Bank sold insurance to ineligible customers for years.
ANZ is facing court action for selling customers credit card repayment insurance that offered them no cover.
Credit payment repayment insurance has been hawked by banks to customers but our investigations have found it’s a product that provides little, if any, value. Policies have numerous exclusions, typically providing no cover for people aged 65 or over or who are unemployed.
The Financial Markets Authority (FMA) has filed proceedings against ANZ, alleging the bank sold the insurance to customers who were ineligible to make claims under the policies. Charges relate to the period 1 April 2014 to May 2018.
The FMA also alleges ANZ sold duplicate insurance policies to some customers that provided no additional cover during the period April 2014 and November 2019.
While the problems date back to 2001, the FMA is taking action under the Financial Markets Conduct Act, which came into effect in April 2014.
The FMA claims ANZ breached the act by making false and misleading representations about the policy cover. It’s seeking declarations ANZ breached the act, as well as pecuniary penalties and costs.
While ANZ was aware of the duplicate policy issue in September 2017, it didn’t notify the FMA until June 2019. The bank was also aware in May 2018 that it had been selling policies to ineligible customers but only notified the FMA last June.
Neither issue was disclosed by the bank during the joint FMA and Reserve Bank review of the sector in May to June 2018.
Credit card repayment insurance has previously been slammed by Australian regulators as poor value.
Consumers receive as little as 11¢ in claims for every dollar paid in premiums for credit card repayment insurance, an investigation by the Australian Securities and Investments Commission found.
After the spotlight was been turned on these policies, major Aussie banks – including ANZ – stopped selling them to Australian consumers. However, it’s taken longer for them to be withdrawn here. ANZ only stopped selling the policies to new customers in August 2019.