Insurer RACQ will pay a $10 million fine for potentially misleading customers about pricing discounts on certain types of insurance cover.
The Federal Court found RACQ sent out misleading product disclosure statements on at least five million occasions between March 2017 and March 2022.
Roughly 458,746 customers missed out on an estimated $86,476,339 in discounts they should have received, the court said.
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The insurer has nearly 1.8 million members and offers insurance on households and multiple types of vehicles.
The product disclosure statements for RACQ’s motor, home, caravan & trailer and unique vehicle insurance policies were found to include statements detailing certain discounts applying to customers’ premiums.
The Federal Court ruled these statements were potentially misleading as the discounts only applied to base insurance premiums, not to additional premiums paid for specific optional extras.
The Australian Securities and Investments Commission (ASIC) launched action against RACQ in February 2023.
ASIC deputy chair Sarah Court said customers need to rely on pricing promises set out by insurers and insurers must ensure these promises are passed on in full.
“ASIC identified pricing promises in insurance as an enforcement priority this year, and will continue to monitor marketing and pricing practices in the industry, and use the full range of regulatory tools available to protect consumers from general insurers failing to honour promised discounts,” Court said.
Both parties submitted the penalty sought by ASIC was appropriate and RACQ was ordered to pay ASIC’s costs of the proceedings.
In a statement on Thursday, RACQ said it “had no intention to mislead”.
More than $54 million has been refunded to customers, with the company expecting the refund process to be completed by the end of February next year.
“RACQ has apologised for these matters as they are not in keeping with the club’s high standards and values,” the insurer said.
“RACQ is simplifying its insurance products and the discounts that it offers members and improving its systems and processes to reduce complexity to ensure this never happens again.”
– With Warren Barnsley
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