Optus to refund customers $2.4M for mobile insurance breach

Optus will be refunding around 175,000 mobile customers about $2.4 million for its failure to disclose the features and limitations of its insurance. The Australian Securities and Investments Commission (ASIC) has said the second largest telco in the country will also write to around 500,000 customers who may be affected.

According to ASIC, Optus failed to provide certain customers with a Product Disclosure Statement and a Financial Services Guide, affecting customers who purchased mobile phone insurance in store or by telephone. This breach went on for years, which means many customers might not have been aware of the features and limitations of the mobile phone insurance they bought.

Optus committed four other breaches, ASIC had learnt following its inquiries. This indicated that the telco had inadequate compliance systems and processes.

According to ASIC’s inquiries, there were Optus mobile customers who did not receive their one month free insurance under a promotional offer they were entitled to, were incorrectly charged a premium for insurance during a “rain-check” period, were not provided with necessary information before they purchased an insurance policy over the phone, and were issued the wrong cover, with some receiving “Device Insurance” cover instead of the less expensive “Yes Cover.”

As a response to ASIC’s concerns about breaching Australian financial laws, Optus will be writing to all possibly affected customers. Those affected, including past and present customers, will be given compensation, which includes interest. The telco is also proposing that if it cannot locate former customers who had been affected by the breach, it will pay the owed amounts to a charity assisting financial literacy instead.

It has also appointed an independent external firm to conduct a comprehensive review of its system to ensure that it complies with its Australian financial services licence obligations.

Optus customers who purchased mobile phone insurance and think they may be affected by the said breaches are urged to contact the telco on 1800 854 349 on weekdays.

“When 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,” ASIC Deputy Chairman Peter Kell said in a statement.

An Optus spokeswoman also told news.com.au that the company has “taken a number of steps to prevent future mistakes.” These steps include more training for its staff who deal with or sell its insurance products.

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