MLC Life Insurance hit with $10m penalty
The Federal Court has ordered MLC Limited (MLC) to pay a $10 million penalty for misleading customers and failing to provide benefits, resulting from a lack of appropriate systems to administer its insurance policies.
The Court also declared that MLC had contravened the ASIC Act, the Corporations Act and the Insurance Contracts Act for failures to:
- pay a rehabilitation benefit to 119 customers who had undertaken approved rehabilitation programs following injury and/or disability;
- have adequate processes to review and, if appropriate, promptly update its medical definitions for critical illnesses in certain policies; and
- adequately train and monitor staff about communications to customers regarding the administration of their policy, including policy schedules and premium notices.
According to the Australian Securities and Investments Commission (ASIC) Deputy Chair, Sarah Court, the failings recognised by the Court were the result of poor governance, poor controls and poor systems, such as legacy IT systems.
“‘ASIC will continue to take action against insurers who aren’t acting in accordance with their duty of utmost good faith towards their customers,” she said.
In addition to the $10 million penalty, MLC has provided approximately $11.8 million in remediation to approximately 1,000 impacted customers.
Typical ASIC. The Witch Hunter Supreme. There was a time (pre ASIC the combatant) when Commissioners worked WITH the insurance industry not against it. MLC Insurance have compensated their policyholders. Still the Monster wants its pound – sorry, its ton – of flesh: the ‘Gotcha, Hee Hee’ culture. Seems we’ve created a monster whose primary purpose is revenue raising to justify its questionable existence. Is this really what we want in Australia Fair??
Jack you are spot on. That section of ASIC known as “enforcement” has to justify its existence, “heads on poles.”
In one sense though, MLC are an easy target. They were owned by a bank and when sold they basically would have looked like a 1920s model T – imported into Australia with just engine and chassis, waiting for someone to put the coachwork on the chassis. No money had been spent on systems at MLC for all the time of its ownership with NAB, and they’re still playing catch up.
The saga continues. MLC are a basket case in ALL admin matters. And their expensive, much hyped NEW adviser software is ” secret insurers business.” MLC incredibly seems to be devoted purely to announcing new appointments to its sales team. Seems there’s a little staff turnover going on.
Yet, here’s the problem for advisers. If MLC just happen to have the least expensive product, ASIC want chapter & verse in the SOA as why the adviser wont recommend MLC. AND, just to get some business in, they are now apparently doing UPFRONT DISCOUNTS, but not disclosing them to advisers.
. It seems the Japanese parent company has developed long pockets and short arms since the purchase