Medibank glitch hits tax statements

New Medibank Private chief executive Craig Drummond has apologised for failing to give members annual tax statements.

Craig Drummond says the failure is “unacceptable”. Picture: Aaron Francis

New Medibank Private chief executive Craig Drummond has ended his first week in the top job apologising for the health insurance giant failing to give its members annual tax statements.

Mr Drummond said the failure concerned shifting customer data to a new technology system.

A spokesman for the $8 billion listed company, formerly government-owned, said that as it neared completion of a major technology upgrade it had experienced a reporting issue that would likely prevent Medibank from providing annual tax statements to the majority of customers by July 15.

Medibank, over the past 18 months, has been completing a $150 million upgrade of its platform to replace its old one with one designed by IBM and SAP.

Mr Drummond, a former NAB executive, acknowledged that the failure was “unacceptable” for customers.

“I sincerely apologise to our customers for this disruption,” he said. “It is important for customers to know their personal data has not been compromised.

“Our team is working around the clock to resolve this issue and I want to assure customers that our focus is on minimising the impact this will have on them.”

Mr Drummond has taken on the top role just as the corporate regulator shines the spotlight on the health insurance giant.

The Australian Competition & Consumer Commission last month initiated Federal Court proceedings against Medibank for misleading and unconscionable conduct.

Medibank was accused of advertising that certain policies would fully cover in-hospital tests and X-rays unless it gave prior notice of any change.

The policies were changed in September 2014 to cover only the normal Medicare rate and required members to pick up the rest, but customers were not notified of the change.

The ACCC alleged that Medibank deliberately withheld the information from members out of fear they would dump their policies.

The corporate regulator also alleged that Medibank calculated there was a risk that the publicity around the benefit change would damage Medibank’s brand and reputation. Its privatisation earned the federal government almost $5.7bn in November 2014.