A broker who did not act on instructions from a businesswoman to arrange insurance for a range of assets has been ordered to pay the maximum compensation by the industry adjudicator, though her request that $40,000 in legal fees be reimbursed was denied.

The Australian Financial Complaints Authority (AFCA) said Oxford Insurance Brokers failed to place requested cover for two Mercedes Benz, home and contents including a diamond ring, director’s and officer’s cover (D&O), and firewood.

The broker said he either did not receive the requests, she did not return documents so cover could be placed, or she did not pay invoices for the insurance requested.

But AFCA ruled that the broker breached his duty of care and his client suffered considerable stress and inconvenience as a result of his failures. It awarded the maximum non-financial loss of $5400.

“The broker’s failures are significant and so the complainant should be awarded the maximum,” AFCA said.

“The broker led the complainant to believe he had placed insurance for one of her motor vehicles when he had not. She could not be certain what items were insured and what items were not.

“The complainant spent considerable time trying to ascertain if her vehicles were insured (and) suffered considerable inconvenience in having to respond to debt collection notices issued by an insurer and seeking to have default credit listings removed.”

However, the businesswoman, who owned a transport firm, was denied reimbursement of legal costs relating to a December 2020 truck accident that involved two trailers hired from a third party, which was seeking $144,516.

AFCA noted she admitted on her D&O application form a month later that an incident had occurred which may give rise to a claim, and said “luckily” the broker’s inaction had not caused her to suffer any financial loss.

“It would be highly unusual for an insurer to accept liability for a dispute that was already on foot,” the ombudsman said. "I agree with the broker that it is likely that the insurer – had it been sent the application – would have declined to provide cover.

“On that basis, the broker is not liable for the complainant’s loss.”

The businesswoman was only alerted to being uninsured when she unexpectedly received a notice from an insurer saying her premium was overdue, followed by debt collection notices and credit default listings lodged against her.

She did not know what these notices related to because the broker had earlier issued a certificate of insurance on his own brokerage letterhead confirming a different insurer. No actual certificate of insurance from that insurer was attached but she believed she was insured with that cover provider as per that correspondence with her broker.

That insurer had no record of her. She checked all major insurers and found she had no insurance cover in place.

The broker, who admitted he did not make file notes of conversations with clients, denied any wrongdoing and showed AFCA copies of invoices. She denied receiving those invoices in the post.

“There is no evidence of an invoice,” the ombudsman said. “I accept the complainant’s submissions and evidence. The broker led the complainant to believe that she had insurance for the 2019 Mercedes because he issued her with a certificate of insurance ... However, there is no evidence that either vehicle was insured although the complainant requested it.”

The broker denied receiving her home and contents request but AFCA said that unless he read her April 2020 email, he would not have known she requested cover for an engagement ring which he mentioned in a later email.

Also, she had emailed the broker at the same email address he had successfully used to communicate with AFCA.

"The broker says that he did not receive the complainant’s requests for insurance cover because he did not receive various emails. I do not accept this,” the ombudsman said.

“There are no documents to indicate that the broker took any action to arrange the requested insurance.

"This failing is significant and could have resulted in significant financial loss to the complainant in different circumstances.

“This is not the conduct AFCA would expect of an experienced professional broker acting in the best interests of his client.”

See the full ruling here.