Where to turn to during a financial dispute with your insurance agent

Introduction

At Consultwho.sg, we received two questions about what to do in the case of a financial dispute. One user shared with us how she purchased an Investment-Linked Policy (ILP) that her insurance agent marketed as a savings plan. The ILP did not suit her needs, and she only purchased it due to her insurance agent’s ‘omission of details’. She asked us what avenues can she pursue to resolve her dispute.

Another user writes that she was informed by her insurance agent that the policy she bought could be halted at any point but neglected to inform her that doing so would result in large penalties. Our user had the impression that she could withdraw her policy at any time without penalty. Like our first user, she would like to find out what action can she take to resolve her dispute.

In this article, we share with you what are the avenues you can turn to, in case of a financial dispute. One option is the Financial Disputes Resolution Centre (FIDReC), which handled more than 8000 cases between 2005 to 2015. Other options include the Singapore Mediation Centre (SMC), the Small Claims Tribunal (SCT), and the Consumer Association of Singapore (CASE). You may also wish to engage a lawyer to represent your case in court as a last resort. Martin Lee and Seng Bingyang, financial consultants listed on Consultwho.sg, also offer some advice.

Martin Lee, a Chartered Financial Consultant®, says: most insurance plans in Singapore enjoy a free-look period, during which you may exercise your right to cancel the plan. For life insurance products, this is typically 14 days. The free-look period starts from the date you receive your policy documents. To cancel your plan, write to the insurance company and state clearly that you wish to cancel your plan.

When the insurance company receives your letter of termination, they will cancel your policy and refund your paid premiums, deducting any expenses they incurred. Do note that if you purchased an Investment-Linked Policy (ILP), the insurance company will sell off all units previously bought, possibly resulting in an investment loss for you.

You can also consider getting some publicity for your case. If you have a Facebook account, write a post about your situation and have your friends and social media outlets share the post. Alternatively, write to a letter to the Straits Times Forum section.

Seng Bingyang, another Chartered Financial Consultant®, says: if the free-look period of 14 days is over, your next course of action is to approach the financial institution where you purchased your financial product. . Contact details of all financial institutions licensed to operate in Singapore can be found at the MAS Financial Institution Directory webpage.

When approaching the financial institution, clearly state your problem and write down the name of the person you spoke to. Also write down the date and details of the conversation. After the initial complaint, the financial institution would likely despatch someone from their compliance team to take your statements and to conduct a thorough internal investigation. Always ensure that you go through the recorded statements thoroughly before approving the paperwork, and request for a copy of the statements for your own reference. If you are not satisfied with the outcome of the investigation , your next course of action is to contact the Financial Disputes Resolution Centre (FIDReC).

Financial Disputes Resolution Centre (FIDReC)

FIDReC is an independent institution that specialises in resolving disputes between financial institutions and consumers. Do note that to engage the services of FIDReC, you must have first tried to speak with the financial institution but failed to come to a satisfactory conclusion with them. To file a complaint with FIDReC, click here.

When your complaint is received by FIDReC, a case manager will be assigned to you. The case manager will attempt to mediate the dispute between you and the financial institution. Up to this point, there are no charges.

If the dispute is not able to be settled by mediation, the case will be referred to adjudication. Adjudication is a process whereby an adjudicator , or a panel of adjudicators come to a decision based on the facts and merits of each case. At this point, a fee of $250 will be charged.

If FIDReC adjudicators rule in your favour, the maximum sum you may be awarded from an insurance company is $100 000. For disputes concerning banks, capital markets, and all other disputes, the maximum amount is $50 000. This decision will binding on the financial institution involved.

Note that FIDReC requires you to sign a declaration not to reveal anything regarding your case’s proceedings or outcome. Therefore, as tempting as it is to air your grievances, you need to bite your tongue and allow FIDReC to conduct their investigation. However, this does not prevent you from pursuing further dispute resolution action, should you be unsatisfied with FIDReC’s final decision as their decision is NOT binding on you

Other Avenues Of Dispute Resolution

• Singapore Mediation Centre (SMC) - The Singapore Mediation Centre employs professional mediators to find a practical and acceptable resolution for all parties involved in the dispute. However, note that the insurance company has to agree to mediate at the SMC. The SMC has no legal power to subject the insurance company to a mediation agreement.
  

• Consumers Association of Singapore (CASE) - CASE aims to champion consumers’ interests and promote fair trading. Like the SMC, CASE offers mediation through accredited mediators. However, its mediation process is also purely invitational, and CASE has no power to compel any party to submit to mediation.

• Small Claims Tribunal - If your claim does not exceed $10 000, you may apply to have your case heard at the Small Claims Tribunal. Your claim needs to be filed within one year of the occurrence of the complaint. With the insurance company’s consent, the claim limit can be raised from $10 000 to $20 000.

• Hiring a lawyer - If your claim is large, or you have exhausted other avenues of dispute resolution, you can consider engaging a lawyer to represent your case in court. This can be an expensive affair, as lawyer fees can run well into the 6 digit range. There is no guarantee the court will rule in your favour, and even if you win, your legal expenses might exceed your awarded claim.

Consultwho.sg is a platform that aims to help users with their personal finance issues – ask a question anonymously, or connect with our financial consultants.

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