During 2009/10 FOS received 1,690 complaints about whole of life policies, 28% of which were upheld.
In a sizable proportion of these complaints consumers said it was never made clear to them when they took out their policy that their premiums would be reviewed.
Caroline Mitchell, lead ombudsman for investments at the FOS, said: “We expect businesses that sell reviewable whole of life policies to explain clearly that these policies are subject to review – and to point out the effect that any review might have on a consumer’s future premiums.
“We sometimes see additional issues arising when a whole of life policy has been taken out for inheritance tax planning but has not been put “in trust” for the beneficiaries of the estate.
“Putting the policy in trust is very important because it will generally ensure that the lump sum is paid directly to the beneficiaries, rather than forming part of the estate.
“In a small number of complaints we have seen, this has not happened.”
The call by the Ombudsman was reported in The Telegraph this weekend.