The corporate regulator has commenced civil penalty proceedings in the Federal Court against MLC for allegedly failing to implement appropriate systems and controls that resulted in unpaid insurance benefits, premiums being charged without notice and underpaid refunds.
ASIC alleges MLC’s conduct led to over $17.5 million in financial harm to over 260,000 customers.
“Consumers should be able to trust insurers to pay their full benefit in times of need and keep them informed about significant changes to their policies. This case alleges failures by MLC, over many years, to ensure a reliable delivery of basic and everyday insurance services,” said ASIC deputy chair Sarah Court.
In fact, ASIC alleges that from 1999 to November 2020, MLC failed to:
- Pay a life insurance benefit, known as a “rehabilitation bonus benefit”, to 297 eligible customers who were undergoing rehabilitation following an insured injury or disability
- Update its definition of “Severe Rheumatoid Arthritis” in a timely way, resulting in 12 customers suffering from severe rheumatoid arthritis being denied insurance cover and MLC having to update the definition in over 190,000 insurance policies
- Notify over 800 customers that their annual premiums had increased, their premiums were overdue, or that their insurance policies had been cancelled or lapsed
- Fully refund premiums to over 260,000 customers who had cancelled their loan insurance policies or paid out their loans
“Insurers need to make sure they have adequate systems and controls to manage risk and administer their insurance policies correctly. Too often, we are seeing consumers harmed by implementation issues, legacy IT systems and failures resulting from poor governance and culture,” Ms Court said.
“ASIC will look to take enforcement action to ensure these systems improve.”
ASIC is seeking declarations, pecuniary penalties and other relief from the Federal Court.
This is, as usual, ASIC trying to justify its questionable role by delving into long past history. Of course, virtually every financial (and othe) institution has skeletons in its cupboard; nothing was, nor is, nor ever will be perfect. No-one can deny this. But let’s work on building a great future, rather than digging up graveyards. ASIC has done, and continues to do, far more harm than good. Time they were publicly questioned.
Is it just me or does anyone really care about all fo this having happened so long ago.
What it does really show is just how incompetent ASIC have been all of this time.
All of these prosecutions are things that have happend a very long time ago. Doesn’t make what the organisations were doing right, but it makes you wonder what ASIC have been doing all of these years. A big fat nothing.
Had ASIC actually been doing there job all of these years ago and prosecuting these events back then, financial planners might not be in the current situaion we are in, as ASIC would have stopped most of the nonsense from happening by these prosecutions. It would have had the desired effect of tidying up the industry so al of the compliance issues in place now could have been much better framed and probably been a lot less cmbersome.
My premium increased nearly 100% this year. My fees had been high. I`m retired, after over 35years in super contributions I only had $120,000 to retire on.
Is this the facilitative approach ASIC were talking about? On the other hand MLC have been terrible to work with lately.
Once again, as an institution they will remediate, be fined and move on…..if it was an adviser “game over”!!
More conflicted ASIC enforcement.
Advisers get to pay the legal costs of this enforcement action.
MLC Insurance caught out, who knows what we will hear about the other insurers soon from ASIC
Great but who is losing their job over this? Who is personally made responsible? Who is being banned from the profession? Where are the same type of penalties that ASIC loves to apply when an adviser does a small percentage of what the product manufacturers have been guilty of time and time again?
Someone at ASIC should be fined and banned for taking so long that half the affected policies are so long ago that they are outside of the legislated window.
But apart from those issues MLC ran a pretty good operation.
I guess the question here is how much will our ASIC levy fee increase by as a result of this action if they fail.
Advisers pick up the tab for the enforcement action regardless of success or failure..