Court orders Utmost Wealth Solutions to refund $16,889 to investor over “unfair” policy clause

2026-03-08 - 22:17

The High Court of Lagos State, has ordered Utmost Wealth Solutions to refund $16,889.75 to Mrs. Clara Chinenye Nwachukwu after declaring a key clause in its investment policy “manifestly unjust, unfair and one-sided.” Delivering judgment on January 26, 2026, Justice K. A. Jose (Mrs.) held that the policy term which allowed the company to apply 100 per cent of a customer’s premium payments during the initial period to administrative charges was inequitable and contrary to consumer protection laws. Mrs. Nwachukwu had instituted the suit marked LD/9332GCMW/2022 against Profinad Nigeria Limited, Utmost Wealth Solutions and Ms. Nnite Chinwe Ogochukwu, seeking a declaration that the clause was invalid. She also asked for a refund of $18,000 invested under the “Vision Plan,” accrued interest of $2,106.84, N10 million in general damages, and costs. How the dispute arose The claimant told the court that in August 2014, Profinad Nigeria Limited introduced her to what was described as a long-term savings and investment policy designed to help her “save and make money at the same time.” Trusting the representations made, she subscribed to the plan and began paying $1,000 monthly premiums. She paid for 18 months until February 15, 2016, when she lost her job and could no longer continue the payments. A valuation statement dated June 8, 2016 showed her plan had grown to $20,106.84, comprising her $18,000 capital and $2,106.84 in accrued interest. In June 2021, when her daughter was applying for a visa to Canada, Profinad wrote to the Canadian High Commission confirming that Mrs. Nwachukwu maintained an investment account with Utmost Wealth Solutions and that her daughter was the sole beneficiary. The letter, admitted in evidence, reinforced her belief that the investment remained intact and operational. However, when she formally requested withdrawal in March 2022 due to pressing financial needs, she received an email stating that the policy had lapsed in 2019 “with no value,” as all contributions had been applied to administration fees. The legal battle The second defendant relied on Clause 5.3 of the policy’s terms, which provided that the first 100 per cent of premium payments during the initial period—18.78 months in a 20-year plan would be used to fund administrative charges for the duration of the policy. The claimant argued that she was never properly informed that her entire contributions for nearly two years would be consumed by fees. She maintained that she understood the investment to function like a pension scheme and believed she could withdraw her funds at any time while retaining value. The court examined the clause under Section 127 of the Federal Competition and Consumer Protection Act, which prohibits unfair or excessively one-sided contractual terms. Justice Jose held that while parties are generally bound by the terms of contracts they sign, courts are empowered to invalidate terms that are inequitable under consumer protection law. The judge found that retaining 100 per cent of the invested sum and accrued interest, even after the policyholder ceased participation, was excessively one-sided. Corporate liability and damages The court dismissed the claims against Profinad Nigeria Limited and its managing director, reaffirming the principle of corporate personality established in Salomon v Salomon. It held that the life policy contract was between Mrs. Nwachukwu and Utmost Wealth Solutions, formerly Generali International Limited. On reliefs, the court ruled that although the clause was invalid, the insurer was entitled to reasonable administrative fees for the period it actually managed the policy. Applying a 2 per cent annual charge over eight years, the court calculated allowable fees at $3,217.09 and ordered a refund of $16,889.75. The court declined the N10 million general damages claim, holding that contractual damages are limited to foreseeable losses. However, it awarded N2 million in costs in favour of the claimant. The ruling is expected to have wider implications for long-term investment products in Nigeria, particularly those with front-loaded fee structures that may erode investors’ capital in the early years of subscription. The claimant told the court that in August 2014, Profinad Nigeria Limited introduced her to what was described as a long-term savings and investment policy designed to help her “save and make money at the same time.” Trusting the representations made, she subscribed to the plan and began paying $1,000 monthly premiums. She paid for 18 months until February 15, 2016, when she lost her job and could no longer continue the payments. A valuation statement dated June 8, 2016 showed her plan had grown to $20,106.84, comprising her $18,000 capital and $2,106.84 in accrued interest. In June 2021, when her daughter was applying for a visa to Canada, Profinad wrote to the Canadian High Commission confirming that Mrs. Nwachukwu maintained an investment account with Utmost Wealth Solutions and that her daughter was the sole beneficiary. The letter, admitted in evidence, reinforced her belief that the investment remained intact and operational. However, when she formally requested withdrawal in March 2022 due to pressing financial needs, she received an email stating that the policy had lapsed in 2019 “with no value,” as all contributions had been applied to administration fees. The legal battle The second defendant relied on Clause 5.3 of the policy’s terms, which provided that the first 100 per cent of premium payments during the initial period—18.78 months in a 20-year plan would be used to fund administrative charges for the duration of the policy. The claimant argued that she was never properly informed that her entire contributions for nearly two years would be consumed by fees. She maintained that she understood the investment to function like a pension scheme and believed she could withdraw her funds at any time while retaining value. The court examined the clause under Section 127 of the Federal Competition and Consumer Protection Act, which prohibits unfair or excessively one-sided contractual terms. Justice Jose held that while parties are generally bound by the terms of contracts they sign, courts are empowered to invalidate terms that are inequitable under consumer protection law. The judge found that retaining 100 per cent of the invested sum and accrued interest, even after the policyholder ceased participation, was excessively one-sided. Corporate liability and damages The court dismissed the claims against Profinad Nigeria Limited and its managing director, reaffirming the principle of corporate personality established in Salomon v Salomon. It held that the life policy contract was between Mrs. Nwachukwu and Utmost Wealth Solutions, formerly Generali International Limited. On reliefs, the court ruled that although the clause was invalid, the insurer was entitled to reasonable administrative fees for the period it actually managed the policy. Applying a 2 per cent annual charge over eight years, the court calculated allowable fees at $3,217.09 and ordered a refund of $16,889.75. The court declined the N10 million general damages claim, holding that contractual damages are limited to foreseeable losses. However, it awarded N2 million in costs in favour of the claimant. The ruling is expected to have wider implications for long-term investment products in Nigeria, particularly those with front-loaded fee structures that may erode investors’ capital in the early years of subscription.