$280,000 award sought after ANZ admits misleading customers over credit card insurance

Friday, 12 February 2021

ANZ bank faces paying a financial penalty for mis-selling credit card repayment insurance to some customers.

ANZ has admitted to misleading customers about its credit card repayment insurance.

The bank admitted breaching the Financial Markets Conduct Act when it sold the insurance to certain bank customers, the Financial Markets Authority said.

The FMA was seeking a penalty of $280,000 against the bank.

A hearing to determine the penalty was held on Friday at the High Court at Auckland, but an award had not yet been made, the FMA said.

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Credit card repayment insurance was designed to make repayments for cardholders should they die, fall sick, or be made redundant, but the FMA said ANZ charged certain customers for the insurance when it offered no cover or benefit for them.

The FMA claimed ANZ made false and misleading representations about the cover conferred by certain policies.

The case had been filed last year by the FMA.

“The admissions were made as part of a resolution reached between the Financial Markets Authority (FMA) and ANZ of proceedings that the FMA filed in June 2020,” the FMA said.

The FMA said these were the first civil proceedings it had taken under the fair-dealing provisions the act.

The FMA was told by the bank of the breaches in 2018.

Banks have phased out credit card repayment insurance, the sale of which caused scandals in the United Kingdom and Australia.

In Australia class action lawsuits and probes by regulators, which have cost banks just under A$60 million (NZ$62m) to date, ended bank sales of credit card repayment insurance, which yielded super-profits as payouts to policyholders were so low.

ANZ spokesman Stefan Herrick said: “ANZ is awaiting the decision of the Court and will comment after it is issued.”

He said: “We stopped selling credit card repayment insurance in 2019.”

ASB stopped selling the insurance in February 2018, shortly after it's parent bank CBA paid A$10m in refunds to 65,000 students and unemployed people unable to claim on the redundancy cover portion of its policies.

BNZ stopped selling it in October 2018, a full year before its parent NAB settled a class action lawsuit for A$49.5m with its lawyer Sharon Cook saying: 'We can only move forward if we deal with the past, so that we can earn trust among customers and the broader community and grow confidence in the future of NAB.'

Westpac stopped selling credit card repayment insurance at the same time as ANZ.

It said ending sales was a step towards simplifying it product range.

ASB said its review concluded customers may prefer to buy other forms of insurance to protect them against financial risk.

Concerns payment protection insurance was being mis-sold to some people in New Zealand have been voiced for nearly a decade.