New Zealand’s Financial Markets Authority has filed High Court proceedings against ASB Bank for alleged insurance product multipolicy discount failures.

The regulator alleges the failings arose through staff manual processing errors at the point of sale for the ASB-branded products. A sub-issue involved staff telling caravan and trailer insurance customers they could receive the discount, despite the policies being ineligible.

The High Court action also relates to banking services, with the regulator saying ASB failed to consistently apply fee exemptions to certain accounts with access to Fastnet Banking.

The multipolicy discount issue affected 23,062 customers between April 2014 and May 2022, and the overcharging totalled about $NZ2.8 million ($4.1 million). During the same period, 2435 customers were affected by the Fastnet issue, totalling about $NZ1.146 million ($1.697 million) in overcharges.

ASB self-reported the multipolicy problem to the FMA in September 2021 and the Fastnet Banking issue in December that year. It has completed remediation work and repaid affected customers, including interest.

“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,” head of enforcement Margot Gatland said. “While we acknowledge ASB’s efforts to remediate the issues, the length of time it took to identify and resolve the mistakes was pertinent to the FMA’s decision to file civil court action.”

The multipolicy discount issue dates to 2009 and the Fastnet Banking issue began in 2011, but the FMA’s claim reflects the introduction of the Financial Markets Conduct Act 2013, which took effect from April 2014.