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Category: Telecommunications / Fraud and Corporate Crime / Consumer Protection

Optus to refund $2.4m to customers for problem phone insurance

Tuesday, 12 Jul 2016 14:34:57 | Justine Parker

ASIC said Optus is likely to have to refund around 175,000 customers. (ABC News: Nic MacBean, file photo)

Optus has agreed to refund a total of more than $2 million to thousands of mobile phone customers after overcharging them for insurance.

Key points:

  • Refunds likely to total $2.4m
  • Optus to write to around 500,000 customers and refund about 175,000
  • ASIC says it did not seek penalties so as to avoid court and get a faster refund

The Australian Securities and Investments Commission (ASIC) said that Optus failed to provide key documents to customers buying mobile phone insurance, as required under the terms of its financial services licence.

It said the telco later reported other breaches, including incorrectly charging customers and issuing the wrong cover.

ASIC said the breaches indicated Optus had "inadequate compliance systems and processes, such as training, monitoring and supervision of staff."

ASIC deputy chairman Peter Kell said it is vital that customers are compensated.

"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," Mr Kell said.

"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."

'Priority was to get money back to customers'

ASIC first became concerned about Optus' compliance when the telco reported that it had failed to give its insurance customers a Product Disclosure Statement and a Financial Services Guide, which it must do under the terms of its licence to provide financial services.

Further breaches were then found, including: not applying promotional discounts; incorrect charges; providing incorrect and more expensive cover; and failing to pass on information about excesses and cooling-off rights.

Optus will be writing to around 500,000 customers who may be affected by the breaches.

It will refund around $2.4 million, including interest, to about 175,000 customers.

Despite the seemingly systemic nature of the issues, Mr Kell said ASIC decided not to seek penalties by pursuing the matter in court.

"In this instance we were focussing on getting the money back into the customers' pockets," he responded.

"We decided to do that as quickly as possible rather than go through a court case, which may last for a longer period, so our priority was to get the money back to customers in this case."

The telco will also face an independent review to ensure it continues to meet the obligations of its financial services licence.

AustraliaPlus


 

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