A company held 3 director’s insurance policies for Boris, one of its directors. During 2015, Boris’s interest in the company was bought out by the other directors. Once Boris’s exit was finalised, the company contacted their usual adviser (Michael) at its insurance advice firm (the adviser firm), on 1 February 2016. Michael was Boris’s brother.
Boris receives advice from the adviser firm
On 2 March, another of the adviser firm’s advisers told the company that Boris was receiving advice from him about retaining some of the policies under his own name, and his ongoing insurance requirements. The adviser sought the cancellation paperwork from the insurer and sent this to Boris on 7 March. On 11 March, the adviser told the company he had sent Boris the change of ownership forms to sign, and that the remaining company directors also needed to sign them.
Policies not yet cancelled
On 12 April, the company contacted the adviser saying the policies had not been cancelled. The same day, Boris emailed the company saying he had ‘been slack’ in getting the forms to the remaining company directors for signing. Also that same day, the adviser sent an internal email to a colleague saying that Michael would need to follow up with his brother Boris about cancellation. The adviser said he had sent the forms to Boris, received no reply, and the matter was out of his hands.
In April 2016, the company received the signed cancellation forms from Boris. On 15 June, the company returned the completed forms to the adviser. One of the policies (policy A) was cancelled on 15 July but, by 12 October, the adviser firm discovered the other two policies (policies B and C) had not been cancelled. Policies B and C were finally cancelled at the end of October 2016.
The company complains
From at least October 2016, the company had expressed dissatisfaction with the delays in the adviser firm effecting the policy cancellations, and had requested a refund of the premiums paid during that delay. The company continued corresponding with Michael about the complaint.
Eventually, in October 2017, Michael introduced the company to the adviser firm’s complaints manager. Michael told the complaints manager that he tried to sort the matter out at a ‘mates level’, that ‘that was his mistake, with too many conflicts of interest’, and he ‘should have registered it as a formal complaint’.
The adviser firm’s response to the complaint
The adviser firm’s complaints manager fully investigated the complaint and said the adviser firm would accept responsibility for:
- A lack of communication with the company, including the delay in resolving the matter when it became a complaint.
- Internal administrative errors between July and October 2016.
- Policy A’s premiums for June and July 2016, and policy B and C’s premiums from June to October 2016.
The complaints manager said the adviser firm sincerely regretted the errors made, and that he had discussed the complaint with the staff members concerned, to ensure the situation did not occur in the future. The company did not accept the adviser firm’s offer to resolve the complaint and complained to FSCL.
The company considered the adviser firm should take responsibility for the premiums paid during the full period of delay, from February to October 2016. The adviser firm said it was prepared to accept responsibility for the delays caused by its staff members, but would not accept responsibility for the delays it said were caused by other people.
Reasonable for the adviser firm to advise Boris
The company first told the adviser firm the policies needed to be cancelled on 1 February 2016. The adviser firm then advised Boris about taking over personal ownership of the policies, and his ongoing personal insurance requirements. This process took until 7 March 2016, when the adviser sent Boris the cancellation forms.
We said it was reasonable for the adviser firm to advise Boris about taking over the policies personally. When a director intends to take over policies personally, it will take a certain amount of time for them to receive advice on, and consider the changes, in a practical sense. We said a period of 5 weeks was not an unreasonable time for this to occur.
Responsibility for the delays from 7 March onwards
After the forms were sent to Boris on 7 March, we said the responsibility for signing the forms and returning them to the adviser firm was with Boris and the other company directors. This meant the delay from 7 March until the forms were returned on 15 June, could not be attributed to the adviser firm. From 15 June it was the adviser firm’s responsibility to action the cancellations. We therefore agreed that the adviser firm should compensate the company for the June and July premiums in relation to policy A, and the June to October premiums in relation to policies B and C ($9,880).
We also said the adviser firm should pay the company a further $500 for the inconvenience caused by its delays in both recognising the company’s complaint, and reviewing the complaint through its internal complaints process. It took a year from when the company first expressed dissatisfaction about the delays in processing the policy cancellations, for the complaint to reach the complaints manager. This caused considerable and unreasonable delay in the company being referred to FSCL, and the complaint being resolved.
Both parties accepted our view, and agreed that the adviser firm would pay the company $10,380 to resolve the complaint.
Insights for participants
This complaint highlights the importance of ensuring all staff are aware of, and trained in, how to recognise complaints. Staff also need to know a firm’s process and policy around escalating complaints to a complaints manager or complaints team. Once the complaints manager received the complaint it was dealt with very well, but the complaint should have reached him sooner. If this had occurred, it is unlikely the complaint would have escalated to FSCL.