Bank acknowledges misunderstanding over need for insurance

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Bank acknowledges misunderstanding over need for insurance

Categories:

Concerns about lending decisions,

Summary:

In January 2023, Jonas went to a bank branch seeking a personal loan. The staff member approved the loan and asked if he wanted any insurance. Jonas, whose first language was not English, already had life insurance with an insurance company. After some discussion with an insurance manager at the branch, Jonas signed up for full cover with the bank. This meant he would have to cancel his original policy, which he did.

Published:

July 2023

Jonas later complained that the insurance manager had indicated to him that life insurance was a condition of getting the loan. The bank replied that the insurance manager had followed the correct process when discussing Jonas’ insurance needs, and this included explaining the option of keeping his existing policy, but with the bank providing top-up cover for the extra insurance needs he had disclosed. Jonas did not accept this explanation and complained to us.

Our investigation

We read the bank note summarising the manager’s discussion with Jonas, and this showed the manager had followed the correct process. However, Jonas showed us a text message he sent to a friend in his own language while in the branch, and it said: "I have been told I must get insurance." He sent the text after the bank approved the loan, but before he met the insurance manager. In the text, Jonas said he was waiting to meet the insurance manager.

The bank acknowledged a miscommunication when it asked Jonas whether he wanted insurance before he met the insurance manager. It agreed the text message clearly showed Jonas did not understand what was happening. The bank offered $2,000 for any inconvenience caused by the misunderstanding.