New Zealand’s Financial Markets Authority (FMA) says AIA has admitted to making false and/or misleading representations to customers in proceedings it took against the life insurer.

FMA says the matter will proceed to a penalty hearing before the Auckland High Court where it will seek declarations of contravention.

“AIA has agreed to admit all causes of action and will file a notice of admission of the breaches in the High Court,” FMA said in a statement, adding “the parties will submit that AIA should be ordered to pay a pecuniary penalty of $NZ700,000 ($660,668)”.

The regulator says AIA self-reported the breaches when it was asked to provide information as part of the joint FMA/Reserve Bank of New Zealand conduct and culture review of life insurers in 2018.

“AIA has told the FMA that remediation for affected customers has been completed, and the FMA will be seeking confirmation of this as part of the process,” the regulator said.

FMA says the matter against AIA is based on three core breaches regarding incorrect and misleading communication to customers holding various life insurance and associated policies.

They are purported enhancement of policy benefits, charging premiums after the termination of a policy and treating policies as terminated when they should have remained in force and incorrect inflation adjustments.

FMA says it is determined to hold such misconduct to account and send a strong message of deterrence to the market.

“Consumers’ trust in the integrity of their life insurance provider is paramount for the industry to be effective,” FMA Head of Enforcement Karen Chang said.

“This case demonstrates that firms providing critical insurance must ensure they have necessary systems and controls in place to perform their core business and manage their customers’ policies correctly.”