The corporate regulator is suing Auto & General over alleged policy discount misrepresentations in Budget Direct insurance adverts viewed by millions of consumers.

The Australian Securities and Investments Commission alleges discounts of up to 30% were advertised between March 2020 and July 2024 for people who bought home, car or motorbike policies online, but about 39,000 customers lost their discounts after making amendments during their first year. 

The average premium discount loss was nearly $100 and across the cohort it totalled $3.3 million, ASIC says. 

Auto & General today apologised to affected customers, describing the conduct as “inadvertent” and highlighting significant investment in compliance systems and processes.

The regulator alleges the advertising was misleading because customers were not told the discounts would be removed following amendments such as changes of address, insured vehicle or premium payment frequency.

It says Auto & General became aware of an issue as early as 2016 but failed to fix it or inform affected policyholders for years, and senior staff knew of the problem.

ASIC deputy chair Sarah Court says enforcement priorities this year include a focus on misleading pricing practices affecting cost of living.

“Australians should be able to take insurers at their word, especially when it comes to discounts that influence their decision to take up a policy and compare it to other products in the market,” she said.

“We allege Budget Direct’s conduct was misleading and deprived tens of thousands of Australians millions of dollars in savings they were promised.”  

Auto& General has since paid more than $3.8 million in remediation, including interest, to affected customers. 

ASIC is seeking declarations and civil penalties from the Federal Court.

Auto& General told insuranceNEWS.com.au that all 39,661 financially impacted customers have been fully compensated.

“Auto & General self-reported the inadvertent incident to ASIC and apologises to our customers that were affected,” a spokesperson said.  

“The matter only arose when the customers made an amendment to their policy during the first year – primarily either by replacing their insured car or changing their insured address.

“In the past two years, Auto & General has invested more than $70 million in improvements to its systems and processes for managing its risk and compliance obligations, and to prevent such an issue recurring. 

“In addition, since this issue commenced, there has been a significant program of transformation to improve our culture of accountability and compliance.”