It’s the putting right that counts

Angus was involved in a minor car accident and, when he attempted to claim insurance for the car repairs, his insurer said his insurance policy had been cancelled the previous August by Angus’s credit union. Angus contacted the credit union to find out what was going on.

The credit union investigated and found that it had made a mistake. Within 24 hours of receiving the complaint, the credit union explained that a staff member told the insurer to cancel the insurance when she shouldn’t have. The credit union paid the premiums necessary to reinstate the policy so Angus could have the car repaired. 


Angus’s view

Angus did not accept the credit union’s response, saying he was very worried when he discovered he had been driving an uninsured car for about seven months. Angus was concerned about what might have happened if he had been in a more serious accident, and no one had known that the policy was cancelled by mistake.

Angus also said when he discovered he was uninsured he had to act quickly to arrange alternative cover. Although Angus was able to find insurance cover, that was cheaper than his original policy, he had to borrow money from a friend to pay for that cover.

Angus said he would like the credit union to pay him a couple of hundred dollars in compensation for the worry associated with the wrongful cancellation of his insurance.

When the credit union declined to pay Angus any compensation, Angus complained to FSCL. Angus felt someone should be held accountable for the mistake.


The credit union’s view

The credit union said it quickly investigated Angus’s complaint, accepted responsibility, and paid the premiums to reinstate Angus’s policy. The credit union said that if Angus could show any direct loss caused by its error, it would compensate Angus, but felt he had not suffered any significant stress or inconvenience.




Our role in resolving complaints

It is inevitable that people will make mistakes. It is not our role to punish the person who has made the mistake, but to make sure the mistake is fixed and the person affected returned to the position they would have been in if the mistake had not happened.

Sometimes fixing a mistake involves reimbursing money the person has lost as a result of the mistake. Other times it may be appropriate for the person to be compensated for the less tangible consequences of a mistake, including stress, worry, and disruption to plans.


No direct loss

In this case, the credit union acted quickly to reinstate the insurance, and there was no direct financial loss.



We then considered whether compensation for inconvenience was appropriate. We explained to Angus that, in the course of everyday life, everyone experiences some degree of inconvenience. Just because a mistake has happened, compensation is not automatically necessary. To be persuaded that the credit union should pay compensation, we needed to see something in Angus’s experience to show that his situation was outside what can reasonably be expected as part of life. Some factors we might take into consideration are:

  • the length of time involved
  • the amount of money concerned
  • the extent to which Angus’s enjoyment of life has been impacted.

Although Angus had to act quickly to arrange alternative insurance cover and needed to borrow money from a friend to pay the premiums, he was able to repay his friend without any difficulty.

Angus was worried about what might have happened if the accident had been more serious, but we encouraged him to put his mind at ease and focus less on the hypothetical scenarios and more on the promptness with which his complaint was resolved.


Within the tolerance expected in everyday life

In our view, Angus’s stress and inconvenience fell within the tolerance of the inconvenience of everyday life. Although the credit union made a mistake, any stress and inconvenience experienced was very short-lived. Within 24 hours the problem was fixed, and the credit union did not quibble over the cost of reinstating the policy, bearing in mind Angus’s failure over the last seven months to notice the direct debits had stopped and the savings made from not having to pay premiums.



We recommended that Angus withdraw his complaint.


Key insights for the participant and the complainant

From time to time we will all experience irritation when someone we encounter makes a mistake. On occasion that irritation will have serious consequences and compensation will be appropriate. However, it does not follow that compensation will always follow a mistake.

This complaint was well-handled. The credit union quickly investigated the complaint, accepted responsibility, did not argue over who should pay what and covered the cost of reinstating the insurance all within 24 hours. Throughout the process the focus was entirely on Angus and returning him to his original position as quickly as possible to avoid consequences following from the original error.