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You are not the client

Paul owns an apartment in a body corporate. At the beginning of February 2024, a water leak damaged Paul’s apartment and the body corporate submitted a claim to their insurer. The insurer assessed and accepted the claim. In mid-March 2024 the insurer paid the body corporate about $34,000 to fix the damage. The body corporate passed the $34,000 along to Paul to arrange the repairs. While the insurer was assessing the claim, Paul was unable to live in the apartment, so the insurer also paid Paul’s accommodation costs.

After the claim was paid Paul complained to FSCL that the insurer’s delay in assessing and paying the claim had caused him considerable stress and inconvenience. We referred the complaint to the insurer’s internal complaints process.

The insurer reviewed their process and were satisfied there had not been any delay. The insurer referred Paul back to us but did not accept that we were able to investigate his complaint. The insurer said that their client was the body corporate and if Paul wanted to take the complaint any further, he would need the body corporate’s permission.

The body corporate declined to give Paul consent saying they were satisfied with the insurer’s claim assessment process. Paul asked FSCL to investigate.

Dispute

The insurer said that we should not investigate Paul’s complaint because he was not their client and they had not provided him with a financial service. The body corporate was the insured party, and the body corporate did not wish to complain about the claim assessment process.

Paul said that he had indirectly received a financial service from the insurer. Paul referred to the insurance premiums he was paying as part of his body corporate levy and that he had benefitted from the successful insurance claim. Paul also noted that the body corporate had authorised him to speak directly to the insurer during the claims process and that this authorisation had not been terminated.

Review

Under our rules we can only investigate complaints from people or organisations who have received a financial service from the financial service provider they are complaining about. The body corporate was the insured and if they had any concerns about the way the insurer assessed the claim, they could complain to us.  However, an individual body corporate member cannot, without the permission of the body corporate committee.

While body corporate fees include insurance costs, the insurer’s relationship is with the body corporate as a single entity and not with the individual body corporate members.

Only the body corporate could lodge a claim to repair the water damage. The insurer’s legal obligation to cover the repair costs on Paul’s apartment was found in the material damage policy the body corporate had purchased from the insurer.

Although Paul had benefitted from having the water damage claim accepted, this did not create a relationship with the insurer where he could be said to have received a financial service.

While the body corporate had given Paul permission to talk to the insurer during the claim process, there was no doubt that this authorisation had now ceased.

Resolution

We declined to investigate Paul’s complaint, under paragraph 21 of our rules.

Insights

We work within a set of rules, sometimes called our terms of reference, that set the boundaries for the complaints we can consider. In the early assistance phase of our process we will do everything we can to resolve a complaint, but there are some situations where it is not appropriate for us to start a formal investigation. An example of this is where the person complaining to us has not received a financial service from the financial service provider they are complaining about.