In 2021, Richard suffered a heart attack and had open‑heart surgery. He later contacted the insurer to make a claim, but was told his policy did not cover critical illnesses. He was surprised to learn he was not the policy owner and that the insurer had been sending correspondence to his bank.

Richard complained that his bank should not have remained the owner of his policy once he repaid the loan. He also said its failure to forward correspondence from the insurer meant he lost the opportunity to review and upgrade his cover to include critical illnesses. He sought a refund of the premiums he had paid, a payment equivalent to what he would have received had he been covered for his heart attack, and compensation of $100,000 for the lost opportunity to review his insurance cover. The bank refused his request, and he asked us to investigate.

Our investigation

We found the bank was wrong not to review its ownership of the policy in 2012. With the loan repaid, the bank had no reason to remain the policy owner and should have told Richard it could be transferred back to him. The bank also missed a later opportunity to review the ownership of the policy when it reviewed other insurance with him.

However, we considered the bank was not responsible for Richard’s lack of critical illness cover. He knew he had the policy and had been paying for it for many years. We found he could have contacted the insurer about his policy well before his 2021 heart attack. This would have given him the opportunity to review his cover.

We also found Richard did not suffer any loss by paying the premiums because their payment maintained his existing insurance cover. However, the bank’s continued ownership beyond 2012 caused Richard unnecessary stress and created difficulties when he wanted to complain about the insurer. During our investigation the bank offered $5,000 and agreed to transfer ownership back to him. We considered it was very fair and reasonable compensation for the bank’s wrongdoing and recommended he accept it.

Outcome

We partly upheld Richard’s complaint, but he did not accept the recommended compensation.