When high profile independent financial advice firm Holden Meehan sold Londoner Tania Shishkin an insurance policy six years ago, she was grateful for the protection it offered.
But earlier this year, Ms Shishkin was shocked to discover that the £1,100 she had paid in premiums was completely unnecessary, as she had been covered under her company scheme for the entire period.
And when she demanded compensation from Holden Meehan, the firm ignored her protests, despite the fact that it had earned £209 commission from the sale.
She also found that she had slipped through a regulatory loophole, leaving her unable to complain of mis-selling either to the IFA or the ombudsman. But this week Jobs & Money stepped in, and the firm has now offered Ms Shishkin compensation.
In 1994, Ms Shishkin, an art editor with a medical magazine, needed a mortgage. She went to Amanda Davidson, a director of Holden Meehan, which focuses on ethical investment advice.
"I was 33 at the time. I had a two-year-old child and I chose this firm on the recommendation of a work colleague. It was my first ever mortgage," she says.
Ms Davidson helped her select a home loan and a life insurance policy to back it. Ms Shishkin remains happy with the loan and cover advice.
"Then she asked me whether I had considered how I would keep up my mortgage payments if I fell seriously ill. She recommended that I think about taking out a permanent health insurance (PHI) policy," says Ms Shishkin.
PHI pays out a proportion of the monthly wage if the holder cannot work through illness after a preset period - anything from a month to a year - until the holder's retirement date, if necessary. The payout is usually fixed at 50% of the monthly salary.
"I had never heard of PHI but since I had a child and was not given to any kind of financial risk, I decided to sign up just in case," she adds. Ms Davidson recommended a £14.57 a month plan with Permanent Insurance, a specialist in this area.
But discussing insurance with a colleague recently, she discovered that she had PHI built into her company pension plan. Because PHI is geared to her salary, she could only claim once.
"I had wasted money which I can't afford to lose now that I have two children and work part-time," Ms Shishkin says.
She contacted Permanent which refunded half the premiums, keeping the balance because they had been at risk - any payments would have to be split 50/50 with the company scheme.
But Holden Meehan refused to pay back the remaining 50%. Compliance officer John Ferguson wrote: "The factfind you signed states that other than a pension and death in service life cover, there are no other employer provided benefits."
Ms Shishkin says: "Their line is that I should have known about the PHI. But that was a big assumption. You pay financial advisers to prompt you on these things."
It was made clear she could take her complaint no further. Mr Ferguson wrote: "This type of product is largely unregulated and will almost certainly be outside the jurisdiction of the ombudsman."
The Financial Ombudsman Service agrees. It says that PHI sales by an IFA fall outside the Personal Investment Authority regulatory remit as there is no investment element.
Other advisers say avoiding duplication of personal and company schemes is an essential part of financial planning. IFA James Higgins of Chamberlain de Broe says: "You can't expect clients to know these things - that's our job. Checking on possible workplace PHI before selling a policy is fundamental."
Jobs & Money contacted Holden Meehan. It has now decided to compensate Ms Shishkin. Director Mark Dear says: "Based upon the discussions held at the time with Miss Shishkin and her answers we recommended PHI. If we had known that Miss Shishkin was insured by her employers then we would not have made this recommendation.
"In view of this misunderstanding and to finalise this matter we shall pay Ms Shishkin 50% of the premiums paid as an 'ex-gratia' payment. This is based upon no admittance of liability, but as an act of good faith toward a client."
