Suspended Mercedes driver wins disclosure failure dispute

The owner of a Mercedes Benz insured for $142,000 has won a dispute after it was determined that an authorised representative (AR) who had been involved in Supreme Court action over his general conduct had failed to pass on information to the insurer.

A claim for an at-fault accident with a third-party vehicle was declined because the insurer said the policyholder hadn’t advised of a driver’s licence suspension and as a result hadn’t complied with duty of disclosure obligations.

The complainant said he had told his broker, operating as an AR, of both the suspension and the fact that an incorrect address had been used on his policies.

The Australian Financial Complaints Authority (AFCA) found against licence-holder Community Broker Network in the decision and said the loss should be covered and compensation paid.

AFCA was told by the broker that a product disclosure statement and policy schedule outlined disclosure requirements and a “statement of answers” also referred to the duty.

But the decision says there are no records to show the duty of disclosure was discussed, while the statement is unsigned and not supported by any corresponding notes, emails, phone calls or similar to show how the answers were obtained.

The AR had been involved in Supreme Court action and AFCA says the licensee had “considerable concerns” about his business practices to the point it cancelled his trading licence.

The Mercedes Benz policyholder alleges the AR used an incorrect address to obtain a reduced premium, and said he had pointed out the error at policy renewal and before the date of the claim.

AFCA noted the lack of records and concerns about the AR’s conduct in general in supporting the policyholder.

The complainant also provided information from two other financial firms showing he could have obtained comprehensive cover for the Mercedes Benz C63 S (IV), despite the driver’s licence suspension, if he’d known the existing insurer wasn’t prepared to renew the policy.

AFCA says the licensee took over the management of the AR’s business, including the complainant’s portfolio, and is responsible for the conduct of the representative.

The decision says the licensee should cover the loss for the $142,000 agreed value, less $2294.17 for the premium and an $800 policy excess.

It should also reimburse $8336.81 paid to the third-party driver for damage caused to their vehicle, reimburse $4455.02 in third-party hire vehicle expenses and pay $3000 in non-financial compensation.

AFCA says there was added stress because the third-party driver brought legal action in pursuit of their loss, and there were further unreasonable delays because of the licensee’s “refusal to accept liability for the failures of its authorised representative and attempt to place liability with the complainant”.

The complainant should be reimbursed for legal expenses up to a maximum of $5000, it said.

The decision is available here.