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<\/p>\nASIC is taking legal action over allegations Budget Direct customers lost online discounts they were promised and were overcharged.<\/p>\n
The court action is against Auto and General, the underwriter for Budget Direct.<\/p>\n
The corporate regulator alleges tens of thousands of consumers lost more than $3 million between March 2020 and July 2024 because of the company’s misconduct.<\/p>\n
ASIC alleges approximately 39,000 customers lost their online discount after making amendments to their policy during the first year.<\/p>\n
It claims the average premium discount loss was about $100, which amounted to about $3.3 million in total.<\/p>\n
ASIC claims Auto and General engaged in misleading advertising because it was not clear to customers at the time of sign-up that discounts would be removed if they made changes to their policy, such as changing their address.<\/p>\n
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ASIC Deputy Chair Sarah Court said Budget Direct’s conduct was misleading.<\/p>\n
ASIC deputy chair Sarah Court said Budget Direct’s conduct was misleading.<\/p>\n
“In this case we allege Budget Direct removed discounts without notice if the customer made certain changes to their policy details, leaving tens of thousands of people out of pocket,” she said.<\/p>\n
“Australians should be able to take insurers at their word, especially when it comes to discounts that influence their decision to take up a policy and compare it to other products in the market.”<\/p>\n
Ms Court said it was “really disappointing” that ASIC continued to find companies failing “to deliver on pricing promises to customers”.<\/p>\n
Younger Australians pay more for home insurance<\/a><\/p>\n The ABC looked at how home insurance premiums compared for different age groups around the country \u2014 the results were surprising.<\/p>\n She said consumers needed to be able to rely on the representations made to them by their insurers and the industry was “on notice”.<\/p>\n “Given the string of cases we have seen \u2026 consumers are entitled to be a bit sceptical.”<\/p>\n She said the potential penalties could be significant.<\/p>\n “We’ve seen penalties in the tens of millions of dollars in relation to other insurers for similar conduct, so we’ll see where we get to in this matter.”<\/p>\n ASIC alleges Auto and General first became aware of the issue as early as 2016 but failed to inform affected customers for years.<\/p>\n ‘Customers fully compensated’<\/p>\n Auto and General has since paid more than $3.8 million in remediation, but ASIC will seek further civil penalties from the court.<\/p>\n A spokesperson for Auto and General said the company had self-reported the incident to ASIC and apologised to customers.<\/p>\n Do you have a story to share?\u00a0Email\u00a0Specialist.Team@abc.net.au<\/a><\/p>\n In a statement the company said affected customers had now been fully compensated.<\/p>\n “In the past two years, Auto and General has invested more than $70 million in improvements to its systems and processes for managing its risk and compliance obligations and to prevent such an issue recurring,” it said.<\/p>\n “In addition, since this issue commenced, there has been a significant program of transformation to improve our culture of accountability and compliance.”<\/p>\n Home insurance customers fighting skyrocketing premiums<\/a><\/p>\n Insurance customers who want to fight massive premium increases have few options for recourse, with the financial services watchdog refusing to take on some cases.<\/p>\n Budget Direct insures about three million Australians across the country and is overseas-owned.<\/p>\n Since 2021, ASIC has focused on misleading pricing practices impacting cost of living for Australians as a priority area.<\/p>\n Today’s federal court action against Auto and General is the latest in a number of cases made by ASIC against bad insurer conduct in recent years.<\/p>\n In August last year, the corporate regulator alleged insurance giant IAG misled home insurance customers<\/a> on pricing discounts.<\/p>\n