The Australian Securities and Investments Commission (ASIC) and IAG have made Federal Court submissions on a $40 million agreed penalty related to a failure to honour discount promises made to customers.

Justice Wendy Abraham considered the submissions in a court hearing in Sydney yesterday, before adjourning the matter and reserving judgment until a date to be determined.

The court has also been asked to make orders on the way in which advice to customers about the penalty should be provided.

ASIC, which launched civil penalty proceedings in October 2021, says it will release a statement when the judgment is handed down. IAG also declined comment today.

The regulator alleged subsidiary Insurance Australia Limited (IAL) engaged in misleading or deceptive conduct and made false or misleading representations to some NRMA Insurance customers by saying they were eligible for certain home and motor policy renewal discounts and then failing to apply the savings.

When launching the action, ASIC said policyholders failed to receive promised discounts totalling around $60 million, with at least 596,000 customers affected between March 2014 and November 2019.

ASIC at the same time called on all general insurers to review their pricing systems and controls to prevent consumer harm as a matter of priority, with problems at other firms also uncovered.

IAG has previously said it self-reported the issue to the regulator in 2019 and has provided refunds through a remediation program. It has apologised for the failure and has said it has enhanced its systems and processes.