ANZ admits long-running breaches

New Zealand’s largest bank has admitted misleading hundreds of customers over credit card repayment insurance — breaches which may “go back to the 90s”.

ANZ New Zealand accepted that it violated the Financial Markets Conduct Act 2013 as part of a resolution with the Financial Markets Authority (FMA) after legal proceedings were filed by the regulator in June last year.

A hearing was held before Justice Matthew Muir in the High Court at Auckland yesterday to determine the bank’s penalty.

The FMA alleged ANZ charged customers for credit card repayment insurance policies which offered no cover or benefit, and issued duplicate policies between April 2014 and November 2019.

ANZ has said it identified 390 customers who had more than one credit card repayment insurance policy and a further 439 who were ineligible to claim the insurance.

Yesterday, the court heard the issues had emerged through the merger of ANZ and National Bank nearly a decade ago.

But the FMA’s counsel Nick Flanagan said such breaches were occurring years before. “They go back to the 90s,” he said.

The FMA’s claim, however, only reflected the period since the act came into force in April 2014.

Justice Muir said the issue he needed to grapple with was whether ANZ should have had such robust systems that such breaches did not continue for years. “Everyone accepts that these were unintentional breaches,” the judge added.

Flanagan, however, told the court ANZ had decided not to tell its customers.

But Justice Muir felt doing so may have created a “level of anxiety and a significant management issue” which could have become larger than the problem itself.

Both the FMA and Justice Muir were critical of how long ANZ took to flush out the problem and repay its clients, the majority of whom were dealt with fairly and appropriately.

ANZ’s counsel, Andrew Horne of Minter Ellison Rudd Watts, admitted the bank took too long to deal with the problem once it became aware of it.

ANZ earlier said it self-reported the issues to the FMA in June 2019 and had already compensated customers $440,000.

Horne also said the issue may have been identified earlier if one of the affected customers had noticed the irregularities in their bank statements.

However, Justice Muir was unsympathetic, saying the same could be said about the bankers.

The judge reserved his decision but said he was prepared to endorse the joint recommendation in regards to a penalty of about $400,000.