Auto & General misled its Budget Direct customers by failing to tell them online discounts would be lost if they made certain changes during their policies’ first year, the corporate regulator alleges. 

The Australian Securities and Investments Commission says the insurer’s website represented that new customers would receive the online discounts on all the year’s premium when they bought certain home, car or motorcycle covers.

But the pricing system was configured so the discount was not applied after amendments during the period, such as changes of address, payment frequency or vehicle.

On about 39,661 occasions, customers made changes and received new premiums that did not include the discount, and they were not informed it had not been applied, ASIC alleges in legal action. 

“By that conduct, Auto & General represented to each such customer, by its silence, that the post-amendment premium for the relevant product continued to apply the online discount,” the regulator said in documents filed last week to the Federal Court. 

ASIC puts the average premium discount loss at nearly $100, while across the cohort it totalled $3.3 million.

It says misleading advertisements between March 2020 and July 2024 were seen by millions of consumers. 

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

The company told insuranceNEWS.com.au all financially affected customers had been fully compensated, and it self-reported the incident to ASIC. 

“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,” it said.

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

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.