In June 2001, the Hospitals Contribution Fund of Australia Ltd (HCF) promoted its health insurance cover in NSW and the ACT by a television advertisement which showed the statement "Join before 30th June and get instant cover". The 15-second TV advertisement also included the audio statement that the 2-month and 6-month waiting periods were waived, and the visual statement in the fine print that "the waiver does not apply to waiting periods of more than 6 months, included those for pregnancy and related conditions. Pre-existing ailments and conditions are also excluded."
The ACCC was concerned that the advertisement may have misled or deceived, or been likely to mislead or deceive, the public about the benefits, conditions and characteristics of HCF cover. The ACCC believes the advertisement represented that by joining HCF before 30 June 2001, the public would be entitled to receive HCF benefits from HCF from the time of joining for all services included in the cover.
The ACCC considered the potential to mislead arose from the fine print statement being insufficient to dispel the misleading impression given by the words "instant cover" as it was not on the screen long enough to be read.
HCF acknowledged the Commission's concerns and gave an undertaking that it will: not broadcast the advertisement in the future; waive all remaining waiting periods applicable to all members who joined HCF between 3 and 30 June 2001; for 3 years not promote by TV advertisements containing a waiver offer private health insurance cover without clearly and prominently specifying any qualification applying to the waiver offer; confirm by 31 August 2001 that its trade practices compliance program is consistent with AS3806; have its compliance program independently audited as at 31 August 2002 and 31 August 2003 and provide copies of the independent audit reports to the Commission.
This undertaking was made and accepted pursuant to section 93AA of the Australian Securities and Investments Commission Act 2001 as opposed to section 87B of the Trade Practices Act 1974. Health insurance, as it falls within the definition of a financial product, is regulated through the ASIC Act. However the Australian Securities and Investments Commission has since December 1998 formally delegated the regulation of all consumer protection aspects of health insurance to the ACCC through the use of nominated ACCC officers as delegates.
