The story
John and Anna were keen to reduce the amount they were paying for personal insurance and health cover. When they received a telephone call from Chris, a registered financial adviser whose company, InsureMe, specialises in personal and business insurance, offering to help them, they agreed to meet with him in their home. Chris assured John and Anna there would be no charge for the meeting. During the meeting, Chris asked John and Anna to sign a copy of his company’s disclosure statement after discussing its terms with them. After the meeting Chris prepared a detailed report on John’s and Anna’s requirements with recommendations for changes to their current insurance arrangements. Despite a number of further contacts over several months and the preparation of an amended proposal, John and Anna decided not to go ahead with any changes to their insurance arrangements.
The complaint
When they received an invoice from InsureMe for $450 plus GST, John and Anna disputed their liability for any charge. John and Anna pointed out that Chris had made the first approach to them and said there would be no charge for his services. When John and Anna signed the disclosure form, they noted that the section that said “we prefer to pay fees for any services provided by the adviser while this agreement is in force” was deleted. Chris did not give them a copy of the disclosure statement at the meeting and in fact they did not receive it until some months later after they questioned the charge.
InsureMe’s position
Chris of InsureMe confirmed he had made the first approach to John and Anna but it was the result of a referral from another company, not a cold call. Chris understood that John and Anna wanted to reduce their insurance premiums while retaining good cover. Before meeting with John and Anna, Chris emailed the company’s Scope of Service and Engagement agreement which includes the disclosure statement. Chris went through the document with John and Anna at the meeting and emailed a copy of the signed agreement a few days later. Chris said John and Anna should have been well aware of the clause stating that a fee may be payable if no business is transacted. Chris disagreed with John and Anna’s claim that he had told them there would be no fee payable. Chris felt that in view of the amount of work he had done, he was fully entitled to make the charge.
Settlement
Once FSCL became involved, Chris reviewed his company’s decision. Because of the costs involved in an investigation, Chris decided to write off the fee in this case although he remained sure that the charge was a legitimate one. The complaint was resolved on that basis.
