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ANZ was fined $ 280,000 for selling some customers credit card reimbursement insurance that were too old to claim, and charging others for “duplicate” policies that did not offer additional coverage.
Credit card payment insurance was designed to make reimbursements on behalf of a customer, if they became ill, lost their job or died.
Banks stopped selling credit card payment insurance in New Zealand after mis-selling scandals in Australia and Britain, but concerns about it in New Zealand date back to 2013.
The fine was handed down by Auckland High Court Judge Matthew Muir, who did not find that the bank had intentionally misled customers.
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In total, 307 ANZ customers were affected, and 300 have now received full refunds.
Under-sold policies went unnoticed at the bank between 1997 and 2018, which, according to the Financial Markets Authority, was evidence of the bank’s “poor processes and systems.”
ANZ only identified them in late 2017 and early 2018.
KITCHEN / ROBERT THINGS
Financial Markets Authority Executive Director Rob Everett and Reserve Bank of New Zealand Governor Adrian Orr present the findings of their joint review of bank behavior and culture in New Zealand.
But it did not disclose them to the Financial Markets Authority and the Reserve Bank in May and June 2018 when regulators were conducting a review of banking conduct in New Zealand prompted by the Royal Australian Commission on customer abuse. from banks and insurance companies.
This was not deliberate hoax on the part of ANZ, the court found, but the result of deficiencies in the bank’s systems for gathering information to hand over to regulators.
The bank admitted to selling policies to some people who were too old to make claims between 1997 and 2018, Judge Muir said.
Depending on the policy, clients cannot make claims if they are over 65 or 75 years old.
ANZ also did not cancel some people’s policies when they reached those ages, instead continuing to collect premiums.
In April 2014, 121 people had policies despite being too old to claim them. They paid a total of $ 22,351 in premiums.
The bank also issued second policies for some people who already had policies, and charged them premiums, when those people did not get additional coverage for having them.
In all, 186 people received duplicate policies, and ANZ charged them a total of $ 176,770 in premiums. The first of these policies was issued in 1998.
ANZ continued to charge for some duplicate policies through the end of 2019, the Superior Court found.
While the maximum possible fine was $ 10 million, Muir said: “ANZ contends that because it did not misdescribe the products, but simply misled customers by charging them for products that did not provide them any benefit, it is unlikely that their conduct materially undermines confidence in financial markets. “
The bank argued that its clients were only “partially uninformed” as those issued with duplicate policies would have seen the premiums on their credit card statements.
Muir said the bank had also argued that people who were too old to claim their policies could have identified the maximum age of eligibility by reading the terms of their policies.
“I don’t find these arguments particularly persuasive,” Muir said.
The fact that an “attentive” consumer might have realized that they could not make a claim did not mitigate ANZ’s flaws, it found.
“Consumers cannot have ‘confidence’ in their participation if they are required to double-check the precise details of every transaction with their bank,” Muir said.
Muir said clients should be able to trust their bank.
“ANZ let them down,” Muir said.
“In my opinion, this is precisely the kind of behavior that undermines confidence in financial markets,” Muir said.
ANZ stopped selling credit card payment insurance in 2019.
ASB stopped selling the insurance in February 2018, shortly after its parent bank, CBA, paid AU $ 10 million in reimbursements to 65,000 students and unemployed people who were unable to claim the redundancy coverage portion of their policies.
BNZ stopped selling it in October 2018, a full year before its parent, NAB, settled a class action lawsuit for AU $ 49.5 million with its lawyer Sharon Cook, saying: “We can only move forward if we deal with the past. so that we can earn trust. ” with customers and the wider community and increase confidence in the future of NAB. “
Westpac stopped selling credit card payment insurance at the same time as ANZ.
