Insurance and Financial Services Ombudsman Karen Stevens said about 11% of the complaints her office received last year related to non-disclosure.

She said there needed to be a law change on non-disclosure to help customers who accidentally left out information when they applied for insurance.

“We need legislation to bring us more in line with the law in Australia and the UK, preferably an Insurance Contracts Act. This would help prevent many consumers from finding themselves in the difficult situation of being uninsured, or potentially, uninsurable.”

She said advisers needed to remember they had a role in educating clients about their obligations. She said if they were filling out forms for their clients, they needed to remember that there was the possibility the client might complain about them in future. She said her office sometimes got complaints from clients who said they did not understand or were not told about what they were meant to disclose.

At FSCL, chief executive Susan Taylor said her office received one or two complaints a month from clients who said an adviser had not properly explained their duty of disclosure when they took out a policy.

“Or the client says that they told their adviser about a certain medical condition and the adviser has said not to bother writing that down on the insurance proposal form. These complaints infer that the adviser is acting in his/her own interests - to sell the product, rather than the client’s interests,” she said.

“Under the current review of the FAA, it is proposed that all advisers will be required to place the client’s interests first, and all advisers will be subject to a new code of professional conduct, that will endorse the 'client’s interests first' rule. I hope this will, in time, lead to a reduction in the complaints that we see.”