Supermarket chain Woolworths has confirmed it will refund customers affected by a pricing error on its Everyday Insurance car policies.
The issue, traced back to 2018, resulted from Hollard Insurance, the underwriter for Woolworths’ insurance products, failing to apply promotional discounts correctly.
The supermarket chain, which has provided insurance products for nearly 25 years, stated the error was uncovered during a routine review.
“We have identified instances where certain promotional discounts were not correctly applied on some Everyday Insurance car policies, by our underwriter, Hollard Insurance,” a spokesperson for Woolworths said, as reported by News.com.au.
The spokesperson confirmed that the grocery giant is now in the process of contacting affected customers and arranging refunds, including interest.
Although Woolworths did not disclose the exact number of customers impacted, it noted that the issue involved a small percentage of the tens of thousands of car insurance policies held between 2018 and 2023. Refunds will average $27 per customer, including interest.
Hollard Insurance self-reported the overcharging error to the Australian Securities and Investments Commission (ASIC). Woolworths apologised for the inconvenience and assured customers that processes had been updated to prevent similar occurrences.
The Woolworths refund case underscores the broader risks faced by consumers in the financial and insurance markets.
The issue comes as ASIC urges the federal government to expand proposed unfair trading reforms to cover financial services. It expressed concerns that excluding financial services from the reforms could leave consumers exposed to exploitative practices and create regulatory gaps.
At the Australasian Consumer Law Roundtable, ASIC commissioner Alan Kirkland outlined challenges specific to financial services, including the complexity of products and the uncertainty faced by consumers when making decisions.
“This reform is necessary to crack down on practices that result in significant harm to consumers, to address the increasing gap between the fair outcomes that consumers expect and what the law can deliver,” he said.
Kirkland advocated for a single, economy-wide ban on unfair trading practices that explicitly includes financial services. He argued that consistent rules would provide clarity and better protections for consumers.
“In ASIC’s view, we need a simple, consistent mechanism to combat this conduct, wherever it emerges,” he said.
