A complainant who argued it was her financial adviser who failed to disclose her history of weight loss procedures has lost an attempt to reverse her insurer’s decision to avoid her cover on grounds of fraudulent misrepresentation.

The Australian Financial Complaints Authority (AFCA) says in its ruling of the dispute that the recklessness of the adviser is attributed to the complainant under the law of agency.

“This means the misrepresentation of the adviser is the misrepresentation of the complainant, and the complainant is responsible for the information provided on the insurance application form by the adviser,” the AFCA ruling says.

The dispute arose after the complainant made a claim in March 2018 on her total and permanent disability (TPD) policy as she had been suffering from generalised anxiety disorder, pain disorder and depression.

She had acquired life, income protection (IP) and TPD cover through her superannuation fund in April 2013 through her financial adviser by completing an online application and answering certain questions.

MLC avoided her cover after she made her claim in 2018 for fraudulently misrepresenting her medical history in her application form.

The insurer says the misrepresentations made in the complainant’s insurance form were made recklessly, not caring whether the answers were true or false.

One of the medical questions specifically asked if she had had surgery to reduce her weight in the last five years and the answer “No” was provided despite the contrary being true.

MLC says had the question been answered correctly, it would not have provided IP or TPD cover on account of the complainant undergoing gastric band surgery within 12 months prior to her application.

It would have provided life cover but this would be subject to a 50% loading.

The AFCA ruling says the complainant has a “significant” history of gastric banding procedures including one in October 2012, less than a year before she applied for the cover through her adviser.

“The panel was satisfied the question was not ambiguous, it was a clear and direct question,” the AFCA ruling says.

“While the panel accepts the complainant says she did not complete the form and may not have been asked any questions by the adviser, the position at law in relation to agency is quite clear.

“The panel was satisfied the adviser was acting as the complainant’s agent such that his actions are to be taken as actions of the complainant.”

Click here for the ruling.