A complainant whose total and permanent disability (TPD) benefit payments were held up has partially won a dispute after the Australian Financial Complaints Authority (AFCA) ruled the insurer must pay “further interest” on top of what it has already agreed to pay to compensate for the delay.

But AFCA dismissed the complainant’s bid to recoup her costs incurred from having to engage a financial adviser for the period of delay between February 20 2020 to June 1 2021, as well as investment losses from not having the TPD benefit invested during this period.

A timeline of relevant events provided in the AFCA ruling showed the complainant had lodged her claim on or around February 7 2019 after she stopped work as a disability worker in August 2017.

On August 17 2020 she notified the insurer that she was now in receipt of the disability support pension effective from December 13 2019.

However, TAL only paid the TPD benefit on or around June 1 2021 after a series of earlier decisions to decline the claim, and has “acknowledged” it was in a position to accept the claim at February 20 2020 after receiving further evidence about the complainant’s mental health condition.

The insurer has said it would pay interest pursuant to section 57 of the Insurance Contracts Act (ICA) for the period of between February 2020 to June 1 2021 and will not pay anything further to the complainant.

But payment of the interest “has not been forthcoming” and it continued to remain unpaid as at October 12 last year.

The insurer says it was waiting for the complainant to confirm her bank account details before it could make the payment of $13,231.95, as she was entitled to under section 57 of the ICA. The insurer says the complainant’s adviser refused to confirm the details.

But AFCA says the bank details had already been confirmed the year before, on May 31 2021, in an email to the insurer for the payment of an earlier accepted interest amount.

“It is unclear to me why the insurer could not have used those bank account details… Moreover, the insurer does not appear to have provided AFCA with the ‘full picture’ as to why the interest has not been paid,” the AFCA ruling says.

“Consequently, I consider the insurer has caused further unreasonable delay in the payment of the interest. It should compensate the complainant for the delay in the payment of the interest by paying interest on that unpaid, and undisputed, amount.”

As for the other losses sought by the complainant, AFCA says it does not think the insurer is liable to compensate her for the adviser fees or lost investment income associated with the delay.

AFCA says the insurer’s liability from the unreasonable delays appear to be “codified” within section 57 of the ICA.

AFCA also says the fees incurred should not be compensated as “they have been incurred for advice by a financial advice practice, as opposed to by a lawyer”.

“This is not a criticism of the complainant’s financial adviser, who has been instrumental in securing the complainant a TPD benefit,” AFCA says.

“However, I am mindful of the fact there is a strict framework around the charging, costing and recording of legal fees, with its own scheme for complaints and its own structure as to what can be recovered in things such as court disputes.

“Further, lawyers have certain professional obligations, including around fees.”

Click here for more from the ruling.