Hi Liam,
The business rule you've created certainly looks as though it should operate.
I notice that you have the site based feature enabled - perhaps there is an issue with this despite this particular rule being a 'default' rather than site specific.
It might be worth adding a lower case variant of email address and specifying 'contains' rather than 'is'.
Hope this helps and let us know how you get on.
Best regards
Chris
set3 Solutions