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ACC cover but no insurance

As a single mother, Kate decided she needed to get income protection insurance in case she had an incident leaving her unable to work and pay her expenses. Kate went to an adviser who recommended she also get mortgage repayment, trauma and a small amount of life insurance for better protection.

Kate accepted with the adviser’s advice and proceeded with the recommended insurance after completing an insurance application. Kate disclosed some previous medical issues on the application.

A year later, Kate suffered a back injury and had to take months off work. When she contacted the adviser about making a claim, he reminded her that they had put a 13-week waiting period in the policy before she could make a claim. The waiting period had helped to reduce her premium cost.

Kate was receiving ACC support, so she could manage her expenses during the wait period. However, when Kate did finally submit an insurance claim, the insurer declined the claim due to non-disclosure of a number of medical conditions, including rheumatoid arthritis, which can contribute to muscular injuries.

Kate complained to FSCL about the adviser.



Kate said the insurance the adviser recommended her was not fit for purpose because:

  • As a teacher, Kate actually received 100% of her income from ACC, rather than the usual 80%, reducing the need for income protection insurance. 
  • The adviser told her any ACC cover would only last 6 months, which wasn’t correct. 
  • Kate couldn’t really afford the income protection policy, especially given the limited benefit it actually provided and the fact that she had to wait 13 weeks to make a claim.

 Kate also complained the adviser didn’t adequately advise her on the risks of non-disclosure. Kate said she was clearly guessing dates and conditions in the medical section of her application form, and the adviser should have recommended she obtain her medical records in order to make full disclosure.

 The adviser said the insurance was tailored to Kate’s needs, which they discussed prior to her application. The adviser said although the income protection benefit would be offset by any ACC cover, it would still apply in the event of illness, unlike ACC.

 The adviser denied he told Kate any ACC cover would only last 6 months. Rather, he said he likely discussed his own back injury and experience with ACC, which he often does with clients. The adviser was only covered by ACC for 9 months at which point ACC told him he could be re-employed in another occupation.

 The adviser said he and Kate agreed to use the 13-week waiting period to bring the premiums within her strict fortnightly budget of $100.

 Finally, the adviser said he advised Kate on the risks of non-disclosure, as is his usual practice.



We reviewed Kate’s complaint and the related documentation provided by the adviser. Unfortunately, the adviser had not kept a written statement of advice or made notes at the meeting where Kate filled in her application form. Therefore, we had to work out what advice the adviser gave, using his correspondence with Kate and the needs analysis notes he filled out when advising her.

Financial advisers have an obligation to act with the same skill, care and diligence a reasonable adviser would exercise in the same circumstances. We had to keep this in mind when reviewing the adviser’s advice.

We thought Kate’s insurance was fit for purpose because it protected her ability to pay her expenses long-term in the event of either illness or injury, while meeting her fortnightly budget of $100 for premiums. We agreed that, although income protection benefit would be offset by any ACC cover, Kate would not be covered by ACC in the event of illness. 

As for the waiting period, correspondence between Kate and the adviser showed he altered Kate’s proposed cover in this way to bring premiums down, and explained the effect of doing so. The needs analysis notes showed Kate said she had sufficient annual and sick leave to help cover this period.

The needs analysis notes also showed the adviser told Kate that her income protection benefit would be offset by any ACC cover. The adviser didn’t tell Kate she would receive 100% of her income from ACC on account of being a teacher, but we didn’t think a reasonable adviser in the same circumstances would necessarily have known that.

There was no evidence the adviser told Kate ACC cover would only last 6 months. We thought it was more likely the adviser talked to Kate about his own ACC experience (as his back injury was mentioned in his disclosure statement) and highlighted the risk that ACC could rehabilitate her into another occupation earlier than desired, meaning  income protection cover would be beneficial.

Finally, we thought it was likely the adviser adequately advised Kate on the risks of non-disclosure. Kate had disclosed a number of medical conditions in her application, and when the insurer sent their offer of terms, the adviser noted exclusions for these had been applied ‘as expected’. This showed the adviser had at least explained the risk that disclosed conditions could lead to exclusions from cover. We couldn’t see why the adviser would not have explained the further risks of non-disclosure, as was his usual practice.

Furthermore, given Kate had already disclosed a number of conditions in the application, the adviser wouldn’t have expected Kate not to mention other medical issues.



We recommended Kate discontinue her complaint, because we didn’t think the adviser had fallen below the standards of a reasonable adviser. As this was the final step in our process, we closed our investigation.



This complaint may have been decided differently under the new financial advice regime which came into effect on 15 March 2021 (and only applies to advice given after that date).

Advisers now have a number of additional obligations, including making sure their clients understand their advice. Advisers also have to keep adequate records to show how they met their obligations in their dealings with the client. The record-keeping in this case was sub-standard.