Life insurance related complaints continue to rank low compared to other sectors accounting for less than 6% of disputes accepted by the Financial Ombudsman Service (FOS) in the last quarter of 2015.
Statistics released for the October to December quarter by FOS show that while the amount of disputes climbed by 2% compared with the same period last year life insurance related complaints still remained low in terms of complaints received and complaints accepted for action by the service.
FOS stated it received 7,641 complaints in the three-month period of which 308, or 4%, were related to life insurance…
FOS stated it received 7,641 complaints in the three-month period of which 308, or 4%, were related to life insurance, while investments equalled 4.4% of complaints. This was in distinct comparison with general insurance which accounted for 29% of complaints and credit which accounted for 43% of complaints.
These differences remained in the total number of disputes accepted by FOS, which increased by 8% over the previous quarter to 5,154 disputes. Of these credit and general insurance disputes made up the largest proportion of all disputes accepted at 45% and 31%, respectively.
However, life insurance disputes still ranked low with 290 accepted disputes, or 5.6% of all accepted disputes. A dispute is ‘accepted’ at FOS if it is not resolved during the registration and referral stage and progresses to the case management stage.
The low numbers strongly echo those released by FOS in its 2015 annual report which found that life insurance complaints were low across the year compared with credit and general insurance but that advisers were often not the basis of the life insurance complaint.
The annual report stated the majority of complaints related to the actions of a ‘financial services provider’ – typically a decision to not pay out on a policy – with advice being the cause for less than 10% of life insurance complaints.
Despite the current low complaint numbers for life insurance FOS was concerned about what it termed a ‘systemic issue’ with one life insurer where it had incorrectly charged certain policyholders an increased premium in relation to their legacy life insurance policies.
FOS noted the insurer had notified the Australian Securities and Investments Commission and begun a remediation program for affected clients after disputes had been raised with FOS, which in turn raised the miscalculated premiums issue with the insurer.
FOS also stated that the number of unpaid FOS determinations had continued to grow as had the level of uncompensated loss, which was worth $16.6 million.
The service said there were 136 unpaid determinations from 34 financial services providers with 192 consumers affected by the unpaid compensation.
It also stated that while only a small percentage of all FOS members are involved the unpaid determinations represented 20.48% of all accepted determinations issued in favour of consumers in the investments and advice area with 56% of the non-compliance with determinations relating to disputes in the financial planning and advisory sector.
How interesting from FOS, and this is the basis for ASIC poor conclusions from a small sample of adviser behaviour that this is how All advisers and the advice provided by the Life insurance industry behave. They, together with the FSC agenda have ” conned” the Assistant Treasurer and Minister for Small Business to introduce measures (LIF) to decimate the very people she is supposed to represent.
The heart of the problem should have been to address issues and the behaviour of the Life Companies, but obviously the adviser is a much easier target to set up as the sitting duck.
This is “Corporate Socialism” and a rather strange relationship for a Liberal Government to be in bed with …… or maybe not when you see how far to the Left this government now leans.
Spot on Alleycat. I wonder if Mr Trowbridge of the FSC is hanging his head in shame? Probably not. Will the AFA and FPA do their job and truly represent their adviser members by now ensuring the assistant Treasurer is made aware of truth? Only time will tell. I guess it’s now up to the LICG.
Where was this report when all these drastic measures were being taken to “PROTECT THE CONSUMER” What a joke ! and either the Government does not know or wants to stick its head in the sand and not be told to suit the Banks and Insurance companies and their “grab” for bigger profits at the expense of the people who have given them loyal service over previous decades.
It’s not July yet ! are the associations that supposedly represent us going to fight on { or perhaps start to fight ?} to save the industry that has provided assistance to millions over the years or watch it become a decimated industry through nothing but greed and loyalty to the banks and insurers “bottom line”
Come on show us what your made of and why we pay membership fees.
Life Insurance complaints made up 4% and the advice component of these complaints is 0.4% of all complaints, so 99.6% of complaints had nothing to do with the advice provided by Life Insurance advisers, yet 10 times the amount of complaints were directed against Life Companies.
I watched the big short last night and it appears nothing has changed. The big end of town can manipulate the Government and turn the heat away from themselves, while redirecting the blame onto easier targets.
Will the AFA and FPA demand an immediate cessation of the proposed restriction of trade against advisers, now that this latest bombshell on top of all the other facts that have shown the whole process been a sham, has come to light?
Advisers want what is best for clients, the Life Companies and to be able to profitably
run their Businesses.
Some honesty from all the participants involved would be a good start.
This is surely proof that this entire LIF etc is nothing but a lie and a grab by certain groups for a larger cut of the market to the absolute detriment of non-aligned advisers and the consumer! A
And while we are all interested in honesty, just which company was responsible for the “‘systemic issue’ with one life insurer where it had incorrectly charged
certain policyholders an increased premium in relation to their legacy
life insurance policies.”?
I bet the FSC haven’t been sharing this information with government. Unfortunately neither the AFA of FPA probably have been either. What a stitch up!
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