After repaying the loan five years later, Connor said the bank misled him by indicating the insurance was mandatory. He wanted reimbursement of all the premiums he had paid. The bank declined his request, saying it never suggested life insurance was mandatory.

Our investigation

We examined the lending and insurance documents and could find nothing stating that the insurance was mandatory. Connor and the bank employee concerned disagreed about the details of the conversation that led Connor to take out insurance, and in these circumstances, it is difficult for us to work out what actually happened.

However, we also considered whether the insurance suited Connor’s needs. The bank employee made a note that the insurance was intended to cover the outstanding loan balance in the event something happened to Connor. However, the insurance would pay out only in the event of death. The information in Connor’s loan application showed his assets significantly outweighed his liabilities, and he had no dependants. The insurance didn’t cover him in situations where insurance could be of use, such as redundancy, bankruptcy or disability. We considered the insurance may not have suited Connor’s needs, and the bank offered to reimburse half of the premiums.

Outcome

Connor accepted the offer.