The court found that product disclosure statements (PDS) provided by the insurer potentially misled customers taking out motor, home, caravan and trailer, and unique vehicle insurance.
They led to over 458,000 customers missing out on discounts worth a combined amount of around $86,476,339 that they should have been entitled to.
On at least five million occasions between March 2017 and March 2022, customers were provided with PDSs containing misleading descriptions of how discounts were to be applied to the cost of optional benefits covers.
Today, the Federal Court fined the insurer $10 million, plus costs, for going against the ASIC Act.
The corporate watchdog brought about the case in February this year after RACQ self-reported the issue following a review of its pricing promises.
RACQ apologised to customers today.
It said it has already refunded $54 million to affected customers, with the remainder of refunds to be handed back to eligible members in coming months.
“Consumers need to be able to rely on the pricing promises made to them by insurers, and insurers need to make sure that they pass on those promises in full,” ASIC deputy chair Sarah Court said.
“We are pleased it has reached a conclusion within a year, with a significant penalty handed down and a clear message to the insurance industry that failures in pricing practices will not be tolerated.”
RACQ was one of 50 brands called out by ASIC deputy chair Karen Chester earlier this year after the watchdog recognised a “systemic failure by insurers to deliver on their pricing promises”.
ASIC found 5.6 million customers of the numerous brands had been overcharged a combined $815 million.
Image by Ethan Hooson on Unsplash.
