A broker has been ordered to pay compensation after “less than ideal” communications with a complainant, despite the dispute over a landlord policy being decided largely against the insured.

The Australian Financial Complaints Authority (AFCA) says it’s not satisfied the broker breached its duty of care, but its communications warranted an award of $500 in non-financial loss compensation.

“Whilst I appreciate the broker was denying any wrongdoing on its behalf, I consider some of the broker’s communication towards the complainant was less than ideal,” the AFCA adjudicator says.

“This included unnecessary comments such as the complainant showing ‘a disappointing level of ignorance’ when making certain submissions.”

The dispute centred on an investment apartment covered under a landlord policy for strata units, arranged by Resolute Property Protect. The property manager provided instructions.

Insurance was previously arranged by a different broker and insurer, but it ceased offering the cover in 2018 and there was a change in arrangements.

The complainant says he believed the new policy covered loss of rent, in line with the previous policy. After the tenant defaulted, he was advised that wasn’t the case, and he didn’t lodge a claim. The broker had provided a policy that was not appropriate and premiums should be refunded, he argued.

AFCA heard the property manager was acting on behalf of an insurance scheme involving more than 400 clients including the complainant when organising the landlord cover.

Documents show loss of rent and rent default was specifically excluded under the previous policy, and the new broker had arranged the same type of cover with the new insurer, as instructed.

There was no discussion with the complainant directly about his needs, which was not surprising as the insurance scheme involved more than 400 members, and general rather than personal advice was provided, the decision says.

AFCA says information shows the property manager provided the complainant an incorrect version of the product disclosure statement at one point, which was before the new broker was appointed and the current policy being active.

“I accept this may have led the complainant to believe he was covered for loss of rent,” the adjudicator said. “Whilst this is frustrating for the complainant, I cannot find the broker liable for this conduct because it was not appointed at this stage.”

Certificates of currency show the cover selected was for contents, legal liability and government audit costs. Renewal notices provided to the complainant all confirm that loss of rent cover wasn’t provided.

“Based on the available evidence, I am satisfied the complainant never had loss of rent cover, had never requested it from the broker or sought advice from the broker on whether that was advisable,” the decision says.

A complainant concern about the pecuniary relationship between the property manager and the broker was also not accepted as leading to any breach of duty.

The broker says it had a formal authorised representative agreement with the property manager, but the manager was acting on behalf of the insurance scheme when organising the landlord cover.

“To the extent that the complainant is dissatisfied with the instructions provided, that is a matter for him to take up with [the property manager],” AFCA says.

The landlord additionally raised concerns about the broker’s conduct during the complaint, including that unprofessional comments were made about him.

“Based on the complainant’s submissions, I accept this behaviour has caused a degree of interference with expectation of enjoyment or peace of mind,” the decision says in awarding the compensation.

The decision is available here.