ASB accused of breaches

The Financial Markets Authority (FMA) has filed legal action against ASB Bank for overcharging insurance and banking customers more than $3.9 million over eight years.

The case, filed in the High Court at Auckland, has two causes of action, with the first relating to the failure to apply multi-policy discounts on ASB-branded insurance products.

The second relates to the bank’s failure to apply fee exemptions to some of its Fastnet Banking customers, specifically those with Society Cheque, Education Administration, and Business Focus accounts. 

A total of 23,062 customers were affected by the multi-policy discount issue between April 2014 and May 2022 and were collectively overcharged premiums of about $2.8m. 

During the same period, 2,435 customers were affected by the Fastnet Banking issue, totalling approximately $1,147,276 in overcharges. 

ASB self-reported the excess charges to the FMA in 2021 and has completed remediation work on both causes of action and repaid affected customers, including use-of-money interest.

The FMA says the multi-policy discount issue dates back to 2009 and the Fastnet Banking problem began in 2011. However, the legal action reflects the introduction of the Financial Markets Conduct Act 2013, which came into effect from April 2014.

Margot Gatland, FMA head of enforcement, says: “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. 

“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.”

The FMA’s claim alleges ASB breached section 22 of the Financial Markets Conduct Act by making false and misleading representations. It is seeking declarations, pecuniary penalties and costs.