An independent review of consumer campaign One Big Switch, commissioned by ASIC, has identified that the advertising of its recent insurance campaigns were misleading.
The company, which is owned by News Ltd, ran a 2014 home insurance campaign which saw more than 74,000 consumers signed up; however, the company did not hold an Australian financial services (AFS) licence. Following ASIC concerns, the company applied for an AFS licence.
However, in granting the licence, ASIC imposed a condition requiring the company to appoint an independent consultant to review its compliance with financial services laws. Law firm Kemp Strang Lawyers was appointed as the consultant.
Kemp Strang Lawyers has delivered an initial report to ASIC which identified that One Big Switch’s advertising of its recent insurance campaigns contained potentially false and misleading statements.
The company advertised a ‘price beat guarantee’ without prominent and proximate qualifications to the offer, such as a minimum age requirement, and the need to be switching from a comparable policy.
It also advertised an ‘average 30% saving on life insurance’, when the pricing of this product depend very much on the health and lifestyle of the individual applicant, and advertised car insurance with an email titled ‘Could you save $600, and lock it in for 2 years?’ when that saving was not necessarily representative of the savings that could generally be achieved.
“In a time when household budgets are tight, offers of group discounts can be attractive to consumers,” ASIC deputy chairman, Peter Kell said.
“ASIC wants to ensure those making the claims are appropriately licensed and complying with important consumer safeguards.”
One Big Switch has agreed to improve its compliance with ASIC’s guidance on advertising. Kemp Strang Lawyers will undertake a further review of One Big Switch and report to ASIC by the end of September 2015.
When the One Big Switch campaign was first announced, it came under significant scrutiny from the mortgage and finance industry for being misleading.
John Kolenda, managing director of Finsure, said One Big Switch's ‘Truth in Banking’ campaign was “futile and potentially misleading” when it claimed that banks were ripping off consumers if they were not passing on RBA
cash rate cuts in full.
It also came under fire for having double standards, after accepting commissions on consumers who made a switch, despite being past statements critical of commissions received by brokers and financial planners.
CORRECTION: A previous version of this article attributed the One Big Switch campaign to consumer group Choice. Choice is not involved in the campaign. AB Online regrets the error