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John Smith
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Commonwealth Bank customer denied payout after being sold wrong insurance by planner
Eight years ago, restaurateur Jackie Milijash went to her local Commonwealth Bank branch to tell them her business had changed address.
It was not until 2014 that she found out the true cost of that visit.
"I said, I am sorry, I haven't worked for nearly two months now. I am now about to have a serious operation and I said, I've got income protection insurance, and they said, no, no, no, you're not covered," she told ABC TV's The Business.
Whilst at the bank in 2008, Jackie Milijash said she was persuaded by the branch's financial planner to cancel her existing insurances, including a long-standing income protection policy with another company, and switch to insurance sold by him.
The policies included trauma insurance, but not income protection.
"I said, but where's my income protection? He said, no, no, no. That's what we now call trauma protection," she said.
Independent financial advisor Suzanne Haddan, from BFG Financial Services, noted that there is a big difference between trauma insurance and income protection insurance.
"Trauma only covers a limited amount of diagnosed events. So you may be off work for illness which isn't covered by trauma, so you wouldn't be entitled to any payment," she explained.
Jackie Milijash's statement of advice, which is a summary of the products sold to her by Commonwealth Bank in 2008, makes interesting reading.
It reads that, after discussions with Jackie Milijash, "our advice may not be appropriate for your particular financial situation."
Despite those concerns, CBA still went ahead and sold her insurance that did not meet her needs, and the employee driving those sales pocketed a $4,000 commission.
What Jackie Milijash did need was income protection.
BFG's Suzanne Haddan said it is a case that raises alarm bells.
"I have to question whether the advice giver understood and knew their client, and were they operating in the best interest of their client," she commented.
In 2008, which was before the "best interest test" was introduced, financial planners were expected to know their client, know the products they sold, and have a reasonable basis for recommending them.
Those are things that appeared to be lacking with the advice given to Jackie Milijash.
"At best that's being incompetent, at worst it's being fraudulent and deceitful," said Ms Haddan.
Mr Mickels expressed similar sentiments.
"In my opinion, that financial adviser would be negligent and, if he was an employee of the bank, they would be vicariously liable for the conduct," he said.http://www.abc.net.au/news/2016-04-28/commonwealth-bank-customer-sold-wrong-insu...
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