ASIC concerns prompt $2.4 million refund

ASIC concerns prompt $2.4 million refund | Insurance Business

ASIC concerns prompt $2.4 million refund
ASIC’s concerns about its compliance with Australian financial services laws has prompted a mobile phone insurance provider to refund about $2.4 million (including interest) to some 175,000 customers and write to around 500,000 others who may be affected.

The concerns were raised after Optus Insurance Services Pty Ltd (Optus) reported a breach about its failure to provide certain customers with a Product Disclosure Statement and Financial Services Guide.

This breach − which ensued for years − resulted to many customers, who bought mobile phone insurance in store or by telephone, to remain uninformed about certain key features and limitations of the insurance they bought.

Following ASIC’s inquiries, Optus has also reported four other breaches where customers:
  • did not receive a one month free insurance under a promotional offer they were entitled to;
  • were wrongly charged a premium for insurance during a ‘rain-check’ period;
  • were not provided with the required information before buying an insurance policy over the telephone; and
  • were issued the wrong cover. Some customers received ‘Device Insurance’ cover instead of the more favourable and less expensive ‘Yes Cover.’
ASIC expressed concern that these breaches may be a reflection of the insurer’s inadequate compliance systems and processes, such as training, monitoring, and supervision of staff. In response to this concern, Optus has appointed an independent external firm to implement a comprehensive review of its compliance functions.

Optus plan to write to all customers who may have been affected by the breaches. It will contact past customers who were overcharged as well as compensate current customers, including interest, by a direct credit to the customer’s account. Optus also proposes to donate the amounts owed to customers who cannot be located to a charity assisting with financial literacy.

ASIC Deputy Chairman Peter Kell welcomed the measures taken by Optus to compensate affected consumers:

“It is important that when a business is licensed by ASIC to sell financial products to retail consumers, it ensures that it does so consistently with the representations it has made to consumers, and in compliance with the financial services laws. Where consumers have suffered a detriment, it is important that remediation is undertaken, and that steps are taken to ensure that the business is operating in compliance with the relevant legal obligations.”

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