The Financial Markets Authority (FMA) is taking ANZ New Zealand to the High Court alleging the country's biggest bank charged some customers for credit card repayment insurance policies that offered those customers no cover.
The FMA says the civil proceedings have two causes of action. Firstly, that ANZ issued duplicate credit card repayment insurance policies to some customers that provided no additional benefits or cover, and charged premiums on those policies, between April 2014 and November 2019. And secondly, ANZ issued and failed to cancel credit card repayment insurance policies for ineligible customers, also charging premiums on those policies, between April 2014 and May 2018.
Credit card repayment insurance is a form of insurance that covers some or all of a customer’s outstanding credit card repayments in circumstances such as in the event of a customer’s bankruptcy, redundancy, injury, illness or death. ANZ says it's sorry, has paid compensation to customers of $440,000, and the FMA’s proceedings relate to 307 customers.
ANZ failed to disclose the issue during FMA & RBNZ's conduct and culture review
The FMA says the two issues date back to at least 2001, but its claim only covers the period since the introduction of the Financial Markets Conduct Act in 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," the FMA says.
"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',” the FMA says.
According to the FMA, ANZ first notified it of both issues in June 2019.
“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," FMA general counsel, Nick Kynoch says.
“ANZ sold a product that, for some customers, offered no benefit.”
'We’re very sorry'
For its part ANZ says it identified the issues, reported them to the FMA in June 2019, and has compensated affected customers to the tune of $440,000. ANZ says it no longer sells credit card repayment insurance.
"ANZ however acknowledges that it took too long to report the issues to the FMA, and will engage with the FMA on its reporting framework over the coming weeks," the bank says.
"ANZ identified 390 customers had more than one credit card repayment insurance policy for their credit card. Those customers only needed one policy as it gave the same cover. ANZ also identified a further 439 customers who were ineligible to claim the insurance. The FMA’s proceedings relate to 307 of those customers, with policies between April 2014 and September 2019."
"ANZ has since contacted all affected customers to apologise and compensate them for the issues which were unintentional and caused by human error and systems issues," the bank says.
“We’re very sorry this happened. We actively review our processes and systems to try and identify issues that could impact our customers. Where we find problems, we work to fix them for our customers,” says ANZ managing director of retail and business banking Ben Kelleher.
9 Comments
Firstly, well done ANZ for identifying a problem, fixing the problem and compensating their customers and then self reporting their mistake. Seems extremely unreasonable for FMA to prosecute this case. In my view financial providers should be encouraged to voluntarily identify their mistakes and fix them. Prosecution should be saved for the villains, not honest traders.
You give ANZ way too much credit. Firstly, ANZ were aware of, and working on, the issue when the RBNZ/FMA were performing their 2018 culture review of banks. ANZ were obliged to disclose it then but chose to wait until 2019. Secondly, this was a massive issue in the UK costing banks 10's of billions of pounds in compensation, however the ANZ kept jamming their blood funnel into their customers even though the entire industry knew it was legally and morally wrong.
There's something missing here. The "problem", so the article states, dates back to 2001. Yet the claims go back to April 2014, when the FMA passed legislation.
So the ANZ turn around, and try to quickly correct their "error", but only back to April 2014. In other words, there are plenty of other "errors", but the ANZ isn't liable for these, so it couldn't give a toss, it simply wants to placate the FMA.
Put more simply, if it were truly sorry, and truly interested in putting right the accidental fraud of its customers, it would have gone all the way back to 2001.
How on earth does the ANZ expect to be taken as having any sincerity.
Essentially, all wrongdoing before the FMA ruling (april 2014), they can get away with, and clearly they will. The FMA taking them to court will simply formalise the acceptability of the crimes between 2001 and march 2014.
So the FMA does the ANZ a favour by taking them to court, making the FMA look effective, and giving the public the sense of security that the ANZ is an honest and trustworthy institution.
So, one question is, why weren't all fraudulent charges corrected, right back to 2001? And a second question is, will the case, once concluded in court, prevent any claims from customers, or the FMA, for the period 2001 to march 2014?
If so, the sincerity of both institutions can be called into doubt, and both can in fact be seen as colluding.
Because the question begs, why would the FMA continue to take the ANZ to court, when reparations have been paid, and all files relevant have been dealt with?
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