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Commerce Commission's Youi probe in final stages as prudential regulator the Reserve Bank notes 'important and serious issues and allegations'

Commerce Commission's Youi probe in final stages as prudential regulator the Reserve Bank notes 'important and serious issues and allegations'

The Reserve Bank, which licences New Zealand insurers as prudential regulator to the sector, is describing the issues raised and allegations made about Youi in yesterday's article as "important and serious."

Freelance journalist Diana Clement's detailed investigation into Youi customer complaints and look at the company's sales culture comes against the backdrop of a Commerce Commission investigation into Youi.

A Commerce Commission spokesman told after Clement's story was published that its current investigation is in its final stages.

"Our current investigation is in its final stages so we aren’t able to go into further detail just yet," the Commerce Commission spokesman said.

The Reserve Bank, meanwhile, is the prudential regulator and supervisor of all insurers in New Zealand, and is responsible for administering the Insurance (Prudential Supervision) Act 2010. Under the Act insurers must be licensed and Youi is licensed by the Reserve Bank.

A Reserve Bank spokesman said whilst the issues and allegations raised in Clement's article are important and serious, the ball's in the Commerce Commission's court.

"While the issues raised and allegations made in the article by Diana Clement are important and serious, relationships between insurers and customers are governed by consumer protections laws and not by the Reserve Bank or the Insurance (Prudential Supervision) Act 2010. The Reserve Bank’s focus is on systemic issues and maintaining the stability of the financial system, rather than on the way that institutions and customers interact with each other," the Reserve Bank spokesman said.

"The Insurance (Prudential Supervision) Act 2010 doesn’t give the Reserve Bank powers to regulate for or supervise the way that an insurer interacts with its customers. The Commerce Commission, which your article notes is already involved, is the correct agency for these issues."

A spokesman for the Financial Markets Authority, which enforces the Financial Markets Conduct Act, said the FMA has provided information to the Commerce Commission as part of its current investigation.

As detailed by Clement some of the allegations from Youi customers include: 

• Being ambushed into handing over payment details when they were only looking for a quote;
• Having their bank accounts and credit cards charged for policies they weren’t aware they’d agreed to, or had asked not to activate until they said so;
• Being hit with repeated dishonour fees from their banks because of Youi debits they weren’t expecting. Many didn’t appreciate that they’d agreed to sign up to a policy or thought it was cancelled;
• Some of the policies on offer fail to include cover considered standard by most New Zealand insurers such as goods away from home with contents insurance;
• Not being made aware that they’re not covered for accidental damage and/or for their mobile phones with standard Youi policies;
• Sales agents who are remunerated according to how much business they sell or retain allegedly manipulating information in people’s policies in order to make the premium acceptable, but therefore putting customers at risk of having claims declined;
• Emails to cancel policies not being actioned and customers not told that Youi doesn’t accept email cancellations;
• Staff allegedly telling customers that policies have been cancelled but failing to cancel policies in order to keep their performance based commissions. And;
• Staff members upselling policies instead of cancelling. 

Youi’s marketing manager Trevor Devitt told Clement customers have mis-represented what happened in their phone calls. Youi had been "fully co-operative and transparent" in its dealings with the Commerce Commission, Devitt added.  

"We’re awaiting their final response to the investigation," Devitt said. 

He also told Clement that data manipulation was "completely unacceptable" and, when identified, was dealt with decisively.

"Any former staff members who have provided you with information may therefore be disgruntled and could very well have been subject to disciplinary action," said Devitt, adding Youi's sales advisors are not paid on a commission basis.

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When this story hits the wires , Youi are toast .

There is no way they can survive in the NZ Market with this type of negative media

Their reviews in Aussie make for amusing reading.

I don't know how anyone can run a company this way- unless of course it is hoping to never run out of suckers!

Been following this thread, and wow, have they got chutzpah.Saw their ad on T.V, last night!

The Reserve Bank should be concerned with the unauthorised use of credit card and account number details by this insurance company. A major concern for many whose bank a/cs are attacked thus. (Comment edited. please remember our commenting policy here - - Ed).

(Comment edited. The Commerce Commission, and possibly other regulators, will make that judgment rather than you, Ed). I don't trust any of the buggers though. Looking back at the payout troubles in Christchurch, insurance companies seem to be good at taking punters' money and keeping a firm grasp on it. We decided to 'self insure' after the Christchurch issues, although we do have third party insurance on the cars. We are well off enough to recover by ourselves if the house burns down and if the Wellington region (where we are) is flattened by an earthquake then it would be a bigger nightmare than Christchurch.

I would have thought the consumer would have some say in it too?

It's a ridiculously insecure system anyway. Any transaction should require authorisation by the account holder. People should be able to share their account details publicly in order to receive payments without the worry of theft.

There should be a PIN or something similar required to authorise a direct debit. The NZX require a password to trade shares for instance.

While you're at it RBNZ, change the transaction fields. We get three 15-character fields to describe a transaction. This is awful. Sometimes I can't even fit a name in there. Even twitter allows more characters.

Im sure Devitt as Marketing manager will be fully aware of the range of coercion's , obfuscations and outright audacious pressure tactics.

I think the company has good intentions but too greedy. The way they remunerate their staff drives the wrong behaviors
and the customer suffers as a result.

Really ? Good intentions ? Must be the Easter spirit, aye.