On 2 April 2021, Sam visited Bank A to renew a Fixed Deposit and inquire about a Unit Trust investment account. Lily, the sales staff member, recommended Plan ABC, describing it as a comprehensive investment involving an annual investment of RM10,000 for five years accompanied by complimentary insurance coverage from Insurance X.

Trusting Lily’s recommendation, Sam proceeded to sign up for the plan.

On 9 June and 12 November 2021, Sam approached Lily to clarify the investment value. However, on 3 April 2022, an agent of Insurance X informed Sam that the product purchased did not align with his expectations and Lily’s explanations were inaccurate. Claiming misrepresentation, Sam asserted that Lily had misled him regarding the nature of the product, its identity as an insurance plan, its features, and the Insurance X health programme.

Sam requested a full refund of the premium paid, which was denied by Bank A.

OUR FINDINGS

The ABC policy is an insurance plan with investment-linked features. It provides a blend of investment/ savings and life insurance protection with a 5-year premium payment duration and benefits extending to age 70. Sam made a one-year premium payment of RM10,000.

The bank maintains that the sales process was conducted appropriately. The bank furnished essential documents, including the Customer Fact Find Form, Bancassurance Product Sales Presentation Checklist, Sales Illustration, Product Disclosure Sheet, Application Authorisation Form, Banca Life Insurance Application Form, and Insurance X Membership Application Form. The documents outline key details such as the plan name, basic coverage amount, premium allocation, and benefits.

The Sales Illustration highlights the investment-linked aspect of the plan and forecasts hypothetical returns.

Sam duly signed the relevant documents, and the policy document was subsequently delivered, to which Sam acknowledged receipt of the policy. A welcome call from Insurance X explained the policy terms and the 15-day cooling-off period.

Following the sale, Sam received correspondence regarding policy fund activity, approval for an auto-debit facility, and a premium holiday notice.

OUTCOME

The Case Manager made a recommendation in favour of Bank A for the following reasons:

• Sam bears the burden of proving misrepresentation by the bank’s sales staff. However, there is no evidence presented by Sam to substantiate the claim that the sales staff misrepresented product features, specifically regarding the nature of the insurance policy or the alleged inducement to purchase during the sales process.

• We noted that the bank’s documents clearly outlined the nature of the product, the 15-day free-look period, and the consequences of prematurely cancelling the policy.

Sam rejected the recommendation and referred the matter for Adjudication. The Ombudsman decided in favour of the bank for the following reasons:

• There is insufficient evidence to support the claim that the bank’s sales staff misrepresented Sam during sales. The burden of proof lies with the insured, and the case manager thoroughly explained why there is no evidence of misrepresentation. 

• Sam’s assertion that the sales staff misled him contradicts the presented documentary evidence. These are disputed facts, and a court of law would be a better forum to resolve the issues since the Ombudsman for Financial Services cannot call and cross-examine witnesses as in a court of law.

• The bank or the insurance company would not be able to cancel the policy and refund the total premium paid since the 15-day free-look period had expired, continuous insurance coverage had been provided since the commencement of the policy, and they would have been liable to pay the claim in the event of any unforeseen incidents during the period.