Optus will refund approximately $2.4 million to mobile insurance customers following Australian Securities and Investments Commission (ASIC) concerns over its compliance with Australian financial services laws.ASIC has advised that Optus Insurance Services will be refunding around 175,000 Optus mobile customers and will write to around 500,000 customers who may be affected.
ASIC stated that Optus had reported a breach about its failure to provide certain customers with a Product Disclosure Statement and a Financial Services Guide, occurring over a number of years and affecting customers who had purchased mobile phone insurance in store or by telephone.
Many customers as a result “may not have been aware of certain key features and limitations of the insurance that they purchased”, ASIC advised.
ASIC inquiries were followed by a further four breaches being reported by Optus, that had seen customers not receive one month free insurance under a promotional offer, incorrectly charged a premium for insurance during a “rain-check” period, not provided with the required information before purchasing an insurance policy over the telephone, and issued the wrong cover.
“ASIC was concerned that these breaches indicated that Optus had inadequate compliance systems and processes, such as training, monitoring and supervision of staff,” ASIC stated of the breaches.
Optus will take steps to contact past customers, while compensating current customers by a direct credit to the customer’s account, with compensation to include interest, with the telco also proposing to pay amounts owing to former customers who cannot be located to a charity assisting with financial literacy, ASIC advised.
An independent external firm has been appointed to conduct a comprehensive review of Optus’ compliance functions to ensure ongoing compliance with its Australian financial services licence obligations in response to ASIC’s concerns.
“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,” ASIC deputy chairman Peter Kell commented.
“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.”
Consumers who think they may be affected by these breaches should contact Optus on 1800 854 349, ASIC advised.