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OnePath, Cigna admit breaching New Zealand fair dealing provisions

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OnePath and Cigna have admitted liability for breaching New Zealand’s fair dealing provisions in relation to misleading representations that their distribution partner, ANZ, made to certain customers who held credit card repayment insurance.

The breaches relate to misleading representations ANZ made when issuing monthly credit card statements to the affected customers, the Financial Markets Authority (FMA) said.

OnePath and Cigna had notified the FMA of the issues during the Life Insurance Culture & Conduct Review.

FMA says it determined OnePath and Cigna should be held to account for their respective roles as the insurers of the “many affected policies” even if they did not directly make the misleading representations.

“OnePath and Cigna received regular information from ANZ about the affected policies and should have had systems and controls to identify the issues and taken steps to ensure that their distributor was delivering their policies correctly,” FMA General Counsel Liam Mason said.

ANZ was the distributor for the sale and invoicing of the affected credit card repayment insurance policies and was ordered by the High Court to pay a $NZ280,000 ($251,000) civil pecuniary penalty last year for making misleading representations to 307 customers.

The issues in the High Court proceeding related to duplicate credit card repayment policies that offered no cover or benefit to customers.

FMA says the breach admitted by OnePath and Cigna falls under section 536 of the Financial Markets Conduct Act, a provision which can deem product and services providers to be liable for the conduct of their agents in certain circumstances.

The regulator says they have jointly offered an enforceable undertaking, which will see them paying $NZ180,000 ($161,000) in lieu of a pecuniary penalty.

In offering the undertaking, Cigna recorded its “commitment to developing and maintaining effective policies, systems, and processes to support good customer outcomes and to prevent issues of the kind referred to in these Undertakings from occurring in the future,” the FMA said.

OnePath is no longer a licensed insurer so it did not offer a similar commitment, having been acquired by Cigna and voluntarily exiting the insurance industry in January 2020.