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Client misled by broker over policy terms did not suffer any loss, AFCA rules 

A complainant who accused his broker of arranging an unsuitable personal accident policy for him and later giving poor service during the claims experience, has failed to win any compensation for the alleged conduct. 

The Australian Financial Complaints Authority (AFCA) agreed Steadfast Taswide Insurance Brokers did not make clear the policy would only cover 85% of his pre-accident income but ruled the complainant did not suffer any loss from the misleading information provided. 

AFCA also ruled the complainant had not submitted any evidence to show he had been treated with disrespect and given poor service after he asked the broker for help with his claim. 

The complainant had engaged Steadfast Taswide in April 2021 about buying personal accident insurance and said he wanted a policy that would provide full replacement of his $1200 weekly income. 

He was provided several quotations and options by the broker and eventually decided to go with one that was underwritten by an insurer identified as S in the AFCA ruling. 

It was only after a claim was accepted that he realised the policy paid a benefit that was 85% of his pre-accident income. He lodged his claim in June last year and it was only from June 27 this year that the weekly benefit increased to its current level of $1049.08. 

AFCA says the broker should have explained to the complainant that the policy did not cover him for his entire weekly income since he had “expressed a desire” for one that provided a $1200 benefit. 

The ombudsman says the cover email, product disclosure statement (PDS) terms and the quote to the complainant “fail to make this clear to someone not familiar with reading these types of documents”. 

The 20-page PDS has a section stating 85% of weekly salary will be paid if an injury claim is accepted and the complainant responded “all looks pretty good” in his email reply to the broker. 

But AFCA says it was “reasonable for the complainant to rely on his broker’s misleading representation the quote was based on a weekly benefit of $1200”. 

However, the ombudsman says the complainant has not demonstrated he could have obtained a policy for $1200 per week with a different insurer, on the same or comparable terms. 

“Accordingly, while I am satisfied there were misleading statements, I am not satisfied the complainant suffered a loss as a result of relying on those statements,” the ruling says. 

“He has received the full value of the policy to which he is entitled and has not demonstrated he could have got a better policy in April 2021. 

“More importantly, the complainant has not established he suffered any direct loss as a result of the financial firm’s conduct. It would therefore not be fair in all the circumstances to require the financial firm to pay compensation.” 

Click here for more from the ruling.