NATIONWIDE, Britain’s biggest building society, is under fire for refusing to agree a life-insurance payout to a widower whose wife died from variant CJD (vCJD), the human form of BSE, at the age of just 30.

The case has emerged as figures reveal that the Financial Ombudsman Service (FOS) is ruling against insurers in nearly half of such cases, suggesting firms are failing customers at their most vulnerable.

Consumers are therefore being urged to pursue firms through the FOS if they feel they have been left out in the cold.

The family of Emma Joad, who died from vCJD last October, has been battling Nationwide for the past 12 months to get a payout from her life policy.

The society, which likes to portray itself as a consumer champion, is refusing to budge because it claims that Joad failed to disclose tests she underwent after a bout of dizziness, even though it may have been unrelated to the disease that killed her.

Joad, who worked in computing, took out the policy when she bought a house in 2000. The cover was supposed to provide a £50,000 lump sum to pay off the mortgage so her family could inherit the home if she died. But her husband’s claim was rejected on the basis that she had not been honest on her application form.

The dispute centres on a single question: “Within the last two years have you attended or been advised to attend any doctor, hospital or clinic for any form of advice, opinion, operation, treatment, or test. (Minor ailments excluded).” Emma answered no, but Nationwide said a trawl through her medical records had revealed she had visited her doctor several times complaining of dizziness and had had a number of tests. This was sufficient to reject the claim.

Joad’s father, David, 65, a retired consultant to the oil industry, argues that her failure to declare this dizziness was an oversight. He points to the section that says minor ailments should be excluded. He said: “The doctor didn’t think the dizziness was a problem. He put it down to low blood pressure, so I don’t think Emma thought it was important.”

He was also surprised Nationwide seized on this point because there is no firm link between the dizziness and the vCJD that killed her. Advisers say it is common for insurers to pounce on conditions unrelated to the claim as a reason not to pay.

Joad is thought to have contracted vCJD from contaminated gelatine consumed before 1989, when safeguards on the sale of meat products were tightened.

Gill Turner of the Creutzfeldt Jakob Disease Support Network said: “Although the incubation period of vCJD is long, there is usually only 14 months before the onset of symptoms and death. The dizziness in question could have been the result of any number of conditions.”

Nationwide has returned the premiums she paid but her family is so incensed it is taking the fight to the FOS. Rosemary Callender of Nationwide said: “Our sympathy is very much with the family, but our records show that she had undergone tests at her doctor’s and didn’t inform us.”

Consumer groups say disputes like this could be avoided if insurers chose to check medical notes at the application stage, but insurers claim that would cost too much and put the NHS under unnecessary pressure. Application forms often ask ambiguous questions, making it easy for consumers to inadvertantly omit details of their medical history. There can also be confusion about just how much information is required.