The proceedings by the FMA cite two causes of action
ASB Bank Limited (ASB) is facing civil proceedings for its alleged acts of false or misleading representations in its insurance products and services, which was filed by the Financial Markets Authority – Te Mana Tātai Hokohoko (FMA).
FMA Head of Enforcement Margot Gatland pointed out that the case addressed how the ASB had negatively impacted its consumers for a long time.
“The FMA’s case alleges ASB’s poor systems and controls led to millions of dollars in financial harm to its customers for more than a decade,” said Gatland.
“While we acknowledge ASB’s efforts to remediate the issues, the length of time it took to identify and the resolve the mistakes was pertinent to the FMA’s decision to file civil court action,” she added.
ASB Bank Limited’s faulty systems
According to the FMA, the proceedings were due to the ASB’s failure to apply the multi policy discounts on its branded insurance products, which also led to another issue regarding its staff misinforming its customers about insurance policies for caravans and trailers, stating that they were eligible for the multi policy discount even if they were not.
Another cause of the proceedings were ASB’s failure to apply fee exemptions to customer accounts that had access to its Fastnet Banking service consistently, specifically the Society Cheque, Education Administration, and Business Focus accounts. The FMA also claimed that this was caused by its staff’s errors in the manual process and that the ASB did not have the right systems in place that can check if the fee exemptions were correctly applied with each transaction.
While the issue regarding the multi policy discount dated back to 2009 and the one about Fastnet Banking started in 2011, the FMA’s claims were aligned with the introduction of the Financial Markets Conduct Act 2013 (FMC Act), which were effective beginning in April 2014.
The FMA stated that about 23,062 customers were affected by the multi policy discount issue from the time the FMC Act took effect until May 2022, causing a total of $2.8 million in overcharged premiums. Meanwhile, 2,435 customers were affected by the Fastnet Banking issue, which led to a total of $1,17,276 in overcharges.
The ASB had remediated on both the issues and repaid the customers that were affected, which also included the use of money interest. Notably, it had reported the multi policy discount issue to the regulator in September 2021 and the Fastnet Banking issue in December 2021.
According to the FMA’s claim, the ASB allegedly breached the FMC Act through its false and misleading representations about its insurance products’ prices, the availability of certain benefits, and the prices of its banking services.
