ASB ordered to pay $2.1m over fair dealing breaches

A fine of $2.1 million has been imposed on ASB Bank Limited in the High Court over fair dealing breaches – which related to its insurance products and banking services.

ASB admitted it had made false and/or misleading representations which resulted in financial harm to customers by failing to correctly apply multi-policy discounts on ASB branded insurance products – and the failure to apply fee exemptions for eligible FastNet business customers.

The Financial Markets Authority said this resulted in more than 25,000 customers being refunded approximately $4.7 million by ASB.

It acknowledged ASB had self-reported the issues and carried out remediation.

Justice O’Gorman said: “Where contraventions of the FMCA are the result of process or system failures, the penalty must be set at a level that creates a strong incentive for financial institutions to maintain adequate systems and processes.”

Financial Markets Authority head of enforcement Margot Gatland said the penalty reflected the “seriousness of ASB’s systems failures”.

“Customers are entitled to rely on their bank to apply discounts and fee exemptions accurately. ASB’s failed to detect and address these issues over many years.”

Gatland acknowledged ASB’s cooperation, but said the duration of the failings and delays in identifying and escalating the issues meant a strong regulatory response was necessary.

ASB executive general manager for personal banking Adam Boy said ASB had self-reported both issues to the Financial Markets Authority in 2021, and refunded all customers, including a payment to reflect interest.

“Putting things right where we have made mistakes is important to us.

“We apologise once again to these customers. We have made changes to our processes, including working closely with our insurance partner in relation to the multi-policy discount matter, to prevent these issues happening in the future.”