The Federal Court has ordered MLC to pay a $10 million penalty over its failure to provide promised rehabilitation benefits to more than 100 eligible policyholders. 
 
The conduct resulted from a lack of “appropriate processes and procedures” to administer its insurance policies, Justice Mark Moshinsky said in his order issued last week. 
 
As a result the insurer failed to pay a total of $2.06 million in bonus benefits to 119 policyholders within a reasonable period of time after they had provided proof of satisfactory participation in an approved rehabilitation program during the penalty period from November 18 2015 to October 31 2018. 
 
Justice Moshinsky also ordered MLC to publish an adverse publicity notice on its website. 
 
MLC made admissions of contravention in the proceeding lodged by the Australian Securities and Investments Commission (ASIC). 
 
ASIC Deputy Chair Sarah Court says the corporate regulator will continue to take action against insurers who aren’t acting in accordance with their duty of utmost good faith towards their customers. 
 
“Customers should be able to trust that their insurer will pay the benefits promised to them and keep them properly informed if there are changes to their policies,” Ms Court said. 
 
“The failings recognised by the Court are the result of poor governance, poor controls and poor systems, such as legacy IT systems. MLC customers deserve to have their insurance policies administered properly.” 
 
MLC also failed to adequately train and monitor staff about communications to customers regarding the administration of their policy, including policy schedules and premium notices. 
 
In addition to the $10 million penalty, MLC has provided about $11.8 million in remediation to approximately 1000 impacted customers. 
 
MLC self-reported the breaches and before proceedings commenced, the business reached out to affected customers and apologised and provided remediation. 
 
It has also invested more than $640 million to improve its systems. 
 
Click here for the court ruling.