The Federal Court of Australia finds that RACQ Insurance Limited (RACQ) engaged in conduct that was liable to mislead the public in its product disclosure statements about the pricing discounts available for certain types of insurance cover.
On 30 November 2023, the Federal Court of Australia ordered RACQ to pay a penalty of $10 million to the Commonwealth for promising certain discounts on optional benefit covers but failing to deliver the full value of those discounts to some customers.
Between 23 February 2017 and 7 March 2022, for RACQ Motor, Household, Caravan and Unique Vehicle insurance policies, RACQ provided product disclosure statements (PDSs) stating that any discounts for which the customers qualified would apply to the entire premium payable (including to any optional benefits premiums). But, this was not the case. RACQ did not, in all cases, apply the discounts to the optional benefits premiums.
RACQ contravened the law on at least 5,088,261 occasions when it issued policies for RACQ Motor, Household, Caravan and Unique Vehicle insurance. Approximately 458,746 customers missed out on a total of around $86,476,339 in discounts they should have received. Additional policies were also impacted from March 2015 to 23 February 2017.
RACQ admitted that it had contravened laws prohibiting it from engaging in conduct liable to mislead the public as to the nature and the characteristics of a financial service. RACQ has apologised for its conduct.
RACQ is in the process of remediating those customers who were affected between the period March 2015 and March 2022.
The Court found that RACQ engaged in conduct liable to mislead the public as to the nature and characteristics of a financial service in making a number of representations in its PDSs for certain general insurance products regarding the manner in which discounts offered by it would apply to premiums payable by customers. These representations did not accurately convey to the public the manner in which all of the discounts offered by it would, in fact, be applied.