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Overpayment of life and health cover

Amber belongs to an employee provident fund that provides life and health cover. In 2018 the provident fund wrote to Amber saying that, because her son was turning 18 years of age, he would no longer be covered by her policy and Amber needed to change her membership from a family membership to a married/partner membership.

Amber did not change her membership status until 2022 when she discovered she was still paying for a family membership. Amber asked the provident fund to refund the money she had overpaid for the last four years. When the provident fund declined, Amber complained to FSCL.


Amber agreed that she had received the 2018 letter and that she should have changed her membership status. However, Amber said that the provident fund had benefited from her overpayment when she would have had no ability to claim for her son. Amber also felt that the provident fund would have known that she had not updated her membership status and should have drawn this to her attention again.

To resolve the complaint, Amber wanted the provident fund to refund the amount she had overpaid over the last four years, being $594.

The provident fund declined to reimburse Amber’s overpayment. The provident fund said they had reminded Amber that she needed to change her membership status and the policy document made it clear that it was Amber’s responsibility to do so. The provident fund was not able to change Amber’s membership status or the amount she was paying by direct debit from her wages. The provident fund explained further that they are not an insurer but a small, membership focused organisation. Any refund payment to Amber would come at a cost to their other members.


We contacted the provident fund, acknowledging their reasons for not reimbursing Amber’s overpayment, but asking whether they would be prepared to reimburse what appeared to be a relatively small sum to resolve Amber’s complaint. We said that Amber appeared to accept some responsibility for failing to change her membership status and suggested that negotiating a partial refund might be an option.

The provident fund maintained their view that they were not responsible for Amber’s loss and declined to make a settlement offer.


We decided that a fair resolution would be a refund of half the amount Amber had paid, being $297. It was our view that Amber should have acted on the letter and changed her membership status in 2018. However, it appeared to us that the provident fund had benefited from Amber’s overpayment and that they could have reminded her that she had overlooked the letter.

Insights for participants

This complaint illustrates the two approaches to resolving complaints: the principled approach compared with the pragmatic approach.

The provident fund took the principled approach. They were confident they had done nothing wrong and that it would be unfair to their other members to reimburse Amber’s overpayment. The provident fund said they had no ability to either change Amber’s membership status or the amount she was paying and that it was her responsibility to act on the 2018 letter.

While this was a valid response to the complaint, it came at a cost, both financially and in terms of the provident fund’s relationship with their member. By requiring FSCL to decide a complaint, the provident fund had to pay an investigation fee and annoyed their member. If the provident fund had taken a more pragmatic approach, these costs would likely have been avoided.