A woman who alleged her financial adviser gave her inappropriate insurance advice, arranging new policies that came with mental health and lumbar spine exclusions, has lost her dispute.

The Australian Financial Complaints Authority says the adviser made his recommendations based on information provided by the complainant, who did not disclose her extensive medical history to him.

She has conditions relating to her left shoulder; a bilateral eye condition and loss of sight from 2002 due to shingles; a bipolar diagnosis from a young age; white spots on the brain; and confirmed brain condition demyelination.

But she did not disclose the conditions to him, nor to the insurer during a telehealth interview in November 2016 as part of its underwriting assessment before the policies were issued.

Her medical conditions were discovered after the insurer obtained details of her heath history to assess her claim for income protection and trauma benefits. She lodged the claim in July 2017 when she was diagnosed with multiple sclerosis, which forced her to cease work.

The insurer avoided all policies and denied the income protection claim in December 2018. It said had she disclosed her true medical history, it would not have offered the policies on any terms.

“On the balance of the available information, I do not think [she] fully disclosed her extensive medical history to [the adviser] because she did not fully disclose that history to the insurer during the telehealth call,” the complaints authority said in its ruling of the dispute. 

“This means [the adviser] could not factor that missing information into his advice as he did not have that information. On balance, I am satisfied [the adviser] was not fully aware of [her] medical history through no fault on his part.”

The complainant approached the adviser in 2016 about her life insurance policies as she was taking up a more senior role with her employer.

At that time, she had life insurance through her super fund: term life cover for $500,000; total and permanent disability cover for $500,000; and income protection for $8103.90 per month.

Based on the information she provided, the adviser recommended term life cover for $582,000 with a new retail superannuation fund; total and permanent disability for $421,000 linked with her term life cover; trauma insurance for $30,000; and income protection for $8130 a month with the new retail fund. She accepted the advice and cancelled her old policies after her replacement covers were incepted.

She said the replacement policies were not in her best interest because they did not place her in a better position and she wanted compensation from her adviser.

She said had she remained covered under her previous income protection policy, she would have been entitled to an aggregate of $183,471.71 over a three-year benefit period. She also claimed losses arising from her lost life and total and permanent disability coverage.

But the authority disagrees. “[The adviser's] advice was based on the incomplete health information provided by [the woman] despite making medical information enquiries,” the authority said. “The appropriateness of [his] advice is to be assessed on the information he knew when he made his recommendations.” 

Click here for the ruling.