Bank’s response to insurance errors unacceptably slow

Vehicle insurance,
Piper went to the local branch of her bank in January 2018 to get an insurance policy for a car she had just bought. When she went to collect the car, she realised it was a different type to the one she had specified on the application form. She made an appointment at the bank to give the correct information for forwarding to the insurance company.
February 2020

Two months later, Piper noticed her car insurance premium had risen steeply. When she queried this with her insurer (and asked to change the policy to third-party cover only), the insurer told Piper her file showed she had a criminal record. When she disputed this, the insurer said Piper should contact her bank.

Five months later, Piper contacted the bank asking for an explanation of the criminal record notation on her file. The bank said the insurer had made the error, adding it was waiting for an update from the insurer. The insurer came back to the bank saying it had not put any reference to a criminal conviction on Piper’s file. Rather, the error came about when a staff member confused information regarding multiple accidents on Piper’s file.

The insurer also said it had noticed Piper had a duplicate policy and asked the bank whether it should cancel it. The bank did not respond to the insurer or give Piper any update.

In May 2019, while at a bank branch asking about her account balance, Piper was told by a teller that two deductions for car insurance were being made from the account. This discovery led the bank to open a formal investigation, which revealed the duplicate policy was created a year earlier, when Piper told the bank that she had specified the wrong car type on the application form. The bank asked the insurer to cancel the duplicate policy and refund the premiums, which it did. The bank apologised for the errors, eventually offering Piper $3,000 as compensation. Piper declined the offer, saying the bank had not dealt with her complaint satisfactorily, and asked us to investigate.

Our investigation

We found the bank and insurer both made mistakes when Piper asked for the car type to be amended. Piper suffered no direct financial loss because the insurer refunded the premiums for the duplicate policy. However, we considered the bank took too long to investigate the errors and to act on the insurer’s warning about the duplicate policy. The bank should also have confirmed earlier that Piper’s file did not contain a reference to a criminal conviction. These delays caused Piper extra stress and inconvenience, which we felt warranted compensation. We reviewed the bank’s offer of $3,000 and considered this fair and reasonable compensation under the circumstances.

We shared our findings with Piper and the bank.


Piper accepted the offer.

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