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Virginia Surety to refund over $330,000 to add-on insurance customers

The Australian Securities and Investments Commission (ASIC) announced that Virginia Surety Company, Inc. (Virginia Surety), a general insurer, will refund over $330,000 in insurance premiums to more than 500 customers. It will also have a condition imposed on its Australian financial services licence, for improperly selling consumer credit insurance policies.

Between 18 June 2013 and 31 December 2015, Virginia Surety sold consumer credit insurance (a bundled add-on insurance product which includes general and life insurance cover), to customers taking out loans at car yards mainly in Queensland and New South Wales.

ASIC found that Virginia Surety had stated that the life cover in the add-on insurance policies was underwritten by TAL Life Limited (TAL), without TAL's permission. This meant there was a risk that consumers would have a life claim rejected, even though they paid for the policy.

As a result, ASIC has placed a condition on Virginia Surety's Australian financial services licence, so they have to:

  • Refund the life premium paid by affected customers plus interest
  • Engage an independent external compliance expert approved by ASIC, to review its compliance practices and report to ASIC
"Customers should be confident that when they purchase an insurance policy, that they can claim when they need to," ASIC Deputy Chair Peter Kell said.

"The fact that Virginia Surety was selling this insurance without the life insurer's approval, indicates serious deficiencies with its compliance," he said.

"We have put all insurers in this market on notice that they need to change their practices and ensure they are properly considering the interests of consumers," Mr Kell said.

Where a consumer has a valid claim under an affected add-on insurance policy, TAL has agreed to honour the life cover and pay the claim, even though the customer will receive a refund from Virginia Surety.

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Former Brisbane Coffee Club franchisee penalised over unlawful cash-back payment

The Fair Work Ombudsman stated that it has secured more than $180,000 in penalties against a former Coffee Club café franchisee in Brisbane for contraventions including requiring an overseas worker on a 457 skilled worker visa to pay back $18,000 of his wages through an unlawful cash-back payment.

The penalties have been imposed after Brisbane man Saandeep Chokhani - who, with his wife, formerly owned and ran the Coffee Club franchise at the Nundah Village Shopping Centre - required an overseas worker to repay $18,000 of his wages by threatening to take steps to cancel the worker's 457 skilled worker visa if he refused.

Mr Chokhani has been penalised $30,000 and a company he and his wife are the directors of, Gaura Nitai Pty Ltd, has been penalised a further $150,900, in the Federal Circuit Court.

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ACCC takes action against Thermomix

The Australian Competition and Consumer Commission (ACCC) stated it has instituted proceedings in the Federal Court against Thermomix In Australia Pty Ltd (Thermomix), alleging it contravened several provisions of the Australian Consumer Law (ACL) in relation to its Thermomix appliances.

The ACCC alleges that Thermomix misled customers about their consumer guarantee rights, failed to comply with mandatory reporting requirements for injuries arising from the use of the appliances, made false representations and engaged in misleading conduct regarding the safety of the TM31 model, and made false and misleading statements about its 2014 recall.

In relation to consumer guarantee rights, the ACCC alleges that Thermomix represented to certain consumers that the ACL remedies to which they were entitled could only be obtained by signing agreements with non-disclosure terms and other terms that prevented them from making disparaging comments about Thermomix. The ACCC also alleges that Thermomix represented to other consumers that it would not provide refunds or replacements as a remedy at any time.

"Consumers who have purchased a faulty product have rights under the Australian Consumer Law to remedies which businesses cannot restrict, alter, or remove, and this includes getting a repair or replacement for the product, or a refund," ACCC Acting Chair Delia Rickard said.

In relation to the mandatory reporting requirements, the ACCC alleges that Thermomix failed to notify the Commonwealth Minister within two days of becoming aware that a person had suffered a serious injury associated with the use, or foreseeable misuse, of a Thermomix appliance. The ACCC alleges that this occurred in 14 instances because Thermomix failed to give notice of these serious injury incidents within the mandatory two-day notification period.

"The law requires that suppliers must act to notify the ACCC as soon as they become aware of any person who has suffered a serious injury associated with the goods they have supplied. This requirement exists to protect the safety of Australian consumers by helping to prevent further injuries," Ms Rickard said.

In relation to the safety of the TM31 model, it is alleged that Thermomix made false representations and engaged in misleading conduct by representing to consumers that it was not aware of any safety issue with the TM31 by continuing to supply the TM31 when it was aware of a safety issue that ultimately led to a recall action in October 2014, and failing to disclose that safety issue to consumers as soon as it became aware of it.

"Suppliers must act swiftly to notify their customers as soon as they learn of a potential safety hazard with their products," Ms Rickard said.

The ACCC also alleges that in March 2016, Thermomix caused false or misleading statements to be made in the media about the nature of the October 2014 recall action.

The ACCC is seeking declarations, pecuniary penalties, injunctions, corrective publication orders, compliance program orders and costs.

The first case management conference is at 9:30am on 21 July 2017 before Justice Murphy in Melbourne.

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Recent News

Virginia Surety to refund over $330,000 to add-on insurance customers 21/06/2017 9:34:47 PM
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Former Brisbane Coffee Club franchisee penalised over unlawful cash-back payment 20/06/2017 7:31:45 PM
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ACCC takes action against Thermomix 19/06/2017 7:30:59 PM
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