OnePath and Cigna admit fair use violations for credit card refund insurance
OnePath Life (NZ) Limited and Cigna Life Insurance New Zealand Limited will jointly pay $180,000 to the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko after admitting liability for breaching the fair use provisions of the Financial Markets Conduct Act 2013 (FMCA).
The breaches relate to misleading statements made by ANZ when issuing monthly credit card statements to certain ANZ customers who held Credit Card Reimbursement Insurance (CCRI) policies with Cigna and OnePath.
OnePath and Cigna were the insurers of numerous CCRI policies for which ANZ was ordered by the High Court to pay a civil monetary penalty of $280,000 in 2021 for making misleading statements to 307 customers, following a case brought by the FMA. ANZ was the distributor for the sale and invoicing of the affected CCRI insurance policies. The issues raised by the proceedings in the High Court concerned duplicate CCRI policies or CCRI policies which offered no cover or benefit to customers.
OnePath and Cigna informed the FMA of the issues while reviewing life insurance culture and conduct. The FMA has determined that OnePath and Cigna should be held accountable for their respective roles as insurers of many of the policies involved in the ANZ CCRI case because the companies should have had better oversight of their products when they were sold and administered by ANZ.
Although OnePath and Cigna did not directly make misleading statements to their customers, they admitted liability for misleading statements made by ANZ (as their agent) under FMCA Section 536, a provision who may hold product and service providers responsible for the conduct of their agents in certain circumstances.
OnePath and Cigna jointly offered an enforceable undertaking to the FMA, which the regulator accepted and involves the companies paying $180,000 to the FMA in lieu of a monetary penalty. By offering the pledge, Cigna has recorded its:
“…commitment to developing and maintaining effective policies, systems and processes to support successful client outcomes and to prevent issues of the type mentioned in these commitments from occurring in the future.”
OnePath is no longer a licensed insurer and therefore has not offered a similar undertaking, having been acquired by Cigna and voluntarily exiting the insurance industry in January 2020.
Liam Mason, FMA’s General Counsel, said: “This enforceable commitment sends a message to the industry that product providers, underwriters, distributors and intermediaries have a shared responsibility to ensure customers are treated fairly and receive good results for the products and services they receive. ”.
“OnePath and Cigna received regular updates from ANZ about the policies affected and should have had systems and controls in place to identify issues and take action to ensure their distributor was applying their policies correctly.”
Context: FMA proceedings against ANZ
The FMA proceeding contained two causes of action. First, that ANZ issued duplicate CCRI policies to certain customers, which offered no additional benefits or coverage, and charged premiums on these policies, during the period April 2014 to November 2019. Second, ANZ issued and did not cancel CCRI policies for ineligible customers, also charging premiums on these policies, during the period April 1, 2014 to May 2018. While both also affect some policies sold by ANZ before April 2014 and therefore affected other ANZ customers, the FMA’s claim related only to 307 policies which were subject to charges after April 2014, reflecting the date on which Part 2 of the FMCA came into force.
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