What is fair and reasonable conduct?

Educational, cultural and personal circumstances of customers are relevant.

What is fair and reasonable conduct?

When Lagi* went to her bank, she completed an application for life, critical illness, temporary disability and redundancy cover, with the help of a bank employee. Four years later, when Lagi was diagnosed with breast cancer, she made a critical illness claim to the insurer, which was declined and the policy avoided. The insurer had found medical evidence to show Lagi had a history of anaemia, but Lagi had answered “no” to a question on the application about blood conditions, including anaemia. However, people can only disclose information they know about.

The IFSO Scheme can consider the educational, cultural and personal circumstances of complainants. Consistent evidence confirmed Lagi, who was born in Tonga, had difficulty understanding English, especially technical terms. Lagi’s doctor said she wouldn’t necessarily have recognised the term anaemia. When Lagi was diagnosed with breast cancer, the oncology department organised an interpreter to discuss chemotherapy.

Lagi did not approach the bank to purchase the policy. This was relevant because, where a person is sold a policy which they have not actively set out to purchase, the seller cannot rely on the purchaser having made their own enquiries, or having a general understanding of the policy or their obligations.

The bank controlled the sales process and the bank employee completed the application for Lagi.

Accordingly, the sales process, together with the bank’s procedure to complete the form on Lagi’s behalf, significantly contributed to the result in this case.

Based on the evidence, the IFSO Scheme concluded it was not fair or reasonable for the insurer to rely on non-disclosure to decline the claim and avoid the policy.

Complaint upheld

*Names have been changed.

See the full case study.