Our stand-out story of the week highlights the importance of keeping accurate notes of client calls and interactions. In this case, an adviser successfully defend a claim for $100,000 due to their record-keeping…

Keeping detailed records helped an adviser avoid paying $100,000 to a client who complained about his wife’s life cover.

‘Farooq’ told dispute resolution service, Financial Services Complaints, he held a $250,000 life policy on his wife. However, in a bid to lower premiums he took advice and asked to reduce cover to $150,000. But his adviser made a miscalculation with regard to the new premium amount.

The original monthly premium was $830; the adviser said the new monthly premium would be $497, but when the first invoice arrived it was for $567.

After the benefit was reduced to $150,000, Farooq’s wife was diagnosed with a terminal illness, and given a matter of months to live.

However, Farooq told Financial Services Complaints that before his wife received her diagnosis, he called his adviser – after he received his first premium invoice – and asked to reinstate cover back to $250,000 because the saving was not what he expected. Farooq wanted the adviser to pay him $100,000.

Although the adviser acknowledged his premium estimate was inaccurate, he did not think he caused Farooq a $100,000 loss. The adviser said the only loss was the difference between the premium Farooq had been advised, and what he had to pay.

…The adviser had provided us with a copy of his diary, which contained handwritten notes for every call…

Financial Services Complaints agreed with the adviser’s calculation of Farooq’s loss.

“We accepted that if the adviser had delayed reinstating Farooq’s cover for a month, there was a strong argument that the delay caused Farooq to suffer a $100,000 loss, because his wife had been diagnosed with her terminal illness within that month,” states Financial Services Complaints in its published decision.

“However, we did not find any evidence of the delay; Farooq could not establish he had called the adviser or asked to have his cover reinstated before his wife received her diagnosis.

“The adviser had provided us with a copy of his diary, which contained handwritten notes for every call he had received from his clients.

“In the absence of any other evidence, we considered the diary was strong evidence that Farooq did not ask to have his cover reinstated until after his wife received her diagnosis.”

Financial Services Complaints said the adviser should pay Farooq $4,200 as compensation for the difference between the premium he was promised and what he was charged (based on a five-year term).

It also recommended the adviser pay Farooq $1,000 compensation for stress and inconvenience as a result of the incorrect premium estimate.