AMP Financial Planning to Pay After Misinforming Terminal Patient About Life Insurance

Complaint

In February 2020, the complainant made a terminal illness claim to Fund A for his life

insurance benefit. The fund declined the claim as he did not have any such cover in place.

This was because life insurance cover in the fund was contingent on employer

superannuation guarantee (SG) contributions being made.

The complainant says that he did not understand that the cover was contingent on this and

was led to believe that he had been covered by his adviser. He says that if his adviser had informed him that he did not have cover, he would have made SG contributions to obtain the cover. He is seeking his life insurance benefit.

AMP Financial Planning says that the adviser was not involved in opening the Fund A account, nor did he provide the complainant with personal financial advice in relation to it. It says the adviser only provided the complainant with limited advice for income protection and crisis cover in accordance with the complainant’s instructions.

Issues and Key Findings

AFCA found that the adviser breached their obligations to the complainant. The adviser incorrectly stated that the complainant held life cover with Fund A. The panel is also satisfied that having regard to the critical nature of the cover, this was implicitly within the scope of the advice.

This breach caused a loss to the complainant as “but for” the breach, the complainant would have made employer contributions into Fund A and retained the cover.

Determination

This determination is in favor of the complaint. The financial firm must pay the complainant

$110,400 (less premiums paid) plus interest calculated in accordance with this determination. This has been considered fair by AFCA as an adviser is required to include correct information in an SOA, especially information that is critical to a client’s circumstances.