One Big Switch, the movement that encourages consumers to sign up in large numbers in order to secure discounts from service providers, has had its compliance with financial services laws reviewed by the Australian Securities & Investments Commission (ASIC).
The review follows the sign-up of more than 74,000 customers to its campaign to secure better home insurance deals. However, One Big Switch Pty Ltd did not hold an Australian financial services licence at the time. After concerns were raised by ASIC, the company applied for, and was granted, a licence.
As a condition of granting the licence, ASIC required the group to appoint an independent auditor to review its compliance with financial services law. The group appointed Kemp Lang Strang as a consultant and the law firm found that One Big Switch had potentially featured false and misleading statements in its recent insurance advertising campaign. Examples are:
- advertising a ‘price beat guarantee’ without prominent and proximate qualifications to the offer, such as a minimum age requirement, and the prerequisite of switching from a comparable policy.
- advertising an ‘average 30 per cent saving on life insurance’, when the pricing of this product depends very much on the health and lifestyle of the individual applicant.
- advertising car insurance with an email titled ‘Could you save $600, and lock it in for 2 years?’ when that saving was not necessarily representative of the savings that could generally be achieved.
In response to the findings, One Big Switch has agreed with ASIC’s guidance to improve its compliance on advertising.
ASIC Deputy Chairman Peter Kell said, “In a time when household budgets are tight, offers of group discounts can be attractive to consumers. ASIC wants to ensure those making the claims are appropriately licensed and complying with important consumer safeguards. ASIC will not tolerate promoters’ failure to comply with the law.”
One Big Switch was founded by Lachlan Harris, former press secretary to Kevin Rudd. News Corp Australia bought a stake in the company in February this year after previously having an association through Moneysaver HQ, which also involved Pinstripe Media, David Koch’s production company.
Read the ASIC media release
Everyone is keen to save a dollar or two on essential household expenses, but when offered a ‘great deal’, it usually pays to ask yourself who really benefits.
We’ve all seen the ads promising you can save $600 on your car insurance, which seems amazing given that in Sydney the average car insurance premium is about $1200. Or how about saving 30 per cent on life insurance – one of the most expensive policies you can purchase? Of course companies shouldn’t make such claims, as the cost of these premiums depends on too many variables, yet is doesn’t stop them.
The examples quoted in such claims are usually those of one or two customers who are at the extreme end of the scale in how much they were paying and how much they saved. For most people the saving is likely to be only a few dollars, which of course, is still better than nothing.
So, what’s in it for the comparison companies and companies offering to save you money if you join their growing numbers? Let’s face it; they’ve got to make money somewhere. Whether it’s commission on a policy, or the opportunity to market offers to members, money is being made, money that could be saved by contacting service companies direct.
Often the most effective way to save money is to shop around and use any offer or price comparison as leverage. Contacting your insurance company’s competitor for a quote then asking your current provider to better it, gives you a double saving. If you live in a state where gas and electricity prices are deregulated, do the same, or consider bundling to get an extra discount. And when it comes to renewing your car insurance, the more information you provide when seeking a quote, or if you can limit your mileage, you can usually save money.
Remember, if a deal’s too good to be true, it usually is.
Have you had a good or bad experience with comparison sites? Do you shop around for competitive quotes or do you tend to stay with the same company? Do the claims made in adverts make you consider switching insurer or utility provider?