The Australian Securities and Investments Commission (ASIC) has leveled allegations against Auto and General Services, claiming that the company misled customers with promises of discounts up to 30% for those purchasing home, car, or motorbike insurance through Budget Direct online.

According to ASIC, over 39,000 customers were affected, losing their discounts upon making policy adjustments such as address updates or payment frequency changes during the first year of their policy, between March 2020 and July 2024. These changes reportedly led to an average loss of $100 per customer, accumulating to a total of $3.3 million. Despite these losses, customers continued to pay for their insurance under the revised terms.

The regulator argues that the advertising was misleading, as customers were not informed that any alterations to their policy could result in the loss of their discounts. This lack of disclosure left many unaware of the potential financial impact of simple policy modifications.

Furthermore, ASIC contends that Auto and General Services knew about this issue as early as 2016, yet took no action to correct the problem or inform affected customers for several years.

Sarah Court, the deputy chair of ASIC, emphasized the importance of transparency from insurers, stating, “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.”

“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,” ASIC deputy chair Sarah Court 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 and General Services has paid over $3.8 million in remediation, including interest, to the 39,661 affected customers but ASIC will seek declarations and civil penalties from the court.

An Auto and General Services spokesperson said it self-reported the incident to ASIC, apologised to and financially compensated the customers.

“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,” the Auto and General Services spokesperson said.

“In the past two years, Auto and 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 reoccurring.

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

“Auto and General is committed to continuing to provide affordable, comprehensive and dependable insurance solutions to our loyal customers.”

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