A policyholder that demanded reimbursement of commissions and other compensation, saying its broker quit without notice and failed to respond to its queries, has lost a dispute before the ombudsman.

The broker, Grange Insurance Solutions, gave two weeks’ notice of its decision to step away, months before the client company’s business insurance, management liability cover and labour force professional liability policies were due for renewal.

The policyholder insisted the broker breached its duty by unilaterally ending its service contract, but the Australian Financial Complaints Authority disagrees.

AFCA says correspondence between the two parties shows the broker did not “wrongfully resign”, as alleged by the complainant.

“The resignation letter shows the broker gave 14 days’ notice of its resignation,” an AFCA adjudicator said. “This was also nearly 11 months before the policies were due for renewal.

“I am satisfied this gave the complainant adequate opportunity to investigate alternative insurance or broker arrangements.”

AFCA accepts the complainant “expected a higher level of service”, but it finds the broker was “entitled to resign its services just as the complainant may choose to terminate its agreement with the broker”.

The ombudsman says the broker responded to the complainant’s queries and its resignation letter recommended the policyholder find a new insurance adviser.

AFCA says the letter pointed out that some or all insurers “may be unable or unwilling to provide cover to the complainant after the current policy period unless a replacement adviser was appointed. It appears this is what occurred, as the complainant says it was ‘confronted by all underwriters quitting’.”

The complainant cannot be reimbursed for commissions paid to Grange because tax invoices issued for the policies in 2023 stated the broker would be remunerated for arranging the insurance.

“This is consistent with the [Financial Services Guide], which says the remuneration is payable for placing the insurance. As the broker provided this service to the complainant, I am satisfied it is entitled to retain the applicable commission and broker fee.”

See the ruling here.