In 2023, Mikhail badly injured his right knee and was unable to work. He submitted a claim, which his insurer declined. It said the policy excluded claims for any injury or illness affecting his knees. Mikhail was shocked to learn about the scope of the exclusion. He had suffered a separate injury to his other knee years earlier, and he thought his policy would exclude only claims directly related to that earlier injury. Eventually, after reviewing a phone recording of the advice Mikhail had received in 2017 when he took out the policy, the insurer agreed to accept the claim. In the meantime, however, nine months had passed and Mikhail considered the bank was responsible for the delay.

Our investigation

When we reviewed the advice the bank provided Mikhail in 2017, we found some serious issues. The adviser had told Mikhail the policy included an exclusion for his existing knee injury, but did not explain that the exclusion would also apply to any subsequent injury or condition affecting either of Mikhail’s knees. This was misleading, and the advice led Mikhail to misunderstand the terms of his insurance policy. The adviser also failed to explain the risks of moving to another insurer.

We were confident Mikhail would have remained with his existing insurer – which would have covered his claim – if he had received proper advice from the bank. The bank was therefore responsible for the delays Mikhail experienced while waiting for his claim to be settled, which had caused Mikhail significant stress and inconvenience, including placing strain on his relationship, as well as forcing him to borrow money from friends and family to meet his basic living costs.

Outcome

The bank agreed to pay  Mikhail $10,000 to settle the complaint. Mikhail accepted the offer.