Consumer NZ: Look into banks' 'money for jam'

Friday, 12 March 2021

Stock Photo - Dollar notes in New Zealand currency background, bank, banking, banknotes, business, cash, concept, currency, dollar, dollars, economy, finance, isolated, kiwi, many, money, new zealand, note, notes, object, objects, packet, paper, papers, rich, twenty, white money generic

Consumer NZ is calling for a wider investigation into the sale of credit card repayment insurance in New Zealand, saying banks must have known it was “money for jam”.

ANZ was fined $280,000 this month for selling customers credit card repayment insurance they were too old to claim on, and charging others for duplicate policies.

Credit card repayment insurance was designed to make repayments if someone fell ill or lost their job. But it has been identified by regulators in New Zealand and Australia as a poor value product for customers.

ANZ, Westpac, BNZ and ASB confirmed they have stopped selling the product and Kiwibank will stop on April 1.

* 'ANZ let them down': Bank fined $280,000 for misleading customers

The Government is promising to crackdown on life insurance companies with tougher regulations, after a review of the sector (First published January, 2021).

* Dairy business gets loan discount if hits environmental targets

A spokesman for the Financial Markets Authority said it had sent an information request to providers and underwriters at the end of 2020 to ask questions following on from its life insurance conduct and culture review, which identified the product as potentially low value, and the investigation into ANZ.

“We can’t say more now as we are still going through this process.”

Jessica Wilson, head of research at Consumer NZ, said her organisation would like to see a “wider investigation” into the banks.

“ANZ got the fine but we think there’s a bigger issue the regulator should look at.”

She said the product had been sold for “years and years”. “We don’t think ANZ is the only one that has done anything wrong… these are poor value products that shouldn’t have been offered to customers anyway.”

She said the banks must have known they were “money for jam for them and such little value for customers”.

The ANZ fine was handed down by judge Matthew Muir at the High Court in Auckland, who did not find the bank had intentionally misled customers.

While the maximum possible fine was $10 million, Muir said: “ANZ submits that, because it did not misdescribe the products, but merely misled customers by charging them for products which provided no benefit to them, their conduct is unlikely materially to undermine confidence in financial markets.”

The bank argued its customers were only “partially uninformed”, as those issued with duplicate policies would have seen the premiums on their credit card statements.

Muir said customers should be able to trust their bank.

“ANZ let them down,” Muir said.

Banks did not offer further comment.