A breach of trust by a major telco will mean it now has to refund its customers $2.4 million.
A major telco will be compelled to pay refunds after the Australian Securities and Investments Commission (ASIC) found it had overcharged around 175,000 customers for phone insurance.
It is believed that Optus will pay out a total of around $2.4 million in refunds as a result of ASIC’s intervention.
Optus will also be required to inform around 500,000 customers of its breach of trust.
ASIC claims that, although it could have sought lengthy court action and further penalties upon Optus, its priority was to get money back into the hands of the telco’s customers.
"In this instance we were focussing on getting the money back into the customers' pockets," said ASIC Deputy Chairman Peter Kell. "We decided to do that as quickly as possible rather than go through a court case, which may last for a longer period, so our priority was to get the money back to customers in this case."
The breach in question related to Optus not supplying key documents required as part of its financial services licence, such as a full product disclosure statement and a financial services guide to its customers who bought mobile phone insurance.
The telco has also reported other breaches, such as incorrectly charging customers and supplying the wrong type of cover.
According to ASIC, Optus had "inadequate compliance systems and processes, such as training, monitoring and supervision of staff" and so it was necessary that the telco compensated its customers.
"It is important that when a business is licensed by ASIC to sell financial products to retail consumers, it ensures that it does so consistently with the representations it has made to consumers, and in compliance with the financial services laws," said Mr Kell. "Where 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."
Other breaches incurred by Optus include:
- not applying promotional discounts
- incorrect charges
- providing incorrect and more expensive cover
- failing to pass on information about excesses and cooling-off rights.
Optus must now face an independent inquiry to ensure that no further breaches take place.
Read more at www.abc.net.au
Are you an Optus customer? Do you feel you have been misinformed about your mobile phone contract? Are you satisfied with the ASIC ruling or should they have pursued Optus through the courts?