RACQ fined $10mil over insurance PDS

RACQ Insurance Limited has been fined $10 million for misleading customers about discounts available for certain types of insurance cover.

The Federal Court on Friday declared RACQ had issued misleading product disclosure statements (PDS) at least five million times between March 2017 and March 2022, breaching Section 12DF(1) of the Australian Securities and Investments Commission Act 2001 (Cth).

The PDS were misleading in their description as to how policy discounts were to be applied to premiums for optional benefits across home, motor, caravan and trailer products.

RACQ admitted to the contraventions and the parties jointly submitted that the penalty sought by ASIC was appropriate.  RACQ was also ordered to pay the regulator’s costs of the proceedings.

The insurer, which is owned by its almost 1.8 million members, said about 458,746 customers had missed out on about $86,476,339 in discounts.

Justice Downes said although the contraventions were not deliberate, they nonetheless called for “the marking of the Court’s disapproval of those contraventions”.


“The proposed declaration would function as a warning to others of the risk of engaging, whether carelessly or deliberately, in conduct liable to mislead the public as to the nature and characteristics of financial products,” she said.

Justice Downes said, however, RACQ had self-reported to the regulator and “provided significant cooperation to ASIC beyond that strictly required by the law”, including waiving legal professional privilege over legal advices and internal investigation reports; and facilitating access to employees for witness interviews.

“RACQ’s conduct in this regard is to be commended,” she said.

RACQ said although it had no intention to mislead, it recognised and admitted the historical controls it had in place to ensure its PDS complied with the laws were inadequate.

It said that since March last year, it had processed more than $54 million in refunds to eligible members and refunds were expected to be substantially completed by the end of February 2024.

“RACQ had anticipated a penalty of this amount and provisioned for this in its FY23 accounts. All costs of the remediation, including the penalty, will be paid from its reserves,” it said.

ASIC Deputy Chair Sarah Court said consumers needed to be able to rely on the pricing promises made to them by insurers, and insurers needed to ensure promises were fulfilled.

“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,” Ms Court said.

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