History of the complaint by Mr and Mrs Riseley
11 In 2015, Mr and Mrs Riseley made complaints about their superannuation accounts to the then trustee. Broadly speaking, the complaints were founded on their claim that they had paid $10,000 as an upfront payment into superannuation and that they had done so on the basis that they had been told that the funds would be sufficient to provide life and total and permanent disability (TPD) policies on an ongoing basis that there would be a surplus that would be available for their retirement. They said that there accounts had not been operated in the manner indicated to them at the time the accounts were established.
12 It is common ground that they were never provided with TPD policies and over a number of years the funds invested were used up paying for life insurance and other fees and charges.
13 It is also not in dispute, that the payment of the $10,000 occurred in January 2000 when Mr and Mrs Riseley made application to become members of the Connelly Temple Super Savings Plan. At that time, Mr and Mrs Riseley were on holiday. They wanted to make arrangements for insurance cover because they had found out that the cover that had been provided by their former employer was no longer in place. The arrangements were made with some urgency. They were made by an advisor who was known to them (Advisor). He was not a representative of Connelly Temple. He was licenced to provide advice as a representative of another entity (MLC).
14 The Advisor recommended that the insurance be arranged through superannuation accounts. Mr and Mrs Riseley each signed application forms that were completed by the Advisor. Mr Riseley contributed $6,000 and Mrs Riseley contributed $4,000. On the forms, in response to the question, 'Do you require death or death and TPD cover?', each applicant answered 'Yes' and specified a 'Death cover amount' of $250,000. There was a further question: 'I wish to have an amount of TPD cover equal to the amount of my death cover'. In both cases the box next to that further question was not ticked.
15 In response to the applications, Mr and Mrs Riseley were sent letters dated 24 March 2000, by Connelly Temple (Welcome Letters). They set out details about their proposed investments in the Connelly Temple Super Savings Plan. The letters began:
It is important that we administer your investment in accordance with your wishes, and to ensure that this occurs, we ask that you review the following information:
16 In the case of Mr Riseley, the information set out the details of an investment that had been accepted. As to the insurance details, the letter stated clearly as to Insurance Type, 'Death Only' and Sum Insured, '$250,000.00'.
17 In the case of Mrs Riseley, there was no information about insurance in the Welcome Letter. It stated:
Due to incomplete information, we have been unable to finalise your account at this stage. In order to finalise your account, please complete the attached document and return to us in the reply paid envelope provided.
18 Enclosed with the letter to Mrs Riseley was a form which included the following:
To enable us to correctly administer your investment, we require the following information:
• Upon reviewing your application form, we found that you have omitted to provide us with your salary details. This information is required to enable us to assess your request for Total and Permanent Disability. Please complete the details below.
What is your current salary?
• In order for the insurer to assess the requested insurance cover, they require details of your occupation, and occupation duties. This section was incomplete on your application form. Please complete the details below.
19 Both queries were responded to by Mrs Riseley completing and returning the form. It is formally admitted that the Welcome Letters formed part of the material that was before the Tribunal, but as will emerge the content of the letters was not adverted to nor relied upon in any way as part of the complaints raised by Mr and Mrs Riseley. It was only when pro bono counsel agreed to act on their behalf in the present proceedings after they had been commenced that some significance was sought to be given to the Welcome Letter sent to Mrs Riseley after her application was submitted to Connelly Temple. In particular, no contention was raised that the request for information that was made of Mrs Riseley about her current salary supported the claims made by Mr and Mrs Riseley that they had sought death and TPD insurance cover.
20 With effect from 27 January 2000, $250,000 in death cover for each of Mr and Mrs Riseley was arranged and paid for using the contributed funds and returns on investing the balance. Mr and Mrs Riseley received regular reports and information as to the balance of their superannuation accounts all of which showed that the insurance coverage was for death only.
21 It appears that after a number of years, further monthly contributions were also requested to be made and were made by Mr and Mrs Riseley to ensure that the accounts were put into sufficient funds to meet the cost of the insurance. It is not altogether clear when this commenced. I note that detailed information provided to Mr and Mrs Riseley by Suncorp on 27 October 2017 showed that there were no personal contributions to the accounts in FY2005, FY2006 and FY2007. However after the global financial crisis in 2007, personal contributions were made.
22 After a number of years, the making of the additional contributions became too burdensome and were not continued.
23 On 6 December 2016, the superannuation accounts of Mr and Mrs Riseley with Connelly Temple were closed and moved to 'a brand new Suncorp Super account'. The death cover insurance appears to have lapsed before the rollover to the new accounts.
24 On 11 February 2017, Mr and Mrs Riseley sent an email to customer service at the then trustee of the fund. It was in the following terms:
Following recommendation and prior to lodging a complaint with Ombudsmen [sic] we would voice again our displeasure at the performance and the treatment we have been subjected to.
In January 2000, after corporate servitude ended, we were advised to organize our own life insurance, as we were no longer covered by prior corporate employer arrangements. We were away from home, traveling at the time and in Darwin. We made a phone call to a family friend and insurance agent for the company at the time … He suggested after we conveyed what we required, was a 250k death & permanent disability policy.
[The Advisor], recommended we purchase these policies and it would be a once only payment of $10,000.00 and of course it would be self-funding and the companies investments from our $10,000.00 would see no further contributions required. This did not last too long and we were being invoiced monthly at a rate for myself higher, than the rate struck for my wife.
This we accepted while were working but we are now on a pension and increase in rates sees we cannot afford to keep payments up.
We contend we were somewhat mislead in what was offered and what has been delivered. As [the Advisor] and now his son are still in the industry, we intend to call on their input to support our claims here. We have never been offered any solid reasoning and feel we have been dealt harshly and if we were told we would at some time in the future pay more money, we would have taken a far closer look and called for competitive quotes, thoroughly addressing terms & conditions rather than taking advice on face value from a family friend (your companies representative).
25 On 24 June 2017, Mr Riseley sent a further letter of complaint by email and post. It said:
I refer to our last communication regarding this account and our request for following information since, without any substantive response.
On the 27th January 2000, my wife and I had left corporate life and needed a policy to give us the security, we felt was required at that time, $250,000 each. We purchased from your colleague/partner [Advisor's entity, Advisor]. It was purchased on basis we would pay $10,000.00 and that would cover our life insurance, with a view to also covering our funeral costs etc. and this $10,000.00 being invested would be self-generating income covering the ongoing insurance premiums.
Of course, it did not cover future premiums and my wife & I, had to start paying different premiums, to keep up the insurance. We have never received an acceptable reason as to;
1) What churned up our initial capital and it is this we have been chasing. An audit trail and commentary as to how our loss of capital occurred?
2) What practices took place to see this loss of capital?
3) Why was my wife and I paying different premiums?
At our age & time in life, this cover was important and since we stopped employment and could not afford to keep up the premiums, we have attempted to get from you the answers
We would ask the;
a) alternatives once again, we asked for when notifying you we could not meet the premiums after August/September 2015?
b) A complete audit trail of how our capitol [sic] was churned up
c) The signed copy of our policy at time of entering into this agreement
A simple written communication, this is a very complicated request and will take more time, will not cut it this time. We need immediate confirmation and a firm timeline we expect to be kept to, prior to initiating a formal complaint with the ombudsman.
The longer this goes on, the more concerned we are we have been treated poorly and need to address in another forum.
26 On 14 July 2017, a 'Customer Relations Specialist - Internal Dispute Resolution' at Suncorp responded to Mr Riseley. In the response, the Complaint and the Outcome were summarised as follows:
Your Complaint
You sought personal financial advice from [Advisor] of [Advisor entity] in January 2000 as you knew him personally.
[The Advisor] recommended you to purchase Asteron Connelley [sic] Temple Super Savings Plan and there would be a one off payment of $10,000.00.
[The Advisor] told you the investment would be self-funding and no further contributions would be required as the return from your investment would be sufficient. You were subsequently invoiced on monthly basis.
When you received the advice in January 2000 you were about to travel or were travelling and did not have any urgency [sic], and all of the arrangements being made over the phone.
You believe that you were misled by [the Advisor] when you received the advice.
You subsequently closed the fund around August 2015 as you could no longer afford the payments.
Outcome
Our investigation has revealed [the Advisor] was licenced under MLC as such any concern you have in relation to the advice provided by [the Advisor] should be referred to MLC.
MLC can be contact on: [email address supplied]
Asteron were the product provider however we are not in a position to review or assess personal financial advice provided to you by [the Advisor]. Please refer any further questions you may have regarding the advice to MLC.
Thank you for giving me the opportunity to address your concerns. If you have any questions about this letter or the decision, I can be contacted on [telephone number and email address supplied].
27 On 9 August 2017, Suncorp was notified that a dispute against Suncorp had been lodged in the name of Mr Riseley with the Financial Ombudsman Service. The notification set out the following as a summary of the dispute (which appears to be in the form of matters stated by Mr Riseley directed to Suncorp in reply to the response from the Customer Relations Specialist of 14 July 2017):
Your response is inaccurate in detail, consistent with all previous responses and does not address the issues. Though, I guess I should be pleased on this occasion I have had a response. This complaint is not leveled [sic] at [the Advisor] who sold us a policy, a policy your company was promoting, a policy at the time was supposedly fit for purpose, fit for our purpose. [The Advisor] did recommend your policy as fit for purpose and a one $10,000.00 payment would fund my wife and my life insurance, we have no reason to question [the Advisor] provided us with a product in good faith, fit for our purpose. When we received the advice, agreed to in this policy, we were in Darwin and given advise [sic] our corporate cover was expiring, situation was rather urgent and yes was done over the phone. We do not believe we were misled by [the Advisor], in fact the ducking and diving, we have faced from your company for past 2 years indicates policy; 1) was poorly structured 2) poorly managed 3) fee structure was not conveyed accurately to customers 4) obviously, customers have been misled by your company, expecting the $10,000.00 investment would take care of and maintain their future life assurance cover The fact, your company, despite numerous requests and attempts to get a signed copy of this policy signed off on by my wife and I, has been ignored/avoided, underpins our belief you are misleading my wife & myself. Why would this be so?
28 There were then some further communications. They included the following email from Mr Riseley to Suncorp:
These policies were signed by wife and myself while on holidays in Darwin, after we left corporate life, they were to be life & TPD policies, self-funding and a superannuation savings plan. All, we can see from the transactions, is our money being snaffled by your company in fees and commissions, to no benefit of my wife and myself? This is not what we agreed to, now in retirement, we cannot afford further payments and we have wasted all those funds we have put into them.
Can we have an explanation before we move on to other forums to express dissatisfaction with what has happened here?
29 And the following response from Suncorp:
Please find attached detailed transaction histories of you and your wife's Connelly Temple Super Savings Plan accounts.
Your premiums over the life of your insurance were based on premiums rates calculated using your age, gender and smoking status.
30 There was no resolution between the parties. On 12 September 2017, Mr Riseley was informed that he could pursue his dissatisfaction regarding his investment by contacting the Tribunal. However, for a time, he continued to press his complaints with Suncorp directly.
31 On 16 October 2017, Mr Riseley sent the following email to Suncorp:
At time we contacted [the Advisor], January 2015, we were in Darwin, in caravan traveling, after leaving corporate servitude of 25 years. We were taking a break when informed our Life & TPD corporate cover was ceasing end of month.
We needed cover immediately and as we knew [the Advisor] who lived locally and involved in same kids sporting community, we relied on his advice. Forms signed you have.
Only advise we received from [the Advisor], was his recommendation, we go for a Life, TPD and super fund whereby if we deposited $10,000.00, this particular fund would then be self-funding, company would invest our $10,000.00 and returns annually would cover policy and contribute to our own superannuation part of the policy.
Did we deal with [the Advisor]? Not in any capacity would we deal with [the Advisor] again;
1. After finding out after a few years our $10,000.00 was lost and we had to pay monthly premiums on top of that;
2. We found out [the Advisor] was receiving ongoing commission on this policy,
3. Add insult to injury, since August 2015, it has taken 2 years to get any information and eventually spreadsheets / audit trail,
4. We now find that while we knew [Advisor's entity (Advisor)], were still enjoying commission on this dud policy,
5. They and whoever have just been blundering our $10,000.00 & contributions since, we intend holding to account.
It has become clear & self-explanatory why no one interested in discussing with us and avoiding our inquiries!
We are only now interested in how we glean some compensation for the gross misleading, deceptive behaviours, by whoever in dealing with our $10,000.00 or seek our own independent advise, to allow us to assess our legal options moving forward.
32 It can be seen that notwithstanding the earlier statement that the complaint was not about the Advisor's conduct, by this point it is very much the Advisor's conduct that was being called into question by Mr and Mrs Riseley.
33 Later in October 2017, Mr Riseley was provided with detailed responses by Suncorp. They included the following explanation:
Progressively, each plan had:
• deductions in the form of administration fees and insurance premiums;
• additions in the form of personal contributions you and your wife made to your respective plans; and,
• and, combination of additions and deductions pending whether the investments had positive or negative return.
34 Also, as to the way the initial funds were applied, Suncorp explained:
Effectively, the initial contributions of $6,000 and $4,000 with the largely positive investment returns and personal contributions were not sufficient to maintain the plans because of the ongoing administration fees and insurance premiums. To aid in understanding this, the following is a table I have put together from the annual statements which I have been able to readily attain:
35 The table then set out detailed information as to how the funds had been applied. At no time was the accuracy of this information questioned by Mr and Mrs Riseley. Their complaint was expressed in more general terms and was to the effect that the money they had provided at the outset had been used up and this was contrary to what they had been told when the accounts were set up.
36 Mr and Mrs Riseley were also provided with copies of the relevant part of their original applications which showed that they had not ticked the box for the TPD cover and were provided with the following further response by Suncorp:
I recognise that based on your statements throughout your complaints that you had intended to and believed that you had purchased both Death and TPD cover. I acknowledge that in your need to have coverage promptly established that you did so when you were travelling, that you and Colleen may have inadvertently not ticked the option for TPD cover. This is another aspect that the MLC advisor acting under the National Australia Bank licence could have identified and made sure was corrected for you prior to submission of the application forms to Asteron. Again, I underscore that your dissatisfaction with the actions of [the Advisor] is able to be directed to his firm and the financial institution that he was licenced with.
Separate to the apparent oversight of you and Colleen not ticking the box to purchase TPD cover, in each of the annual statements which you were issued during your membership of the plan, which you have not denied receiving, the type of insurance cover you have is clearly outlined as Death cover only. I have attached the 2015 statement which demonstrates such in full …
37 After that, Suncorp provided a very detailed notice of response to the Ombudsman as to the complaint. It maintained the distinction between the advice provided by the Advisor for which Suncorp disclaimed responsibility (on the one hand) and the responsibility to administer the accounts in accordance with instructions and terms of the fund (on the other hand). As to the latter, the position of Suncorp (supported by detailed information) was that there had been regular annual reporting to Mr and Mrs Riseley and financial information was provided as to how the funds had been applied and the premiums for the death cover insurance charged. In effect, it was Suncorp's position that the accounts had been administered in accordance with their instructions and fees and charges had been charged that were permitted under the terms of the trust instrument and were reasonable and had been fully disclosed at all times.
38 Copies of annual statements as to their superannuation accounts that had been sent to Mr and Mrs Riseley from 2005 (being the earliest available records of such statements held by Suncorp) were provided to them. They detailed the opening balance, every charge that had been made in each year, the way in which funds had been invested, the return (positive or negative) on those investments and the balance of funds at year end. Each statement also clearly stated that the insurance cover that was in place as part of the superannuation account was for death cover.
39 Some of the communications by Mr Riseley with Suncorp refer to the difficulties that he came to face in November 2014 when his lower left leg was amputated and the fact that he was being cared for by Mrs Riseley after having finished work on 31 July 2015 without any benefit from the monies that had been contributed to the superannuation accounts. On 18 August 2017, he put his complaint in the following terms:
I am particularly interested in, how the premiums were calculated and an audited statement of transactions which include payments made on My Account and my wife's Account, we had to surrender, as we could no longer afford the policies and were ignored in conveying same.
I am quite frankly, investigating how we can get these policies reinstated at a reasonable rate, how we can afford these policies, to ensure we have the funeral costs and retain the benefits, we visualized when we first purchased these policies.
40 Then, on 27 October 2017 he sent an email to Suncorp in the following terms:
My wife and I ceased work 31st July 2015 and at that point our company was unable to afford payments and thus when we started to look for some relief.
On the 26th of November 2014 I had my lower left leg amputated and worked right up to July 31st 2015, when my medical situation deteriorated, it meant I could no longer work. I applied to centrelink for a TPD pension & my wife (my carer) was put on a carer pension as I need 24/7 care. As such I still want to know what I am entitled to based on the fact I was covered by this policy which we had been paying for from January 2000?. Poor advise is only one aspect of my dissatisfaction with this policy!