In August 2014, Walter was hit in the head by a cricket ball during a game of indoor cricket. The subsequent post-concussion syndrome which he suffered as a result of this injury meant he was unable to continue working. In December 2015, Walter submitted an income protection claim under his life insurance policy. His insurer then requested his full medical details, declined his claim and cancelled the policy (retrospectively) from its inception on the basis Walter did not disclose the full details of his mental health history and history of drug and alcohol use.
The insurer argued Walter’s insurance application would not have been accepted had it known the extent of his mental health history and history of drug and alcohol abuse. The insurer said it had no reason to request full details of Walter’s medical history upon his application in 2013.
Walter complained to his adviser, claiming that the adviser did not fulfil his duties to make clear the importance of disclosing all medical information. When the adviser rejected Walter’s complaint, Walter complained to FSCL.
The adviser filled out the form for Walter in his presence before having Walter sign it and initial every page. Walter and the adviser disagreed about what Walter disclosed to the adviser, and what the adviser wrote down on the application form. Walter said he disclosed more about his past drug and alcohol use, and the adviser’s decision not to include this information implied the information was not necessary or material to the insurer.
The adviser’s view
The adviser provided us with his usual advice process, and maintained that he made it very clear to Walter that all information must be disclosed.
The adviser pointed to the fact that he ensured Walter initialled every page. The application form was also accompanied by a provision which said:
In order for us to advise you properly and select a suitable insurance policy for you, you agree to:
- Provide full and accurate information to us when we complete your fact find and needs analysis.
- Complete the application forms for the policies you have selected truthfully and disclose all relevant matters on the form, missing nothing out.
In addition to this at the end of the application form, the adviser had the client write “this form was completed truthfully” which Walter had signed next to.
Walter said he disclosed to the adviser more than was written down on his application form and that the adviser was “very blasé about everything.” Walter maintained that his adviser filled out the form for him and did not include all the information which he gave to the adviser. He also said the adviser used language like “they’re not going to crucify” you for “having smoked a bit of weed” and implied that the insurer would request Walter’s full medical records.
Walter said the adviser should have made it clear the insurer may not request his medical records upon receiving his insurance application. Walter said he felt rushed to complete the form because he and the adviser met at his house, and by the time the meeting had finished it was after 10pm. Walter said the adviser was responsible for making it “crystal clear” what Walter was expected to disclose on the application form.
It was clear that there were some deficiencies in the adviser’s advice process with a lack of documentation or file notes detailing the steps he took with Walter. As a result, it was a ‘he said, she said’ situation where it was difficult for us to determine where the truth of matter lay. We said it would have been helpful if the adviser had kept file notes of what was discussed.
As the professional, the adviser is responsible for keeping contemporaneous file notes.
Furthermore, the adviser’s usual advice process and the duty of disclosure section in the application form give an impression that Walter’s full medical records would be requested. As a matter of best practice, the adviser could have made it clearer that the insurer would not necessarily seek all Walter’s medical records.
However, there was insufficient evidence that the adviser intentionally told Walter not to disclose certain information about his medical history and drug and alcohol use. As Walter had signed the proposal form, saying that this form was completed truthfully, the onus was on him to read the form and correct any mistakes, errors or omissions.
Although the adviser’s processes could have been better there was no guarantee that Walter would have been in any better position. We found it likely that the insurer would not have insured Walter had he fully disclosed his mental health history, drug and alcohol abuse. As a result, we did not uphold Walter’s complaint.
Whether one is using an adviser or not in order to obtain insurance, the onus is on the person seeking insurance to ensure that all the information obtained or detailed in an application form is correct.
It is also important to remember that insurers will not automatically obtain all of your medical records when seeking insurance.
This case also shows how important it is for an adviser to keep contemporaneous file notes/memoranda detailing actions taken and advice given to clients.