Last updated 13 July 2016
Background
On 12 July 2016 ASIC issued a media release advising that in response to ASIC concerns Optus Insurance Services Pty Ltd (Optus) will refund approximately $2.4 million (including interest) to around 175,000 Optus mobile phone insurance customers and will write to approximately 500,000 customers who may have been affected by any one of a number of communication glitches.
Optus notified ASIC that it had failed, over a number of years, to provide certain customers who purchased mobile phone insurance in store or by telephone with a Product Disclosure Statement and a Financial Services Guide.
As a result, ASIC expressed concerns about:
- whether Optus’ has adequate compliance systems and processes in place to ensure compliance with Australian financial services laws – such as training, monitoring and supervision of staff;
- customers not being aware of certain key features and limitations of the cover they purchased,
and made futher enquires to Optus in relation to its compliance regime.
As a result Optus reported an additional four breaches noting that some customers:
- did not receive one months free insurance that they were entitled to under a promotional offer;
- were incorrectly charged a premium for insurance during a ‘rain-check’ period;
- were not provided with the required information over the phone before purchasing an insurance policy (e.g. information about excesses and cooling-off rights); or
- were issued the wrong cover receiving ‘Device Insurance’ cover instead of the more favourable and less expensive ‘Yes Cover’.
Oh No! – Remedial Action
Sometimes you just can’t say “No” to ASIC.
Instead, Optus has said “Yes” to the following remedial actions:
- write to all customers that may be affected;
- where overcharging has occurred, take steps to contact past customers and compensate current customers (including interest) by a direct credit to the customer’s account;
- pay amounts owing to past customers who cannot be located to a charity assisting with financial literacy; and
- appoint an independent external firm to conduct a comprehensive review of its compliance functions to ensure ongoing compliance with its Australian financial services licence obligations.
Make sure you pass the “Yes” check.
ASIC’s concerns in relation to Optus are a timely reminder to ensure that Australian financial service licensees have processes and procedures in place to ensure they can say “Yes” to each of the following:
- ensure a PDS and/or FSG is given to retail customers when they are required to be given;
- that telephone sales and call centre scripting include all applicable disclosure requirements;
- that the right product is issued to customers and the correct premium is charged; and
- that customers receive their entitlements to bonuses, discounts or free insurance periods that are offered to them.
Please let us know if we can assist in reviewing any of your compliance arrangements to make sure you get the “Yes” tick for your business.
IMPORTANT NOTICE
This document is designed to provide helpful general guidance on some key issues relevant to this topic. It should not be relied on as legal advice. It does not cover everything that may be relevant to you and does not take into account your particular circumstances. It is only current as at the date of release. You must ensure that you seek appropriate professional advice in relation to this topic as well as to the currency, accuracy and relevance of this material for you.
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