In Australian Securities and Investments Commission v MLC Limited [2023] FCA 539 the Federal Court of Australia declared that MLC’s representations to 119 income protection insurance policy customers that they were not eligible for rehabilitation benefits constituted:
(i) a false or misleading representation, that services were of a particular standard, had benefits, or contained conditions or rights, in connection with the supply or possible supply of financial services, in contravention of ss 12DB(1)(a), (e) and (i) of the ASIC Act; and
(ii) misleading or deceptive conduct, or conduct that was likely to mislead or deceive, in relation to financial services, in contravention of s 12DA(1) of the ASIC Act and s 1041H of the Corporations Act.
Justice Moshinsky concluded that by reason of MLC engaging in the misleading conduct and MLC not having appropriate processes and procedures to ensure that it would pay the benefits to the 119 Customers in the period 18 November 2015 to 31 October 2018, MLC thereby failed to do all things necessary to ensure that the financial services covered by its AFSL were provided efficiently, honestly and fairly, and thereby contravened s 912A(1)(a) of the Corporations Act.
MLC was ordered to pay a $10 million penalty. In addition, MLC provided remediation to impacted customers.
Justice Moshinsky also ordered MLC to publish an adverse publicity notice on its website.
The three categories of conduct were:
(a) the non-provision of a rehabilitation bonus benefit on top of monthly income protection benefits (which MLCL was providing) to 119 customers;
(b) MLCL’s lack of adequate processes for reviewing and, if appropriate, updating medical definitions for critical illness, including, in particular, severe rheumatoid arthritis; and
(c) MLCL’s failure to adequately train staff as regards the removal of a mail suppression ‘flag’ and appropriately monitor staff use of the flag, resulting in some customers not receiving communications from MLCL regarding their policies.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
