ASIC has announced that in response to ASIC’s concerns about compliance by Optus Insurance Services Pty Ltd (Optus) with Australian financial services laws, Optus will refund approximately $2.4 million (including interest) to around 175,000 Optus mobile phone insurance customers and will write to around 500,000 customers who may be affected.
Optus reported a breach to ASIC about its failure to provide certain customers with a Product Disclosure Statement and a Financial Services Guide. This breach affected customers who purchased mobile phone insurance in store or by telephone, and occurred over a number of years. As a result, many customers may not have been aware of certain key features and limitations of the insurance that they purchased.
in response to ASIC’s queries Optus subsequently reported four further breaches where customers:
- did not receive one month free insurance under a promotional offer they were entitled to;
- were incorrectly charged a premium for insurance during a ‘rain-check’ period;
- were not provided with the required information before purchasing an insurance policy over the telephone (e.g. information about excesses and cooling-off rights); and
- were issued the wrong cover. Some customers received ‘Device Insurance’ cover instead of the more favourable and less expensive ‘Yes Cover’.
ASIC was concerned that these breaches indicated that Optus had inadequate compliance systems and processes, such as training, monitoring and supervision of staff.
In addition to compensating current customers by a direct credit to the customer’s account Optus is also proposing to pay amounts owing to former customers who cannot be located to a charity assisting with financial literacy.
Optus has appointed an independent external firm to conduct a comprehensive review of its compliance functions to ensure ongoing compliance with its Australian financial services licence obligations.
