The director of a pool building firm who claimed his business ended up owing a premium funder money because his broker failed to give proper advice and failed to act as instructed, has lost his bid for compensation. 

He says AB Phillips, the broker that arranged for the renewal of the construction policy, did not advise him of the premium increase; did not explain that the premium funding agreement would roll over to fund the 2022/23 cover; and that he thought he was cancelling the cover when he asked for the premiums to be lowered. 

The director also said he thought the amended Certificate of Insurance (COI) he received in July last year was for a new policy and that he did not agree to be bound by the new cover or sign any documents. 

He told the Australian Financial Complaints Authority (AFCA) he should not have to pay premiums because he cancelled the policy on July 13 last year within the 30-day cooling off period. 

But AFCA has dismissed the director’s complaint against the broker. The ombudsman says information provided shows AB Phillips acted according to instructions provided by the director. 

AB Phillips supplied phone contact notes to show the director made no engagement with the broker between July 13 last year, when he requested a lower premium, and November 2 the same year when he cancelled the policy. 

The director had instructed the broker to amend the policy after receiving a letter about the renewal, which included information about the revised premium, the AFCA ruling says. 

He wanted cover for Other Business removed from the policy as he was unable to afford the increased premium. The broker carried out the instructions and issued the director a new COI for the period from July 15 2022 to June 15 this year to reflect the changes made.  

“The policy number was unchanged, and the original policy was amended not cancelled,” the AFCA ruling says. 

“The partial premium refund went to the premium funder who had lent the complainant the premium amount.” 

An email with the new COI attached was sent to the director on July 20 last year and the correspondence also confirmed that the partial refund would go to the premium funder. 

AFCA notes also that the director was not making the monthly repayments to the premium funder and the broker had attempted unsuccessfully to contact him in late August last year to discuss the non-payment. 

The next contact between the broker and the director only occurred on November 2 that year when the broker was instructed to cancel the policy. The policy was cancelled on December 3 from the date of inception and the director was refunded 30% of the premium paid. 

“I am not satisfied the broker breached its duty to the complainant,” the AFCA ruling says. 

“The broker made reasonable efforts to arrange a policy suitable to the complainant’s needs and informed the complainant adequately that the funding arrangement was rolling over.” 

Click here for more from the ruling.