ANZ taken to court
ANZ has become the second major bank this week to blame internal systems breaches and human error for a regulatory scandal, after it was hit with court action over junk credit card insurance.
New Zealand’s Financial Markets Authority has filed High Court proceedings against ANZ alleging it charged some customers for credit card repayment insurance policies that provided no cover.
ANZ is alleged to have issued duplicate policies to some customers which provided no additional benefits or cover and, secondly, failed to cancel policies for ineligible customers while also charging premiums.
The Kiwi regulator claims ANZ made “false and misleading representations” about the cover of the policies.
It is seeking declarations of contravention, pecuniary penalties and costs.
The FMA said it was taking the matter to court after an almost two-year delay by ANZ in notifying the regulator of the issue after it was first identified in 2017.
ANZ notified the FMA in mid-2019 of a problem where the bank issued and was charging customers for two policies, where they received no benefit, for a period of five years.
“ANZ sold a product that, for some customers, offered no benefit,” FMA general counsel Nick Kynoch said yesterday.
“While ANZ has embarked on their own remediation program, and ultimately selfreported this matter, the case points to a failure of internal systems and controls resulting in customer harm over a significant period of time.”
ANZ said the problems were “unintentional and caused by human error and systems issues”.
It said it had self-reported the issue to the NZ regulator and paid out $NZ440,000 ($409,845) in compensation to affected customers.
“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 said.
The action against ANZ comes hard on the heels of the release of Westpac’s internal accountability review which blamed its 23 million alleged breaches of financial crimes law on issues including a botched technology upgrade, poor staff training and resourcing.