Tens of thousands of Budget Direct customers lost online insurance discounts they were promised and were overcharged for premiums as part of misconduct that went on for years, ASIC alleges.
In Federal Court proceedings launched against Auto & General Services Pty Ltd, the insurer that arranges Budget Direct insurance products, ASIC alleges that:
- between March 2020 and July 2024, Auto & General advertised significant discounts of up to 30% for Budget Direct customers who purchased car, home or motorbike insurance policies online with the advertisements being viewed by millions of consumers, and
- approximately 39,000 customers lost their online discount after making amendments to their policy during the first year. The average premium discount loss amounted to nearly $100 and across the cohort was worth $3.3 million.
It is ASIC’s case that the advertising was misleading because customers were not told the discounts would be removed following any changes such as a change in address, either at the time they signed up, or at the time that they made the change.
ASIC alleges Auto & General first became aware of the issue as early as 2016 but failed to fix it or inform affected customers for years. ASIC alleges that senior staff were aware of the problem but did not immediately fix it.
ASIC Deputy Chair Sarah Court said the case highlighted the importance of ASIC’s 2026 enforcement priority focused on misleading pricing practices impacting cost of living for Australians.
‘We have taken multiple cases alleging failures by insurers to deliver on their pricing promises to customers.
‘In this case we allege Budget Direct removed discounts without notice if the customer made certain changes to their policy details, leaving tens of thousands of people out of pocket.’
ASIC alleges changes which affected the application of the discount varied by insurance product. For example, where a customer made a change to their insured address, made a change to their insured vehicle or changed the premium payment frequency. ASIC alleges the discount was lost even though the policy the discount originally applied to continued.
‘Australians should be able to take insurers at their word, especially when it comes to discounts that influence their decision to take up a policy and compare it to other products in the market.
‘We allege Budget Direct’s conduct was misleading and deprived tens of thousands of Australians millions of dollars in savings they were promised,’ the Deputy Chair said.
Auto & General has since paid over $3.8 million in remediation inclusive of interest to approximately 39,000 customers affected between March 2020 and July 2024.
ASIC will seek declarations and civil penalties from the Court.
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Background
ASIC alleges Auto & General contravened s12DB of the ASIC Act by making false or misleading representations about the price of insurance services and that its products were of a particular standard, quality, value or grade.
According to ASIC’s case, customers who made certain changes to their insurance during the first year lost their online discount without being told, despite advertising saying the discount would apply for the full year.
The alleged conduct affected Budget Direct-branded car, home and motorbike insurance policies purchased online from 2007. Due to limitation periods, ASIC’s court action relates to conduct between March 2020 and July 2024.
Addressing misleading pricing practices impacting cost of living for Australians is one of ASIC’s enforcement priorities for 2026. ASIC’s Report 765 When the price is not right: Making good on insurance pricing promises, released in June 2023, confirms the standards that general insurers need to meet in designing and promoting pricing promises to ensure customers get the full benefit of any discounts promised.
Similar action taken by ASIC includes:
- In August 2025, ASIC alleged IAG misled home insurance customers on pricing discounts. The matter is ongoing (23-228MR). In June 2023 in a separate matter, IAL was penalised $40 million for pricing discount failures, the largest penalty ever handed down against an insurer for breaches of financial services laws (23-179MR).
- In November 2023, RACQ Insurance Limited (RACQ), was ordered to pay a $10 million penalty by the Federal Court for potentially misleading customers in its product disclosure statements about the pricing discounts available for certain types of insurance cover (23-323MR), (23-038MR).
- In September 2025, in a separate matter, ASIC took court action against RACQ alleging it sent half a million misleading insurance renewal documents with misleading comparison pricing for more than five years despite customer complaints (25-211MR).
- On 22 October 2024, ASIC commenced proceedings alleging QBE Insurance (Australia) Limited misled customers about the value of discounts offered on certain general insurance products. The matter is ongoing (24-234MR).
ASIC’s Moneysmart website features information that supports Australian consumers in making decisions about insurance. It’s important to compare policies from different insurers and to shop around for the best value for money. Find out more about choosing car insurance and home insurance.