Optus has been ordered to refund $2.4 million to around 175,000 customers who had been sold mobile phone insurance with the telco.
The Australian Securities and Investments Commission announced today it had found Optus had overcharged its device insurance customers and failed to provide them with the necessary paperwork.
The corporate regulator said in a statement that the telco would be writing to the a further 500,000 customers who may be affected.
Optus self-reported its failure to provide certain customers buying insurance for their smartphones with a product disclosure statement and financial services guide. The failing had taken place over a number of years, affecting customers buying in-store or over the phone.
When ASIC made further inquiries, Optus admitted another four breaches. Some customers, the telco admitted, had not received the free month’s insurance they were entitled to under a promotional offer and others had been incorrectly charged a premium during a ‘rain-check’ period.
Furthermore, a number of customers had not given information about excesses and cooling-off rights when purchasing insurance over the phone and others were issued with the wrong cover completely.
ASIC said it was concerned the breaches indicated that Optus had “inadequate compliance systems and processes, such as training, monitoring and supervision of staff”.
The company has now appointed an independent external firm to conduct a comprehensive review of its compliance functions. It will attempt to contact past customers to issue them with compensation while existing customers would receive a direct credit into their accounts. Where former customers cannot be traced, their payments owed will go to a financial literacy charity, Optus said.
ASIC Deputy Chairman Peter Kell said in a statement: "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.
"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 purchased mobile phone insurance from Optus and think they may be affected by these breaches should contact Optus on 1800 854 349.
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