Automobile club hit with massive fine for misleading customers

RACQ Insurance has been issued with a $10 million fine by the Federal Court for potentially misleading customers about price discounts for certain types of insurance cover.

The case was brought about after an investigation by the Australian Securities and Investments Commission (ASIC) found RACQ had failed to inform customers of policy discounts available to them by neglecting to put them in their Product Disclosure Statements (PDSs).

The court found that RACQ sent out the misleading PDSs on at least five million occasions between March 2017 and March 2022. Approximately 458,746 customers missed out on $86,476,339 in discounts.

RACQ admitted to the breaches, and agreed that the penalty was appropriate. They were also ordered to pay ASIC’s court costs.

Need for transparency

Sara Court, deputy chair at ASIC, says businesses have a legal obligation to be transparent with customers.

“Consumers need to be able to rely on the pricing promises made to them by insurers, and insurers need to make sure that they pass on those promises in full,” she said.

“ASIC identified pricing promises in insurance as an enforcement priority this year, and will continue to monitor marketing and pricing practices in the industry, and use the full range of regulatory tools available to protect consumers from general insurers failing to honour promised discounts.”

The court found RACQ’s motor, home, caravan and trailer and unique vehicle insurance policy PDSs included statements that certain discounts would be applied to customers’ insurance premiums.

These were found to be potentially misleading because in reality, the discounts were only applied by RACQ to the base insurance premium, and not to any additional premiums paid for certain optional extras the customer may have chosen.

The optional extras in question were: excess free windscreen, hire car, no claim discount protection, increased caravan contents, pet, mobile phone, small business contents and items away from home.

Speedy outcome

Ms Court said she was pleased with the outcome of the case, and praised the speed at which it was conducted.

“ASIC brought this case in February 2023,” she said.

“We are pleased it has reached a conclusion within a year, with a significant penalty handed down and a clear message to the insurance industry that failures in pricing practices will not be tolerated.”

RACQ is a wholly owned subsidiary of The Royal Automobile Club of Queensland, a community organisation owned by its nearly 1.8 million members.

Do you have a policy with RACQ? Do you think this ruling is fair? Let us know in the comments section below.

Also read: ASIC switches up super guidelines

Written by Brad Lockyer

Brad has deep knowledge of retirement income, including Age Pension and other government entitlements, as well as health, money and lifestyle issues facing older Australians. Keen interests in current affairs, politics, sport and entertainment. Digital media professional with more than 10 years experience in the industry.


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  1. RACQ – not surprised! I am a gold member but cannot give any example of any benefit this gives me. It’s bordering on a rort. I recently decided to check car insurance premium with them. Entered my membership number – got quote. Then got a quote with no membership number stated. Exactly the same premium. Not one cent of discount.
    I then tried to get a home insurance quote. Well, although I live in a Brisbane suburb, RACQ deem this to be in cyclone area. Despite the official government standard stating that cyclone area is north of Bundaberg, over 400kms north, no, RACQ ignore that so the premium they gave was astronomical!
    RACQ has been ordered to pay when people weren’t given a discount. Yeah right, how are they going to calculate that? My daughter had top level roadside package, a week after date of renewal, she moved overseas so couldn’t use it, and they refused to transfer it to me. Over $500 lost. I myself looked at getting a new battery for my car through RACQ, but again, were way dearer than elsewhere.
    Discounts and savings are minimal if not useless.

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