From level 1-20 I believe you unlock access to a new type of item.  In addition in the loot box when you level up with an inquisitor level you will get an item of the type you just unlocked.  The bug is if you are leveling up an alt, the new item will be of the level of your highest level character.  For example I have a rank 28 Crusader and decided to level up an Assassin.  Any time my Assassin gains an inquisitor rank she receives a level 28 item of the type she just unlocked which, of course, means she can't use it.