More than 370 consumers have been refunded a total of $635,860 after they were overcharged premiums on their consumer credit insurance (CCI) when purchasing a car from several Toyota motor vehicle dealerships in Australia. The refunds were made jointly by Toyota Finance Australia Limited (Toyota Finance), Allianz Australia Insurance Limited (Allianz), Aioi Nissay Dowa Insurance Co., Ltd (Aioi) and MTA Insurance Limited (MTA).
The overcharging occurred between 1 January 2006 and 26 September 2011 and involved customers at Maitland Toyota, Northpoint Toyota, Pacific Toyota, Grafton Toyota and Motorama Toyota. The policies were issued by Allianz, Aioi and MTA
The overcharging arose because consumers were charged the premium applicable for commercial credit insurance cover, instead of the lower premium applicable to consumer policies. In each case the premium was financed, along with the purchase price of a car, by Toyota Finance.
Personnel at the Toyota dealerships concerned benefitted from selling consumers a commercial rather than a consumer policy, because they received a commission of up to 50% of the policy premium. Under the National Credit Code, which regulates consumer credit and associated insurance, car dealers are not allowed to receive, and insurers are not allowed to pay, more than 20% in commission on CCI policies.
‘The Toyota motor vehicle dealerships concerned received up to 2.5 times more commission from the insurer for the sale of the credit insurance policies, than they were entitled to receive for CCI under the Code. Where this occurs, the Code provides that the consumer is entitled to recover the whole of the commission,’ ASIC Commissioner Peter Kell said.
‘ASIC has worked to ensure the commissions were recovered, the overcharged premiums were refunded and that Toyota Finance has refunded any interest associated with financing the higher premiums.’
Toyota Finance has also agreed to implement new compliance processes and tighter procedures to prevent the possibility of a recurrence of the problem. All affected customers have now been compensated.
The problem was initially discovered by Aioi, who reported the matter to ASIC. Further review by Toyota Finance at ASIC’s request identified additional instances of overcharging on Aioi, MTA and Allianz policies.
ASIC acknowledges the cooperation of Toyota Finance and the insurers in responding to this issue and compensating affected consumers.