Share and Follow
Auto and General Services is facing allegations from ASIC for misleading advertising practices concerning discounts promised to Budget Direct customers. The company had promoted discounts of up to 30 percent for individuals purchasing home, car, or motorbike insurance online.
However, according to ASIC, over 39,000 customers did not receive these discounts as advertised. The issue arose when policyholders made adjustments, such as updating their address or altering payment frequency, within the first year of holding the policy, specifically between March 2020 and July 2024.
These changes reportedly led to customers losing approximately $100 each, resulting in a cumulative loss of about $3.3 million. Despite the removal of their discounts, it is claimed that the customers continued to pay the full insurance premiums.
ASIC argues that the advertising was misleading because it failed to inform customers that making any changes to their policies could result in the loss of their discounts.
The allegations further state that Auto and General Services was aware of this issue as early as 2016, yet did not take corrective action or inform customers for several years.
“Australians should be able to take insurers at their word, especially when it comes to discounts that influence their decision to take up a policy and compare it to other products in the market,” ASIC deputy chair Sarah Court said.
“We allege Budget Direct’s conduct was misleading and deprived tens of thousands of Australians millions of dollars in savings they were promised.”
Auto and General Services has paid over $3.8 million in remediation, including interest, to the 39,661 affected customers but ASIC will seek declarations and civil penalties from the court.
An Auto and General Services spokesperson said it self-reported the incident to ASIC, apologised to and financially compensated the customers.
“The matter only arose when the customers made an amendment to their policy during the first year – primarily either by replacing their insured car or changing their insured address,” the Auto and General Services spokesperson said.
“In the past two years, Auto and General has invested more than $70 million in improvements to its systems and processes for managing its risk and compliance obligations and to prevent such an issue reoccurring.
“In addition, since this issue commenced, there has been a significant program of transformation to improve our culture of accountability and compliance.
“Auto and General is committed to continuing to provide affordable, comprehensive and dependable insurance solutions to our loyal customers.”
NEVER MISS A STORY: Get your breaking news and exclusive stories first by following us across all platforms.