ASIC is suing insurance comparison provider Choosi Pty Ltd for allegedly misleading prospective customers through its funeral and life insurance comparison services.
In proceedings filed in the Federal Court, ASIC alleges Choosi made false or misleading representations to customers by claiming it compared products from a range of funeral and life insurers.
However, ASIC claims that Choosi - from at least 1 July 2019 and ongoing - only compared policies issued by a single insurer (with one limited exception). All policies were distributed by Greenstone Financial Services Pty Ltd, a company associated with Choosi.
ASIC alleges that at least 4,225 funeral insurance policies and 9,478 life insurance policies were sold during this period, with Choosi receiving $61 million in commissions.
ASIC Deputy Chair Sarah Court said ASIC was taking action to stop companies taking advantage of consumers trying to shop around for the best deals.
'We allege Choosi misled thousands of consumers into thinking they were comparing options from a range of insurers.
'We will contend people were led to believe they were making a sensible decision by comparing policies; however, they were denied genuine choice.
'Consumers may have been encouraged to buy a funeral or life insurance policy when a cheaper or more suitable policy might have been available from other insurers that were not assessed.
'Comparison websites must provide a meaningful comparison service and not simply operate as a sales channel or distribution platform for companies.'
Ms Court said that while comparison sites can sometimes be useful for consumers, they should only be part of how people shop around for financial products.
ASIC alleges Choosi made the misleading representations on its website, across social media, and via television commercials and advertorials.
ASIC's action against Choosi follows other recent consumer-focused actions including Snaffle, Resimac, and Hollard Insurance.
Background
ASIC alleges Choosi contravened ss 12DB and 12DF of the Australian Securities and Investments Commission Act 2001.
The maximum penalty that can be ordered for a single contravention of either of these provisions by a body corporate, by reference to the current penalty unit value, is $16.5 million.
ASIC's Moneysmart website has guidance for consumers for how to use comparison websites for insurance and other financial services.
