Financial Ombudsman Warns Against Insurance Middlemen

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The Australian Financial Complaints Authority (AFCA) has warned people affected by recent natural disasters, against signing up with insurance middlemen in the hope of progressing their claims.

AFCA Chief Operating Officer, Justin Untersteiner, says in a media release that AFCA is an ombudsman service that is completely free to use and legally binding on financial firms.

He encouraged people to think twice before signing contracts with claims management companies.

“AFCA has heard reports of claims management companies charging people to manage disputes with financial firms,” Untersteiner says.

“While not illegal, AFCA is concerned that people are being charged excessive costs and/or a percentage of the sum recovered, when in reality the service provided is of no real benefit to the person.

“AFCA warns against signing binding contracts with claims management companies unless people clearly understand the likely cost implications. In most cases it is not necessary or of any real value.”

The media release states that AFCA has also just launched a support hotline to ensure priority service for those impacted by the bushfires and that AFCA was ready and willing to assist to ensure financial complaints are resolved quickly.

It says the AFCA Bushfire Support Line (1800 337 444) is part of AFCA’s disaster response process which identifies and expedites complaints about financial products and services from the impacted communities.

“If you’re affected by the bushfires, and you find yourself in a dispute with your insurer or financial provider about a claim or request for assistance, AFCA can help resolve it. We have special processes that identify and fast-track complaints from people, primary producers and small businesses in impacted communities, so we can assist you to resolve complaints as quickly as possible,” he says.

Click here for AFCA’s online bushfire support information hub.

 

 



3 COMMENTS

  1. I was sad to hear the commentary above (which was also on the ABC AM radio program earlier this week), about dodgy middlemen, masquerading as claim advocates taking advantage of flood/ fire / hailstone victims.
    The commentary was focused on opportunistic behaviour in the General Insurance market.
    The emphasis was on claim disputes, however many claimants need help throughout the claim process.

    I am pleased that this behaviour is being called out – as it otherwise takes away from the good work real claim advocates deliver.
    We should also be careful that we don’t add to the distrust in the industry – yes, their are a minority of opportunistic people, but most businesses are their to help customers.

  2. Fantastic news for consumers.

    However, we’re all painfully aware that AFCA stops short of mentioning lawyers and law firms when they refer to these ‘shady, unscrupulous insurance characters’ that are providing assistance with insurance claims. Instead we get the phrase “insurance middlemen”.

    I’m sure it has nothing to do with the fact that AFCA is mostly made up of lawyers, studying lawyers, failed lawyers and civil servants.

    Law firms preying on vulnerable consumers dealing with insurance claims are far more prevalent than the handful of insurance professionals that have branched out to provide claims support services.

    Law firms also charge far more for their services and will deliberately aggravate even the most mundane and simple claims to the point of expensive dispute as it best serves their interests. They do this by ramping up expenses through EDR processes like AFCA’s “completely FREE” service and court processes; ‘representing’ the consumer and ultimately pushing claims to a ‘settlement’ (as opposed to benefit payment) which is enough to fill the firms coffers and leave the bamboozled consumer with some meagre, left over payment, after all the unexplained ‘costs’ have been deducted.

    The mantra of “no win, no fee” is a deceptive lie and consumers are often shocked when their insurance payments are garnished to the sum of 10s and 100s of thousands of dollars.

    It’s helpful to point out that AFCA and Mr Untersteiner’s short but horrific reign of abracadabra is coming to an abrupt head as Insurers and Financial firms lose all confidence and faith in the system and AFCA’s clear inability to uphold the principles of law and good faith. Ways and means of calling AFCA to account are being tackled at multiple levels and with full legal support.

  3. Is he talking about “no fee – no charge” lawyers who want to take 30% – 40% for lodging some pretty simple documentation? I’m guessing when we have a government full of lawyers, we’ll never get regulation of legal practitioners in the same way they’ve regulated financial planning.

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