A professional indemnity insurance provider has been accused of instructing the former directors of AFS Group from providing information to a dispute resolution scheme.
A lawyer representing a former client of an AFS adviser received a letter from the Credit Ombudsman Service Limited (COSL), an ADR scheme, yesterday explaining a claim filed against AFS had been thrown out due to a lack of co-operation with the relevant PI insurer.
“We are unable to deal with your complaint further and have now closed our file,” said the letter obtained by ifa and signed by COSL case co-ordinator Mairead Murphy.
The letter explained that AFS Group does not have to resources to pay claims of unsecured creditors and that therefore co-operation from AFS’s insurance provider is necessary to proceed with the claim.
However, “the insurer has declined to provide any further information and instructed AFS not to disclose any further information”.
The lawyer, speaking to ifa on condition of anonymity, said the former directors of AFS are not to blame for the obstruction of the claim, pointing the finger squarely at the insurance provider – whose identity has been supressed in all documentation available to the lawyer or seen by ifa.
“The insurers have had a win here; it is pretty murky waters,” the lawyer said. “They are fighting on every stage to try and stop people pursuing their claims.”
The lawyer said he filed the claim prior to AFS entering administration in April, meaning the insurer should be held to account as AFS’s PI cover was still valid.
“There is a deficiency in the system and that’s that claims that are made when an insurance policy is current should be dealt with and now the insurers have found a way to frustrate the process by refusing to hand over information,” he said.
The lawyer said similar tactics have been utilised by the same insurer in two separate disputes involving claims against AFS in the Supreme Court of Western Australia.
Do you know more about this? [email protected]
Stimulate new ideas. Stimulate new thinking. Top up your CPD points and hear from industry experts with ifa’s Knowledge Centre. Keep up to date with the latest trends and reforms, all while adding to your CPD hours. Explore the Knowledge Centre now.
IOOF has completed the first phase migration of its legacy platforms and products on new proprietary super and investments platform, Evolve. ...
The Administrative Appeals Tribunal has rejected an adviser’s appeal for review of an ASIC banning order after he failed to show in court. ...
ROAR Software and Fin365 have partnered up for a new integrated solution. ...