuring Mr K is gaining ongoing value from the FA’s advice and their fees charged. We don’t doubt Mr K always knew what he was paying for the cost of his insurance, but what is apparent is that he didn’t pursue or was too busy to request a comparison of premium prices or new products they were entitled to. This is the arrangement between the FA and Mr K and available at any point for him to discuss.” In addition, Vitality also said: “1. Optimiser Requires Customer Selection and Consent Optimiser remains an optional pricing feature which alters the customer’s premium structure. The plan being a whole of life has long and far-reaching requirements for Mr K to be active. Vitality cannot retrospectively amend the plan as though Mr K had made a choice that, in reality, he didn’t. Doing so would contravene contractual and regulatory obligations. The fact that Mr K later chose to add Optimiser does not grant the insurer authority to rewrite historical plan terms. 2. It Is Not Possible to Reconstruct a Hypothetical Engagement History

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Applying Optimiser retrospectively would require us to assume which Vitality activities Mr K would have engaged in, what status he would have achieved annually, and what discounts might have applied. There is no factual basis on which such assumptions can be made. Rebuilding a fictional history of premiums, behaviours and statuses would not be reliable, fair, or compliant with actuarial practice. 3. Historic non engagement Levels Do Not Support a Causal Link From 2012 to 2022, Mr K did not engage in the Vitality programme, despite the availability of discounts. His established pattern over a decade indicates that engagement was not influenced by the scale of discount alone. His improved engagement from 2023 reflects a change in circumstances at that time. This does not evidence he would have achieved Platinum for the years in discussion. Given the evidence of his long-term pattern of non- engagement, it cannot reasonably be concluded that he would have acted differently from 2020 onward. 4. We have addressed 2023 but this is a complaint based on hypothetical options that were never considered at the time. Even if notification should have been clearer, Ombudsman principles require putting the customer in the position they should be in now, not reconstructing years of hypothetical behaviour. We have placed Mr K in a position following mis-information in 2023. We would do not consider retrospective rewriting of the contract/financial history. Backdating is not required under ICOBS and would go far beyond what is normally considered fair and proportionate for a missed opportunity for a conversation between Mr K and his FA. 5. Backdating Would Create Inconsistency and Unfair Precedent Retrospectively applying Optimiser back to 2020 to this plan would create unequal treatment compared with other customers who did not select Optimiser earlier. It would undermine fairness across the customer base and disrupt the integrity of premium modelling. This would not be consistent with regulatory expectations of fair and consistent customer treatment. For the reasons above, we maintain that Optimiser cannot be retrospectively applied from 2020 and past premiums cannot be recalculated on a hypothetical basis. Vitality remains committed to a fair resolution but respectfully submits that retrospective application or refunding of premiums would exceed what is reasonable and proportionate in this case.” After considering what Vitality had to say, our Investigator issued further findings. In summary, he said: • An IFA cannot be relied upon to provide details of policy enhancements to clients that they have previously provided advice to, as consumers such as Mr K may end a relationship with the IFA at any time. • It isn’t the IFA’s responsibility to highlight changes to the terms of a policy – this is very firmly the product provider’s responsibility. • Vitality are unable to evidence they ever informed any IFA they believed to be linked to Mr K that the Optimiser could be added to his policy.

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• The Vitality policy Mr K’s IFA recommended to him in 2012 was suitable for him at the time, and there is nothing to suggest it is no longer suitable. It was a whole of life policy, so it’s unclear why he would need to request any comparisons of alternative products or prices, as Vitality suggested in response to the original outcome. • Vitality should have notified Mr K of the significant enhancement to the terms of his policy – this being the ability to add the Optimiser, regardless of what actions he took or what actions the adviser that previously recommended the policy to him took. • Our remit is to put Mr K into the position he would now be in had Vitality not made any mistakes. A big part of this is to ensure Mr K hasn’t lost out financially. • Vitality have confirmed the Optimiser could be added to existing policies from January 2018. The mistake Vitality made was that they didn’t inform Mr K of this enhancement to his policy terms in a timely manner. • Had Vitality not made the mistake and instead notified Mr K his policy could benefit from up to a 40% discount instantly for just £5, he was persuaded he would have paid the additional £5. He was also persuaded he would have taken the steps required to maintain a higher Vitality rewards status. • He didn’t require Vitality to actually make any retrospective structural changes to the policy. All that is required is for Vitality to determine how much extra Mr K has paid in premiums due to the Optimiser not being added to the policy in October 2018 and provide the appropriate refund. • As there will be no changes to the structure of Mr K’s policy, there would be no unequal treatment compared with other customers who did not select the Optimiser earlier. For clarity, our Investigator explained that our approach would be the same should any other customers bring a complaint around this same issue to us. Our Investigator went on to say that even Vitality’s own reasoning for why Mr K’s engagement increased in 2023 supported his assertions. As stated above, Vitality indicated Mr K increased engagement after a conversation he had with them in which he asked for guidance on how increasing his Vitality rewards status through regular engagement could assist in mitigating larger premium increases. Following this conversation, Mr K’s status almost instantly increased to silver after which, it reduced back down again after misinformation from Vitality. Our Investigator felt that it would appear very unusual that within months a bronze status policyholder could change into a silver status policyholder by making instant changes to their lifestyle based on some guidance. He found it far more plausible Mr K was already relatively active and due to the clarity provided by Vitality’s guidance, he simply started to ensure his activity was recorded accurately on the app. He was persuaded had similar clarity been obtained earlier, Mr K would have at that point ensured his already existing activity was recorded more accurately on the app. Had Vitality clarified to Mr K in 2018 he could apply the Optimiser to his policy, which would secure a 40% discount on his premium, he would have got the clarity he was looking for - that engaging with the Vitality reward programme could lead to significant discounts. He felt that this would have led to his Vitality rewards status increasing very quickly – as seen in 2023.

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Vitality were unhappy with our Investigator’s view. They said, in summary, that they found the decision flawed. They also said it is based on assumptions rather than evidence. They also said that “The absence of evidence cannot be replaced with the most favourable hypothetical interpretation. DISP requires a realistic application of the balance of probabilities, not optimistic.” Our Investigator was not persuaded to change his view as he didn’t believe Vitality had presented any new arguments he’d not already considered or responded to. Unhappy with that outcome, Vitality then asked the Investigator to pass the case to an Ombudsman for a decision. After carefully considering matters, I explained that I had decided to issue a provisional decision on this case as I was minded to reach a different conclusion to that of our Investigator and not uphold Mr K’s complaint. This window aimed to give both parties the opportunity to look at what I’d said and provide any comments before I reached my final decision. What I said in my provisional decision: I have summarised this complaint in less detail than Mr K has done and I’ve done so using my own words. The purpose of my decision isn’t to address every single point raised by all of the parties involved. If there’s something I’ve not mentioned, it isn’t because I’ve ignored it - I haven’t. I’m satisfied that I don’t need to comment on every individual argument to be able to reach what I think is the right outcome. No discourtesy is intended by this; our rules allow me to do this and it simply reflects the informal nature of our service as a free alternative to the courts. My role is to consider the evidence presented by Mr K and Vitality in order to reach what I think is an independent, fair and reasonable decision based on the facts of the case. In deciding what’s fair and reasonable, I must consider the relevant law, regulation and best industry practice. Where there’s conflicting information about what happened and gaps in what we know, my role is to weigh up the evidence we do have, but it is for me to decide, based on the available information that I've been given, what's more likely than not to have happened. And, having done so, I’m not planning on upholding Mr K’s complaint - I’ll explain why below. Before I do, I should comment that in his complaint, Mr K has made multiple references to the Optimiser becoming available in 2020, however, Vitality say that it became available on existing plans from 2018. Although the Optimiser became available to existing policyholders from January 2018, Vitality have not provided evidence that they notified Mr K of this change. That said, in Mr K’s email to this service of 10 February 2026, he states that he recalls seeing references to the Optimiser as far back as 2018. I do think it would have been helpful had Vitality proactively drawn this to Mr K’s attention, particularly as the Optimiser represented a material enhancement to the policy terms and offered the potential for more meaningful premium reductions than the one to three percent discounts referred to in the annual statements Mr K received. However, the absence of such a notification does not mean that Mr K is automatically entitled to retrospective premium adjustments. So, while I consider the Optimiser to have been a material enhancement to the policy terms, materiality alone doesn’t determine whether retrospective redress is appropriate. Redress is intended to compensate for actual financial loss caused by a failing, rather than to penalise a failure to communicate. In this case, I still need to be persuaded that the lack of notification resulted in Mr K paying higher premiums than he otherwise would have done.

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In order to make an award of redress, I must be satisfied, on the balance of probabilities, that the lack of notification caused Mr K to suffer a financial loss. In this context, that requires me to be persuaded that had he been told about the Optimiser when it became available, he would more likely than not have chosen to add the Optimiser at that time, engaged with the Vitality Programme in the way required by its rules and achieved and maintained a level of engagement sufficient to result in materially lower premiums. If I’m not persuaded that these steps would more likely than not have occurred, then it wouldn’t be fair or reasonable to award retrospective premium reductions. On this point, I don’t think the evidence supports the conclusion that Mr K would have achieved and maintained a Platinum status from 2018 onwards. His actual engagement history shows very low activity. He had the Vitality app but didn’t sync or record activity. He didn’t raise any concerns about Optimiser benefits or premium-linked engagement until 2023 when he queried a premium increase. Whilst Mr K says he was physically active during this period, there is no evidence he attempted to record that activity or engage with the programme in a way that would have earned “points”. I’ve also seen nothing to suggest he sought clarity about the Optimiser or its benefits before 2023. I do want to acknowledge that once Mr K received clearer information in 2023, his engagement increased significantly and he quickly achieved silver status. I don’t think it follows, however, that improved clarity alone explains Mr K’s engagement from 2023 onwards, or that similar clarity in earlier years would have produced the same outcome. Engagement with a rewards-based insurance scheme requires ongoing motivation, prioritisation and practical effort over time, including regular syncing and monitoring of activity. The fact that Mr K chose to engage more fully after a specific conversation in 2023 does not in my view, provide a reliable basis for concluding that he would have done so consistently from 2018 onwards. It’s equally consistent with Vitality’s explanation that his circumstances or motivation changed at that time. And, while the Optimiser wasn’t highlighted prominently in their earlier communications, the annual statements did refer to the potential for discounts through engagement with the Vitality programme. So, I’m not persuaded that Mr K was entirely unaware that activity could influence his premiums, even if the scale of the potential benefit wasn’t clear. Vitality have argued that Mr K’s financial adviser should have informed him about the Optimiser. But, I’ve seen no evidence that Mr K continued to receive ongoing advice after the plan was set up in 2012. A WOL plan is typically a ‘set-up-and-leave’ product unless the customer’s circumstances change significantly, so it wouldn’t be reasonable to assume he remained in an active advice relationship. I’ve also seen no evidence that Vitality notified the adviser of the Optimiser’s availability. In the absence of such evidence, I don’t think it’s reasonable for Vitality to rely on an adviser’s supposed ‘duty to review’ as a substitute for their own responsibility to communicate material changes to the terms of a policy. I’ve considered the possibility that Mr K might later provide Apple Health or similar data showing that he was physically active during the period in question. But, even if such data were available, it wouldn’t alter my thinking. Vitality’s programme requires activity to be recorded and synced at the time in order to earn “points”. That’s consistent with Vitality’s position that it isn’t possible to reconstruct a hypothetical engagement history or retrospectively award points, and I think that position is reasonable. Evidence that Mr K was active isn’t the same as evidence he engaged with the Vitality programme in the way required to earn points or achieve a higher status. The two, in my opinion, are distinct.

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To uphold the complaint for the period before 2023 would require me to replace Mr K’s contemporaneous engagement history with a best-case hypothetical reconstruction. That would involve assuming not only that he would have opted into the Optimiser, but that he would have consistently recorded activity, met the programme’s thresholds, and maintained a higher status over a number of years. I don’t consider it appropriate to reach findings on that basis, as it would go beyond weighing probabilities and instead amount to assuming the most favourable possible outcome. I appreciate Mr K says that he didn’t log or sync his activity because he wasn’t aware of the Optimiser. But, it’s my understanding that the ability to engage with the Vitality programme didn’t depend on having the Optimiser. He could always have logged activity, earned points and received the standard one to three percent discounts referenced in his annual statements. So, the absence of Optimiser-specific information doesn’t explain the complete lack of engagement over several years. And, even if he was physically active, that isn’t the same as demonstrating he would have engaged with the programme in the way required to earn points or achieve a higher status. Having Apple Health data can’t show he would have opted into the Optimiser, synced his data in real time, met Vitality’s thresholds or maintained a higher status consistently over several years. So, even if Mr K could show that he was active, that wouldn’t provide a reliable basis for reconstructing a hypothetical engagement history or awarding discounts retrospectively. It would still require me to make a series of assumptions, effectively applying the most favourable interpretation of events, rather than deciding the case on the balance of probabilities. For these reasons, the existence of activity data wouldn’t alter my thinking. Even though I’m minded to not uphold Mr K’s complaint, I still need to consider whether the steps that Vitality have already taken fairly address the impact of the mistakes that were made. Redress should be fair and proportionate to the actual detriment caused and not based on assumptions about how a consumer might have behaved in the best case scenario. The Optimiser is an optional feature that changes the premium structure and requires the customer’s explicit consent. It wouldn’t be appropriate or contractually sound to apply it retrospectively as though Mr K had selected it earlier. Nor would it have been appropriate for Vitality to automatically opt customers into the Optimiser without their consent. That would fundamentally alter the nature of the policy and the customers’ obligations. Vitality have raised concerns about fairness and consistency across their customer base. Whilst I don’t base my decision on precedent, I do need to be satisfied that the outcome I reach is fair in the round. There will inevitably be other customers who didn’t opt into the Optimiser when it became available. Without clear evidence that Mr K would have acted differently from those customers, I don’t think it would be fair to require Vitality to reconstruct a hypothetical engagement history or to refund several years of premiums on that basis. I also agree with Vitality that it wouldn’t be appropriate to assume the maximum possible benefit such as that which is consistent with Platinum status in the absence of evidence. My role is to apply the balance of probabilities, not construct the most favourable scenario for the consumer. Vitality have already corrected the only clear and evidenced accepted error, the incorrect information given in 2023 by adding the Optimiser from January 2023, refunding premiums from that date and paying compensation. In my view, this represents a fair and balanced ‘half-way-house’. It recognises that Mr K was misinformed in 2023 and may have lost out as a result, but it avoids making assumptions about how he would have behaved in earlier years without clear evidence. In the absence of such evidence, I think this approach is fair and proportionate.

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Summary In order to award retrospective redress, it’s not enough for me to conclude that the Optimiser was a material enhancement or that Vitality ought reasonably to have drawn it to Mr K’s attention. I must also be satisfied, on the balance of probabilities, that the absence of notification caused a financial loss, that is, that Mr K would more likely than not have opted into the Optimiser at the relevant time and would then have engaged with the Vitality Programme in accordance with its operational requirements so as to achieve and maintain a status that resulted in materially lower premiums. The evidence before me does not persuade me that this causal chain is established for the period prior to 2023. Mr K’s contemporaneous engagement history shows very low or no recorded activity over several years, despite having access to the app and the ability to earn at least modest discounts through engagement during that time. So, while Mr K says he was physically active, Vitality’s scheme requires activity to be recorded and synced in real time in order to earn points, and I have no evidence that he attempted to do so prior to 2023 despite his email of 10 February 2026 stating that he had some awareness of the Optimiser as far back as 2018. In the absence of such evidence, I am not persuaded that it is more likely than not that he would have engaged with the programme in the manner required to secure materially lower premiums over a sustained period had he been properly notified of the Optimiser earlier. To conclude otherwise would require me to substitute Mr K’s actual, contemporaneous engagement history with a hypothetical reconstruction based on what he might have done in more favourable circumstances. I do not consider that to be an appropriate application of the balance of probabilities. Ombudsman fairness requires me to assess what is more likely than not to have happened, not to assume the most advantageous possible outcome for the consumer in the absence of supporting evidence. For these reasons, I’m not persuaded that Mr K has shown he has lost out financially before 2023 as a result of Vitality’s actions. I don’t think it would be fair or reasonable to require Vitality to refund premiums or apply Optimiser benefits for the period before January 2023. Responses to my provisional decision: After reviewing what I had to say, Mr K responded, explaining that he accepted the outcome. Vitality also responded, explaining that they had nothing further to add. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. As neither party have provided any new information and have accepted the outcome of my provisional decision, it therefore follows that I have reached the same conclusion that I set out above. My final decision I’m not upholding Mr K’s complaint about The Prudential Assurance Company Limited.

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Under the rules of the Financial Ombudsman Service, I’m required to ask Mr K to accept or reject my decision before 22 May 2026. Simon Fox Ombudsman

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