Optus to compensate customers after ASIC rule breach

Optus subsidiary Optus Insurance Services will refund around $2.4 million to some 175,000 customers after disclosing it had breached ASIC regulations with its mobile phone insurance offerings.

Optus disclosed to ASIC that it had inadvertently failed to provide some customers with a product disclosure statement and a financial services guide, as required of businesses licensed by ASIC to sell financial products to retail customers.

This led to many customers potentially not being aware of key features and limitations of their policies.

After ASIC sent inquiries as to the breach, Optus reported a further four breaches involving incidents where customers were overcharged or misled.

These involved a failure to provide the one month free insurance promised under a promotional offer; incorrectly charging premiums for insurance during a ‘raincheck’ period; not providing the required information before customers purchased a policy over the phone; and issuing some customers with the wrong cover.

As well as paying compensation, Optus has also agreed to write to around 500,000 customers who may have been affected by the oversights and to appoint an independent company to conduct a comprehensive review of its compliance functions.

ASIC deputy chairman Peter Kell welcomed the steps that Optus is taking to compensate affected customers.

“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,” he said.

“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.”

Image courtesy of James Cridland under CC