A loan protection policyholder will be refunded premiums paid after the financial services ombudsman found he was influenced by “pressure” from a selling agent.

The man bought the policy in April 2012 when taking out a loan. It added $2177 to his loan balance, and later that year he received $1386 after making a claim under the policy.

But he later said the policy was sold in an unfair manner by a Credicorp Insurance agent.

He told the Australian Financial Complaints Authority the agent presented the policy as a way of protecting his account, without explaining it was an optional purchase.

He said the discussion about the purchase was brief and did not allow him to properly consider the product.

Credicorp Insurance’s proposal letter noted the credit provider “strongly recommends protection on all loans”.

Related article: Injured traveller’s business class upgrade ‘not reasonable’

But the insurer said its letter also indicated the policy was optional and people “cannot be required to buy this insurance”.

It argued the cover was useful to the complainant because he made a claim on it, and this was inconsistent with his suggestion he was unaware of the policy.

The insurer also suggested the complaint fell outside AFCA’s time limit, and the complainant should have been aware of his loss more than six years ago.

The authority says there is insufficient evidence the insured was aware the policy was optional when bought, and it notes he paid “significantly more in premiums and interest than he received in his claim benefit”.

There are no records in the sales agent’s needs assessment that indicate a conversation about the policy’s optional nature occurred. Without this conversation, the buyer probably did not make an informed decision on the purchase.

AFCA’s ombudsman added: “The presence of the words ‘strongly recommend’ shows there was an environment where salespeople were encouraged to sell loan insurance to customers.

“In the circumstances, I am not satisfied the complainant was provided with a fair opportunity to consider his options and decide whether to accept or decline the policy.

“The information shows further that the financial firm exerted sales pressure in the form of a strong recommendation in written form.”

Credicorp Insurance must refund premiums paid, plus interest but minus the $1386 claim benefit.

See then ruling here.