An advice company that did not disclose a client’s medical history when arranging insurance must compensate the woman after her claim was denied.

Nextgen Financial Group – which went into liquidation in 2023 – failed in its best interests duty and must refund more than $3000 in fees and pay $5400 compensation for non-financial loss, the Australian Financial Complaints Authority says.

The client also sought payment of the total and permanent disability benefit she missed out on, but the ombudsman has rejected this, saying she has not established she was entitled to the payout.

The childcare worker and her husband approached a Nextgen adviser in 2021 when it was recommended they take out life cover to help a home loan application.

The woman held $75,000 standard death and TPD cover with BT MySuper, but on the adviser’s recommendation she switched to a Colonial First State superannuation product with life, TPD and income protection cover.

There is no evidence a statement of advice was prepared or given to her, the ombudsman says.

The woman made a TPD claim in 2022, which the insurer declined due to non-disclosure.

She said she had flagged her epilepsy but the adviser who completed her insurance applications answered “no” to all medical disclosures.

The policies were not appropriate for the woman and exposed her to unnecessary risk, AFCA finds.

In rejecting her bid for a payment to cover the lost benefit, the ombudsman says it is unlikely the insurer would have accepted her application if disclosure was made, and it is not satisfied she would be eligible for a benefit under the cancelled BT MySuper product.

The woman said she suffered loss because she could not take out new TPD and life cover in super, but the ombudsman says she has not proved this, because MySuper products often provide default cover without medical underwriting.

Read the ruling here.