Westpac gave misleading advice when it arranged for a customer to acquire an income protection (IP) insurance policy that only provided benefit payments if an injury left the insured “severely disabled” and must reimburse him for the premiums paid, the Australian Financial Complaints Authority (AFCA) says in a dispute ruling.

The customer, who worked as an oil rigger, says he thought the policy he took up covered him if he suffered an injury that left him unable to work, as that was the request he made when he approached Westpac in April 2013 for advice about his personal insurance and superannuation needs.

He wanted insurance that would cover his income in the event that an injury forced him off work but the policy he acquired, which was issued by an insurer not linked to Westpac, did not provide for total and partial disability.

The customer only realised the policy was not what he had requested after he made an unsuccessful claim in 2018 for an injury that left him unable to work for 10 months. As he was not “severely disabled”, he did not get any benefits.

He lodged a complaint with AFCA, saying Westpac misled him and should pay him the policy benefit the IP insurer had denied him when it rejected his claim.

AFCA ruled Westpac is not required to pay the policy benefit as the complainant could not have obtained cover for total and partial disability, and points out the complainant was not able to provide an example of a policy he could have obtained that would have provided cover for the loss he suffered.

But the external dispute ombudsman says Westpac did mislead the complainant as the statement of advice (SOA) it provided in April 2013 “most significantly” stated the policy covered total and partial disability.

“When read as a whole, the SOA indicated the policy provided cover for severe disability, total disability, and partial disability,” the AFCA ruling says. “This was incorrect and misleading.”

AFCA says the SOA was the “best evidence” of what was explained to the complainant before he agreed to go ahead with the proposed IP insurance policy.

“The adviser misled the complainant about the cover provided by the policy,” AFCA says.

AFCA also ordered Westpac to pay the complainant compensation for non-financial loss in the sum of $2500.

Click here for the ruling.