The Financial Markets Authority (FMA) has filed High Court proceedings against ANZ Bank New Zealand (ANZ), alleging the bank charged some customers for credit card repayment insurance (CCRI) policies that offered those customers no cover.
The FMA proceedings have two causes of action. Firstly, that ANZ issued duplicate CCRI policies to some customers, which provided no additional benefits or cover, and charged premiums on those policies, during the period April 2014 and November 2019. Secondly, ANZ issued and failed to cancel CCRI policies for ineligible customers, also charging premiums on those policies, during the period 1 April 2014 – May 2018. These two issues relate back to at least 2001. However, the FMA claim reflects the introduction of the Financial Markets Conduct Act 2013, which came into effect from April 2014.
The FMA claims that ANZ contravened section 22 of the Financial Markets Conduct Act by making false and misleading representations about the cover of the policies. The regulator is seeking declarations of contravention of the Financial Markets Conduct Act, pecuniary penalties and costs.
ANZ first identified the duplicate policy issue around September 2017 and the ineligible customers issue was identified around May 2018. ANZ did not disclose either issue to the FMA or Reserve Bank during their joint conduct and culture review of New Zealand’s retail banks from May to June 2018. The review requested that ANZ disclose “any work underway to remediate any identified issues where conduct by your firm has resulted in detrimental outcomes for customers.”
ANZ first notified the FMA of both issues in June 2019.
FMA General Counsel, Nick Kynoch said, “while ANZ has embarked on their own remediation programme, and ultimately self-reported this matter, the case points to a failure of internal systems and controls resulting in customer harm over a significant period of time. Self-reporting is expected, and is taken into account by the FMA when determining the appropriate regulatory outcome. In this instance, we felt it appropriate to put the matter before the courts.
“ANZ sold a product that, for some customers, offered no benefit.”
CCRI is a form of insurance which covers some or all of a customer’s outstanding credit card repayments in certain circumstances, including in the event of a customer’s bankruptcy, redundancy, injury, illness or death.