Australia’s corporate regulator has launched Federal Court proceedings against Auto & General Services Pty Ltd, the company behind Budget Direct insurance products, over claims it misled nearly 39,000 customers and silently removed discounts they were told they’d receive.
The Australian Securities and Investments Commission (ASIC) alleges that between March 2020 and July 2024, Auto & General advertised discounts of up to 30% for customers who purchased car, home, or motorbike insurance policies online. The problem, according to ASIC, wasn’t just the size of those promises but what happened when customers made routine changes to their policies.
What ASIC Alleges Happened
The regulator alleges the advertising was misleading because customers were not told the online discounts would be removed following any changes made to their policies, such as a change in address.
According to ASIC, the types of changes that triggered the discount removal included:
- Updating an insured address
- Changing the insured vehicle
- Altering the premium payment frequency
The alleged problem was not simply the size of the discount promoted, but what happened after purchase. Customers were not warned at sign-up, nor at the point of making the change, that their discount would disappear.
The average premium discount loss amounted to nearly $100 and across the cohort was worth $3.3 million.
Budget Direct, operated by Auto & General Services Pty Ltd, faces Federal Court proceedings over alleged misleading discount advertising. [Budget Direct]
The Company Allegedly Knew for Years
Perhaps the most damaging detail in ASIC’s case is the timeline.
It is alleged that Auto & General first became aware of the problem as early as 2016, but failed to inform affected customers for years. The conduct ASIC has taken to court spans from March 2020 to July 2024, a period during which the regulator says millions of consumers viewed the advertisements.
Auto & General has since paid more than $3.8 million in remediation, inclusive of interest, to the 39,000 customers impacted. ASIC is now seeking declarations and civil penalties from the Federal Court, going beyond the remediation already made.
What the Regulator Said
ASIC Deputy Chair Sarah Court didn’t mince words when the proceedings were announced on 27th February 2026.
“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,” she said. “We allege Budget Direct’s conduct was misleading and deprived tens of thousands of Australians of millions of dollars in savings they were promised.”
The court framed the legal action as part of a broader push to clean up how Australian insurers use pricing claims to attract customers, particularly during a period of intense cost-of-living pressure.
Part of a Bigger Regulatory Pattern
This case doesn’t sit in isolation. The action lands against a backdrop of ASIC’s stated 2026 enforcement priority targeting misleading pricing practices that worsen cost-of-living pressures.
Top of the list for 2026 is misleading pricing practices impacting cost of living for Australians, with insurance companies, banks, credit providers, and superannuation trustees all expected to be under heavy scrutiny.
It’s a pattern that’s been building across multiple sectors. Earlier this year, over misleading discount claims in supermarkets, which rattled investor confidence in both retailers. The Budget Direct proceedings signal that regulators are now training the same focus on financial services and insurance.
ASIC’s 2026 enforcement agenda has placed misleading pricing practices at the top of its priority list. [ASIC]
What It Means for Insurance Customers
The strong message for boards and executive teams across insurance distribution models is that discounting frameworks must be treated as a core compliance and conduct risk, not a marketing mechanic.
For everyday Australians comparing insurance, the case is a timely reminder to read the fine print when signing up for policies that advertise first-year discounts or online-only pricing. Discounts that disappear the moment you update your address or change your car aren’t quite the deals they appear to be.
ASIC has made clear this won’t be the last case of its kind. With cost-of-living pressure still squeezing households, the regulator is watching how insurers back up their marketing claims, and it’s prepared to go to court when they don’t.
The Federal Court proceedings against Auto & General Services are ongoing.
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FAQs
Q: What is the ASIC legal action against Budget Direct about?
A: ASIC alleges Auto & General Services, the insurer behind Budget Direct, misled customers by advertising online discounts of up to 30% but removing those discounts without notice when customers made basic changes to their policies.
Q: How many Budget Direct customers were affected?
A: Approximately 39,000 customers were impacted between March 2020 and July 2024, with total discount losses estimated at $3.3 million across the group.
Q: Has Budget Direct paid back affected customers?
A: Yes. Auto & General has paid more than $3.8 million in remediation, including interest, to affected customers. ASIC is nonetheless pursuing civil penalties through the Federal Court.
Q: Why is ASIC targeting insurance discounts in 2026?
A: ASIC has nominated misleading pricing practices as its top enforcement priority for 2026, with the regulator saying such conduct worsens cost-of-living pressures for Australian households.
